In April, the White House introduced a new reciprocal tariff measure to tackle the long-standing U.S. goods trade deficit. Many people worldwide have heard of President Donald Trump’s implementation of tariffs. To understand this policy at a deeper level, I went through and read the executive order as well as UChicago scholars opinions (including Robert Gulotty, an associate professor in the Department of Political Science; Steven Durlauf, the Frank P. Hixon Distinguished Service Professor at the Harris School of Public Policy; and Rodrigo Adão, an associate professor of economics at the University of Chicago Booth School of Business) in an article called “How do tariffs work, and who will they impact? UChicago experts explain” posted by UChicago News. After reviewing, here are some of my thoughts.
Starting with a summary of the executive order: due to a $1.2 trillion goods trade deficit, President Trump declared a national economic emergency based on threats to manufacturing, innovation, and defense. Some consequences of this trade deficit include deindustrialization, dependency on foreign supply chains, and regional job losses, among others (all of which I am currently learning about in my AP Macroeconomics course!). The idea is simple on paper: if another country imposes higher tariffs on U.S. products than we do on theirs, we’ll match their rates. The goal is fairness. But fairness, especially in economics, can be complicated.
While I understand the long-term goal of this action, it leaves me thinking about what else might result from it. As Professor Durlauf points out, steel tariffs helped the economy by bolstering “two million jobs … in steel-intensive industries” but, in contrast, hurt “millions of manufacturing jobs involving products that use steel as an input.” Associate Professor Adão also points out that “while tariffs are imposed on foreign goods, the financial burden often falls on domestic consumers and businesses… leading to higher prices for everyday items like clothing, electronics, and food.” This kind of policy can create both winners and losers. While the intention might be to protect domestic industries and jobs, the unintended consequences can often be just as significant. As mentioned, by making imported steel more expensive, domestic steel producers benefit and may even hire more workers. However, companies that rely on steel to make their products—like car manufacturers or appliance makers—end up facing higher production costs. This could lead them to raise prices, cut back on hiring, or even move production elsewhere to stay competitive which could end up harming the consumers.
Reflecting on this, I find it really interesting how a policy that seems straightforward on the surface can have such complex effects once you dig into it. It makes me wonder how policymakers weigh these trade-offs when deciding whether to implement tariffs. Do they prioritize protecting certain industries over others? How do they predict or measure the indirect impacts?
One thing pointed out in this article is the fact that these tariffs impact our relationships with nearby countries creating “political challenges in maintaining friendly relations with the U.S.” That really stuck with me because I had mostly been thinking about tariffs in terms of economics—prices, jobs, industries. But it turns out that trade policy is deeply connected to diplomacy and international relations too. If the U.S. imposes tariffs on imports from countries like Mexico or Canada, it doesn’t just affect businesses-it can strain alliances, disrupt long-standing agreements, and even influence how other nations view and cooperate with us on other issues like security, immigration, or climate policy.
This policy is another example of how economics and public policy collide. Trade decisions reflect political pressures, economic priorities, and global relationships. When tariffs shift, it’s not just an economic signal, it’s a policy message. These moments highlight the need for more people to understand the connection between government decisions and economic outcomes. We don’t have to wait until we’re policymakers or CEOs. We can start now by being curious, by staying informed, and by asking questions when something as small as a price tag shifts. Behind every missing item on a shelf, every spike in cost, there might be a policy decision that started many miles away. But its impact? That’s happening right where you are.
Impact Blueprint 