The parade of U.S. implemented tariffs began in February when President Trump signed an executive order targeting Canada, Mexico, and China. On April 2, the Trump Administration announced a minimum 10% global tariff rate, with country specific tariff rates ranging from 10% to approximately 50%. Although the Trump Administration referred to the new tariffs as “reciprocal”, the rates were not based on the tariff rates charged on U.S. imports by a given country. Rather, the “reciprocal” tariff rates were based on a mathematical formula related to the U.S. trade deficit with a given country. The greater the trade deficit with a given country relative to imports from that country, the greater the “reciprocal” tariff rate. The tariff formula used by the Trump Administration focused on merchandise trade deficits and did not take into account international trade in services, investments, or the size of a country’s economy. The reciprocal tariff rates announced by the U.S. on April 2 were just the beginning of a roller coaster ride of tariff rate revisions. On April 9, the Trump administration announced a 90-day pause from the “reciprocal” tariffs announced on April 2, although the global tariff rate of 10% remained in effect. August 1 became the deadline (later extended to August 7) for countries to negotiate trade deals with the U.S., or face the reimplementation of the “reciprocal” tariffs. The 25% tariff rate (with certain product exceptions) was paused for Canada and Mexico on products covered by the USMCA. The tariff and trade war escalated with China, and by the end of April the U.S. had a 145% reciprocal tariff rate on goods imported from China (with certain product exceptions) with China having a reciprocal rate of 125% on U.S. goods. Negotiations led to the reciprocal tariff on China being lowered to 10% for 90 days on May 12; additional tariffs (justified by fentanyl and China’s unfair trade practices) applied to bring an effective rate of 30-55% for most products. In October, the fentanyl tariff on China was reduced from 20% to 10% and the 10% reciprocal tariff extended for one-year. With an August deadline of U.S. tariffs reverting to the April 2 “reciprocal” rates unless trade deals were reached, multiple trade deals were finalized by the deadline. The focus of the Trump Administration on trade has been an implicit objective of reducing or eliminating trade deficits with trading partners, with an added goal of increasing manufacturing jobs. The United States has the largest economy in the world and dwarfs the economies of many of its trading partners. Given the size disparity of economies, U.S. trade deficits are not surprising, given the ability of the United States to afford more goods. The Trump Administration has imposed tariffs based on the International Emergency Economic Powers Act (IEEPA), Section 232 of the Trade Expansion Act of 1962, and Section 301 of the Trade Act of 1974. The IEEPA gives the president the authority to regulate economic transactions following a declaration of a national emergency. The Trump Administration became the first presidential administration to invoke tariffs based on the IEEPA. The “reciprocal tariffs” are based on the IEEPA, as are the “fentanyl” tariffs on Canada, China, and Mexico. A minimum baseline (reciprocal) tariff rate of 10% has been imposed on all countries. Section 232 of the Trade Expansion Act of 1962 allows the U.S. government to impose tariffs on imports that threaten national security. Section 301 of the Trade Act of 1974 allows the U.S. government to place tariffs on goods from countries that are deemed to be engaging in unfair trade practices. Tariff rates may be “stacked” for a particular country, with the sum of multiple tariff rates determining the overall tariff rate. Through July, the tariff taxes generated $122 billion in tax revenue in 2025 for the federal government. This compares to total individual income tax revenue of $2.4 trillion in 2024. The regulatory costs of administering the tariff program, including the regulatory costs to the U.S, government of enforcing the tariffs and the regulatory costs to businesses for complying with tariff laws, have not been disclosed. The following table contains information for the top 10 U.S. trading partners, including total trade, the trade deficit,
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Center for Business and Economic Insight
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