In the 2024 presidential election, 81% of registered voters said the economy was their top priority. President Donald Trump, who is known by his supporters for creating the “greatest ever U.S. economy,” campaigned on the promise that he would lower grocery, gas and energy prices.
After the COVID-19 pandemic paralyzed the economy, the federal government responded with sharp increases in fiscal spending—the use of government spending and taxation to influence the economy.
The Federal Reserve also lowered interest rates to nearly zero where they remained for almost two years. Even though the economy started to recover, inflation rose to its highest level in decades. American consumers, dissatisfied with prices, took their frustrations out on the Biden administration.
High inflation and the fact that Trump’s opponent, Kamala Harris, was the candidate associated directly with the Biden administration, gave voters more confidence in Trump’s ability.
Donald Trump’s biggest talking point, the economy, created lots of conversation. His strategy: tariffs galore.
According to Mea Ahlberg, an economics professor at SMU, a tariff is a tax on imported goods; however, it’s not a tax foreign countries pay, it’s money that American companies have to fork up.
For example, a car imported to the US with a value of $50,000 that is subject to a 25% tariff would face a $12,500 charge. The charge is paid by the domestic company that imports the goods, not the foreign company that exports them.
Tariffs are not a new concept, though. The Biden administration kept most of Trump’s 2016 tariffs in place and in May 2024, announced tariff hikes on an additional $18 billion of Chinese goods, including semiconductors and electric vehicles.
“Eventually, if we add tariffs to imported goods and if we are very dependent on those imported goods, it is actually going to increase those prices for us,” Ahlberg said.
To some extent, that’s why sophomore advertising major Emma Grevemberg appreciates certain tariff implementations.
“The amount of reliance that we have on imported goods is concerning, especially with countries like China, where nearly all of our goods and everything I wear says ‘Made In China,’” Grevemberg said.
On Feb. 1, President Trump imposed 25% tariffs on imports from Mexico and Canada, which were delayed one month, and an additional 10% on Chinese goods. Trump’s goal in doing so was to stop the flow of fentanyl and illegal migration into the U.S.
“The tariffs on North American countries, I think, are a bad idea since we’re allies with them,” junior and real estate major Carl Firch said. “Especially as we’re entering a time of uncertainty with war and other issues, it’s important to stay allies.”
The implementation of these tariffs will impact the Trump administration’s goal to create more secure supply chains. If they want to reduce reliance on China-centered supply chains, the administration must continue to trade and invest among our neighboring countries. This will be virtually impossible if we get caught in a trade war.
“As for China, we should continue to tariff the heck out of them,” Firch said.
Trump is also enacting these tariffs because he wants to promote in-country manufacturing.
“I think it would benefit people if tariffs were higher because it would stimulate success for domestic companies, which have a difficult time competing with other countries importing goods because their labor is so cheap,” Grevemberg said.
While this is true, it’s going to be very difficult. Economists warn that as the United States nears full employment, a labor shortage could make it difficult to expand the manufacturing sector, particularly as many immigrant workers face the risk of deportation.
On Feb. 9, Dallas Morning News staff writer Sasha Richie wrote a piece on how Texas, being a border state, could face some major drawbacks. Before Mexico usurped China as the No. 1 importer to the U.S., it was Texas’ biggest trading partner; this relationship continues today.
“We’re [Texas] really in the line of fire here on tariffs, if they come into place those tariffs on Mexico,” Pia Orrenius, vice president and senior economist at the Federal Reserve Bank of Dallas, said during the bank’s annual Texas Economic Outlook.
Orrenius also acknowledged that the risk of retaliatory tariffs could impact Texas at a larger scale because of Mexico’s role as a hub for both imports and exports and because a lot of people are employed in processing trade at the border.
Orrenius and her team, after doing a “back-of-the-envelope” calculation into what a 25% tariff on Mexico could do to the Texas economy, found a “15% to 30% decrease in GDP growth.”
Ahlberg says we can’t get ahead of ourselves. Tariffs can be brought to the table to begin a negotiation.
“Trump knows this is going to hurt us if he goes through 100% with everything he says,” Ahlberg said. “But he is using it as a bargaining chip argument, which could really advance our economy.”
However, it is now no longer up for discussion. On March 4, the 25% tariffs on Mexico and Canada went back into effect, causing massive chaos. Stocks like Dow Jones, Nasdaq and S&P tanked within hours. As of Monday, March 10, all three of these stocks continue to fall. Three automotive companies—Ford, General Motors and Stellantis —also felt the consequences, as they comply with the United States-Mexico-Canada Agreement (USMCA). The USMCA is “a trade agreement that allows for the tariff-free movement of goods between the three countries.” This agreement went into effect on July 1, 2020, during Trump’s first term.
Due to this, the tariffs will be especially “disastrous for U.S. companies operating throughout the area and unfairly benefit European and Asian automakers who also import to the U.S,” Ford’s CEO Jim Farley said.
This start-and-stop tactic continues to raise concerns among industries reliant on commerce with Canada and Mexico, which together make up over a quarter of U.S. imports and nearly a third of its exports. Following the implementation of his tariffs, Canada responded with taxes on $20.5 billion worth of American goods, including agricultural products, while Mexico warned it would impose its own tariffs on U.S. imports by Sunday, March 9 unless Trump reversed course.
President Trump said he would allow products that are traded under the rules of the USMCA to avoid the stiff 25 percent tariffs until April 2.
“We are going to give a one-month exemption on any autos coming through USMCA. Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” Press Secretary Karoline Levitt said.
