Trump’s Tariffs and Trade Wars: What Really Happened?

In 2018, former U.S. President Donald J. Trump launched a dramatic shift in American economic policy by waging a global trade war, the likes of which had not been seen in decades. The primary weapon of this economic battle? Tariffs. These tariffs, mainly directed at China but also targeting allies like the European Union, Canada, and Mexico, were intended to curb trade deficits, bring back manufacturing jobs to the U.S., and punish what Trump called "unfair trade practices." But did it work? Or did it backfire?

This blog unpacks the motivations, major events, consequences, and long-term impact of Trump’s trade wars to answer one pressing question: What really happened?

1. The Build-Up: Why Trump Declared War on Trade

1.1 Campaign Promises and Nationalism

From the start of his 2016 presidential campaign, Trump positioned himself as an economic nationalist. He repeatedly emphasized how America was being taken advantage of by other nations, especially China, which he accused of stealing intellectual property, manipulating currency, and flooding the U.S. market with cheap goods.

One of Trump’s slogans—“America First”—was not just rhetoric. It was a central policy pillar. He promised to renegotiate trade deals, pull out of multilateral agreements, and impose tariffs to level the playing field.

1.2 Trade Deficits and China

The U.S. had run consistent trade deficits for decades. In 2017, the deficit with China alone stood at over $375 billion. To Trump and many of his economic advisors, especially Peter Navarro and Robert Lighthizer, this was proof that global trade was harming the American worker. Tariffs, they argued, would incentivize companies to move production back to the U.S. and create domestic jobs.

1.3 Breaking with Free Market Orthodoxy

For years, American policy had been guided by a commitment to free trade and globalization. Trump disrupted that consensus. Instead of pursuing multilateral deals or international cooperation, he favored bilateral negotiations and economic pressure.

2. The Weapons of the Trade War: Tariffs

2.1 Steel and Aluminum Tariffs

In March 2018, Trump announced tariffs of 25% on steel and 10% on aluminum imports, citing national security concerns under Section 232 of the Trade Expansion Act. While the initial targets were China and other competitors, key allies like Canada and the EU were also affected, causing diplomatic strain.

2.2 China Takes Center Stage

The most aggressive actions were taken against China. Between 2018 and 2019, the U.S. levied tariffs on over $360 billion worth of Chinese goods. China retaliated with tariffs of its own, targeting $110 billion in American exports, including soybeans, pork, and automobiles.

This tit-for-tat escalation created what came to be known as the U.S.-China Trade War, the largest and most consequential element of Trump’s overall trade policy.

2.3 Other Global Targets

Trump also targeted the European Union, Japan, and Mexico, threatening tariffs on automobiles, agricultural goods, and other imports. At times, this aggressive policy led to new deals, such as the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA.

3. Major Turning Points in the Trade War

3.1 The First Wave (Early 2018)

The initial tariffs targeted washing machines and solar panels, followed by the broader steel and aluminum measures. These actions drew immediate retaliation from trade partners, including China, Canada, and the EU.

3.2 The Escalation (Mid-2018 to 2019)

The second phase involved much larger rounds of tariffs, especially on Chinese goods. U.S. importers and consumers began to feel the squeeze. American farmers were especially hard hit as China cut back on key agricultural imports.

3.3 The Phase One Deal (January 2020)

In a partial truce, the U.S. and China signed the Phase One Trade Deal, where China promised to increase imports of U.S. goods by $200 billion over two years and address intellectual property concerns. In return, the U.S. delayed or reduced some tariffs. However, by the time the COVID-19 pandemic hit, many of the targets set in the deal had not been met.

3.4 COVID-19 and Its Impact

The pandemic derailed much of the momentum behind the Phase One deal. Supply chains collapsed, global demand dropped, and geopolitical tensions rose again. Trump continued to blame China for the pandemic, reinforcing economic and political rifts.

4. Consequences of the Trade War

4.1 Impact on the U.S. Economy

According to the U.S. Congressional Budget Office (CBO) and multiple independent studies:

• The tariffs raised costs for U.S. consumers and businesses.

• Companies often passed tariff costs to customers.

• Manufacturing job growth slowed, despite initial hopes.

• Farmers received billions in federal aid due to lost exports.

A 2019 study from the Federal Reserve estimated that the trade war caused a loss of 300,000 jobs in the U.S. economy.

4.2 Effect on China

China also suffered. Exporters lost access to key American markets, and its economy slowed. However, Beijing diversified its trading partners and doubled down on self-sufficiency, especially in tech and agriculture.

Interestingly, China did not capitulate to American pressure, and the idea that tariffs would force a broad systemic change in Chinese economic policy proved overly optimistic.

4.3 Global Ripple Effects

• Global supply chains were disrupted.

• Allies like Canada and the EU reevaluated their dependence on U.S. leadership.

• Many countries retaliated with tariffs of their own, creating a feedback loop.

• The World Trade Organization (WTO) came under intense pressure as its relevance was challenged.

  
  

4.4 Winners and Losers

Winners:

• Some domestic producers (e.g., steel companies) temporarily benefited.

• Nations like Vietnam and Mexico gained from diverted supply chains.

  
  

Losers:

• U.S. consumers, who faced higher prices.

• Farmers and small exporters.

• Global investors who experienced volatility and uncertainty.

  
  

5. Long-Term Impact and the Biden Administration

5.1 Did the Tariffs Work?

While the tariffs reduced some import volumes and addressed short-term trade imbalances, they did not significantly bring back jobs or reduce the overall trade deficit. In fact, the U.S. trade deficit hit record highs in the years following the trade war.

The core promise of reindustrializing the American economy remains largely unfulfilled. Many companies found workarounds, shifted production to other low-cost countries, or simply absorbed costs.

5.2 Continuity Under Biden

Interestingly, the Biden administration has not fully repealed Trump’s tariffs. While the rhetoric has shifted to multilateralism and cooperation, many of the tariffs remain in place, especially those on China.

Biden has focused more on domestic industrial policy, like the CHIPS Act and infrastructure investments, to compete with China in the long run. This reflects a broader shift in consensus: economic decoupling with China is now a bipartisan issue.

6. Lessons Learned

6.1 Tariffs Are a Blunt Instrument

Tariffs are easy to impose but hard to calibrate. They can cause unintended consequences, such as supply chain issues, inflation, and retaliation.

6.2 Trade Wars Don’t Have Clear Winners

While the intent was to support American workers, the complexity of global trade made outcomes unpredictable. Many domestic businesses ended up paying more for inputs, which hurt competitiveness.

6.3 Trade Policy Is Now Geopolitical

Trade policy is no longer just economic—it’s deeply geopolitical. Trump’s tariffs marked the start of economic containment strategies against China, which continue today in different forms under Biden.

6.4 A New Era of Protectionism?

Trump’s trade wars may have inadvertently ushered in a new global protectionist wave. Countries are increasingly emphasizing self-reliance, re-shoring industries, and strategic reserves.

Conclusion

Trump’s tariffs and trade wars were among the most defining and controversial aspects of his presidency. What began as a promise to restore American greatness through economic nationalism quickly evolved into a complex, high-stakes global chess match. While they did expose flaws in the existing global trade architecture and brought certain issues—like China's economic practices—into sharper focus, they also revealed the limitations of unilateral action in an interconnected world.

In the end, the legacy of Trump’s trade wars is mixed. They altered the conversation on trade policy, shifted public opinion, and signaled a new era of skepticism toward globalization. But they also exacted real costs—on consumers, farmers, and the global economy at large. Whether future leaders learn from these outcomes or repeat the cycle remains to be seen.