“The Hawley-Smoot Tariff Act, which… Anyone? Raised or lowered? Raised tariffs in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression.” This quote from the 1986 John Hughes movie Ferris Bueller’s Day Off has increased in relevancy after Trump enacted his tariff policies.
A tariff is a tax that a country puts on countries as a whole or specific products, such as clothes, electronics, or food. It makes them more expensive, usually incentivising people to buy domestic goods. Tariffs can sometimes help industries, but they normally escalate trade conflicts, leading to even higher prices.
On April 2, 2025, Trump’s so-called “Liberation Day,” the president announced a long list of tariffs, including a universal 10% tariff on all goods entering the United States. He originally implemented only a 34% tariff on all goods from China, but it has since risen to 145%.
The administration introduced them as reciprocal tariffs — tariffs that are put into place in response to other tariffs, but the majority of the impacted nations had no tariffs against the US.
Economists then did the math, and many said that the actual formula was worryingly simple. The Trump administration divided the trade deficit by US imports (with the imports multiplied by two), multiplying that by 100 to make it a percentage. This formula was the reason the small nation of Lesotho, whose GDP is less than a 10,000th of a percentage of the US GDP, received a whopping 50% tariff.
As of April 9, all tariffs were suspended for 90 days–with the exception of the 10% base tariff applied to all countries, the 25% tariff on most Canadian and Mexican goods, and the 145% tariff on Chinese imports. This pause was in response to a serious downturn of many key stock market indicators.
The exact purpose of the tariffs wasn’t entirely clear, with some officials claiming they were permanent and would be used solely for government income, while others said they were to entice countries to negotiate new trade deals. The administration has been adamant on the fact that these tariffs will come into effect once the 90-day pause is over on July 8.
Why does any of this matter?
Asia, a prime target of many of these tariffs, is responsible for ~65% of electronic exports worldwide, with China responsible for 35-36% of them, as well as 73.2% of clothing imports to the US.
These supply chains have been built up for years, mostly on the backs of workers with wages less than half of the federal minimum wage.
The US doesn’t have the types of industrial bases required to manufacture iPhone 16’s that cost ~$1,700 and Nike shirts that cost $30. Due to the tariffs, these items could see a price increase of up to $3,900 and $60, respectively. This is still significantly lower than costs would be if these products were made in the US.
Cell phones, computers, and other electronics have intricate supply chains that span across Asia. Most raw materials involved in cell phone production, such as cobalt and lithium, are sourced from Asian countries, such as Indonesia and China.
Taiwan, Japan, South Korea, and China are responsible for important components such as semiconductors (which will likely receive specialized tariffs from the Trump administration). Most of these components are assembled into cell phones in China, however, Apple and Samsung have started investing in plants located in India and Vietnam, which normally don’t receive as many economic attacks from the US.
Clothing and shoes are no different. A striking 3% of clothes bought in the US are domestically made, and China, Vietnam, and Bangladesh produce large quantities of the other 97% of clothes bought in the US. Expansion into Vietnam and Bangladesh began as tariffs against China grew in popularity, however, the two countries will be subject to 46% and 37% respectively. These tariffs will greatly increase the cost of various brands such as Nike, Adidas, and Lululemon, which are all manufactured in countries across Asia.
Tariffs will cause every part of these products to increase in price, which in turn will increase production costs, even before the tariffs directly affect the retail price of the finished product.
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