Here's why Trump thinks tariffs are good for the US – and what experts say

President-elect Donald Trump, an outspoken supporter of tariffs, has pledged to enact tough import duties upon his inauguration in January. For Trump, these new levies would both strengthen the trade policies pursued under his first administration and, more broadly, help the United States achieve its main economic and social objectives.

On Monday evening, on his Truth Social website, Trump revealed his intention to impose a 25% tariff on all imports from Mexico and Canada on January 20, the day of his inauguration. The president-elect also announced plans to levy an additional 10% tax on all imports from China.

Trump's penchant for protectionist trade policies is a source of worry for many economists and Wall Street analysts, who worry that new tariffs and retaliatory measures from the United States' trading partners could slow down economic growth, stimulate inflation and trigger a trade war.

But Trump and his allies, including his choice for Treasury secretary, Scott Bessent, have argued that the tariffs deployed during his first term have not spurred inflation and that the benefits could far outweigh the harms .

“But tariffs, if you look at it, are two things,” Trump said in October in an interview with Bloomberg News editor-in-chief John Micklethwait. “No. 1 is protecting the businesses that we have here and the new businesses that are coming in because we're going to have thousands of businesses that are coming to this country.”

Here are four ways Trump says tariffs will help the United States, plus what experts say.

Protecting America's Manufacturing Industry

Trump believes imposing tariffs on trading partners will help protect U.S. businesses at a time when domestic manufacturing jobs have fallen far from their 1979 peak.

In some cases, the tariffs imposed by Trump in 2018-2019 achieved this goal, with the Brookings Institution noting that there is evidence that jobs in specific sectors may have been boosted. For example, tariffs on imported washing machines may have created 1,800 new U.S. jobs at Whirlpool and other manufacturers, according to the centrist think tank.

But that doesn't take into account the broader impact of Trump's first-term tariffs on U.S. manufacturing, with the Federal Reserve finding that U.S. manufacturers found themselves facing higher costs for raw materials than they mattered, as well as retaliatory tariffs imposed by other countries. The number of U.S. manufacturing jobs declined slightly during Trump's first term, from about 12.4 million to 12.2 million workers, although a variety of factors could explain the decline.

“[O]Our results suggest that tariffs did not boost employment or manufacturing output, even though they raised producer prices,” the Fed researchers noted.

Bringing new businesses to the United States

Trump also says expanded tariffs will convince some foreign manufacturers to open factories in the United States to avoid import duties.

“The higher the tariffs, the more likely it is that the company will come to the United States and build a factory in the United States, so they don't have to pay the tariffs,” said Trump to Bloomberg's Micklethwait.

While such change is possible, Micklethwait said such changes would “take many, many years.” (Trump disputed this, saying the companies would “come right away.”) Experts note that many factors beyond tariffs affect where companies decide to operate, including retail chains. sourcing, taxes, shipping charges, and labor and regulatory policies.

Some companies are already anticipating the impact of tariffs by relocating their production sites, but it is not guaranteed that this will benefit the United States. For example, shoemaker Steve Madden said that if Trump imposed new tariffs on Chinese imports, he would shift manufacturing away from China and toward countries like Cambodia and Vietnam.

Generate billions in new federal revenue

Trump has also touted the tariffs as a way to generate new federal revenue that could offset his proposed tax cuts. During his first administration, his tariffs — more limited than his current proposals — generated $80 billion in revenue, according to the Tax Foundation.

If Trump instituted a 10% tariff on all imports, as he proposed during his campaign, the federal government would raise $2 trillion from 2025 to 2034, estimates the Tax Foundation, a nonpartisan think tank focused on tax issues.

According to Goldman Sachs, a 25% tariff on Canada and Mexico, as well as a 10% tax on Chinese imports, would generate just under $300 billion in customs revenue per year. Overall, 43% of U.S. imports come from Mexico (15.4%), Canada (13.6%), and China (13.9%).

However, this revenue would largely be paid for by American consumers and businesses, experts say. Indeed, customs duties are not paid by countries that export to the United States, as Trump claims, but rather by American importers.

In other words, companies like Walmart would face the decision of whether to absorb the higher costs of imports or pass them on to consumers, Vicky Redwood, senior economic adviser for Capital Economics, wrote in a research note.

“If costs are passed on, customers are then faced with a choice: continue purchasing the import (now more expensive) or switch to purchasing a domestic alternative (which will cost more than the import tariff before rate),” she noted.

Trump's tariffs could cost the typical American family an additional $2,600 a year as importers and manufacturers pass the cost of the tariffs onto consumers, according to an August analysis by the Peterson Institute for International Economics, a group non-partisan think tank focused on economic issues.

Stemming the flow of drugs and illegal immigration

Trump also sees the threat of new tariffs as a way to curb illegal immigration and drug trafficking, citing people “flooding through Mexico and Canada, bringing crime and drugs to never-before-seen levels.” . The tariffs would remain “until drugs, especially Fentanyl, and all illegal aliens stop this invasion of our country!” » he added.

Much of the fentanyl in the United States comes from Mexico. During President Biden's term, border drug seizures have increased sharply, with U.S. authorities totaling approximately 21,900 pounds (12,247 kilograms) of fentanyl seized in fiscal year 2024, up from 2,545 pounds (1,154 kilograms) ) in 2019, when Trump was president.

While it is possible that Canada, Mexico and China could step up enforcement of drug trafficking or immigration to avoid Trump's tariffs, it is unclear whether such a threat would achieve these goals. goals. Mexican President Claudia Sheinbaum suggested Tuesday that Mexico could retaliate by imposing its own tariffs and described illegal drugs as a problem in the United States, while indicating her willingness to discuss the issues with Trump.

The flow of drugs to the United States “is a public health and consumption problem in your country's society,” she said.

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Aimee Picchi

Aimee Picchi is an associate editor at CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and wrote for national media outlets including USA Today and Consumer Reports.

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