The Impact of Trump’s Tariff Policy: The Continuing Economic Legacy

Jakarta, Pintu News – Although Donald Trump has left office as President of the United States, his tariff policies are still having an impact on businesses. Economists say that the trade war started by the Trump administration is not over, and companies are still facing rising costs and pressure from global competition.

A number of tariffs, including those imposed on Chinese goods and industrial raw materials, remain in place today. This situation shows that undoing tariff policies is not as easy as implementing them. In fact, the long-term effects of tariffs like those imposed by President George W. Bush on steel are still being felt today, as found in research by Lydia Cox, an economics professor at the University of Wisconsin-Madison.

Rising Costs and Uncertainty for Industry

Trump’s tariffs cover a wide range of goods, from beverages to airplanes and washing machines. Unlike previous tariff policies that had clear objectives, Trump’s policies are often fluid – sometimes aimed at protecting US manufacturing, other times used as a tool to tackle drug trafficking or illegal immigration.

This lack of clarity of purpose makes it difficult for businesses to plan their business strategies. Douglas Irwin, professor of economics at Dartmouth College, highlights that tariffs in previous eras, such as those imposed by Ronald Reagan on Japanese semiconductors, had clear targets to protect the US technology industry. In contrast, Trump’s tariffs lack specific demands on trading partner countries, leading to prolonged economic uncertainty.

The Boston Federal Reserve estimates that Trump’s initial tariff policy increased core inflation by 0.8 percentage points. This price increase is mainly due to the increased cost of imports that are ultimately passed on to consumers.

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An Unstoppable Trade War

In recent weeks, the stock market has been under pressure due to investors’ realization that Trump’s tariff policy is not just a negotiation tactic, but a permanent decision that is difficult for businesses that depend on global supply chains to avoid.

Although the Trump administration had granted tariff exemptions for Canada and Mexico, the policy did not have a major impact. Trump even proposed an additional 25% tariff on all imported goods from these two countries as well as a 20% tariff on Chinese products.

Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center, argues that it is American companies that end up bearing the brunt of these tariffs, not foreign suppliers. She revealed that more than half of the tariff costs are actually absorbed by the US economy, as US consumers’ bargaining power in price negotiations is weaker than expected.

While some tariffs help bring manufacturing jobs back to the US, the costs are very high. For example, an import tax on washing machines in 2018 created about 1,800 new jobs at companies like Samsung. However, a study in the American Economic Review found that these jobs cost US consumers up to Rp13 trillion ($800,000 equivalent) per job.

A Tariff Policy That’s Hard to Repeal

Although the Biden administration has replaced Trump, most tariff policies remain in place. Jack Zhang, professor of political science at the University of Kansas, highlighted that repealing tariffs is much more difficult than implementing them. Once industries start enjoying the benefits of protectionist policies, they will fight to maintain them.

In addition, tariffs also trigger countermeasures from other countries, further complicating the situation. History shows that trade disputes can last for decades. For example, the Chicken Tax imposed by President Lyndon B. Johnson in the 1960s is still in effect today. Originally implemented as a retaliation for European tariffs on imported chicken from the US, the policy continues to impact the automotive industry, making pickup trucks more expensive for American consumers.

The softwood lumber trade dispute between the US and Canada is another example of a protracted trade war. For more than 40 years, disputes over lumber tariffs have led to price volatility that has hurt the construction industry. Many companies have opted to import lumber from other countries such as Chile and Austria, defeating the original purpose of the tariffs to protect the domestic lumber industry.

Conclusion

The tariff policies implemented by the Trump administration have left an economic legacy that is difficult to erase. Companies are still facing rising prices, business uncertainty, as well as the long-term impact of the ongoing trade war.

Given the complexity of international trade policy and its widespread economic impact, it is not easy for subsequent administrations to change course. History shows that tariffs often outlast the president who imposed them, causing economic effects that last for years after the original policy was enacted.

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Reference

• Cryptopolitan. Trump’s Tariffs Effects Still Felt After He Leaves Office. Accessed March 10, 2025.
• Featured Image: Bitcoinist