As of March 13th, less than two months into the second presidency of Donald Trump, uncertainty over the economy is on the rise due to the various tariffs his administration has put in place. While the economy is not yet spiraling out of control, it appears to be on the decline while our allies abroad instate retaliatory measures. Additional facts will arise in the coming months.

Currently, the administration has threatened tariffs to three of the US’s biggest trading partners, China, Canada, and Mexico. 20% tariffs have been implemented on all Chinese goods, though the 25% tariffs on most Mexican and Canadian products and the lesser 10% tariff on Canadian energy have been suspended. Additionally, 25% tariffs were implemented on all steel and aluminum imports. Tariffs on many other goods, including a 25% tariff on European Union goods and raising tariffs to match those of retaliating nations, have also been proposed or are pending, possibly to be implemented in April.

In the meantime, threatened countries have retaliated. China increased tariffs on American farm goods, while Canada’s most populous province, Ontario, imposed a surcharge on energy exports, though Ontario backed down when Trump threatened to double tariffs on Canadian steel and aluminum. Canada and the EU have announced retaliatory tariffs, but the EU’s tariffs are planned to wait until April to potentially negotiate the reduction of Trump’s tariffs. European Commission President Ursula von der Leyen has stated, “We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers.” The EU’s tariffs mainly target products in Republican states, though there are some exceptions. Whiskey is an important product that could be hit by tariffs, causing Trump to speculate placing 200% tariffs on European alcoholic beverages. 

The American economy has begun to decline as a result of the tariffs. Immediately after Trump reaffirmed his promise to implement tariffs on March 11th, all three major stock market indicators (the Dow, the S&P 500, and the Nasdaq Composite) dropped. Additionally, the Cboe Volatility Index, commonly known as VIX, has risen, indicating risky trends in the stock market. Trump has acknowledged that there may be dips in the economy, but he still believes that it will recover. However, he had previously declined to comment on the possibility of a recession in an interview on March 9th.

President Trump has explained that his reasoning behind these tariffs is to slow the spread of illegal immigrants and drugs such as fentanyl from entering the United States by convincing Mexico, Canada, and China to do more to stop them. An article from the White House’s website published on March 3rd focuses on many of the dangerous effects of fentanyl, but it only vaguely describes, “The government of Mexico has afforded safe havens for the cartels to engage in the manufacturing and transportation of dangerous narcotics.” It also claims, “A recent study recognized Canada’s heightened domestic production of fentanyl.” No source is provided for either statement, but the latter, along with other statements in the article, are weakened by FactCheck.org. No proof was found of the former statement either, and in fact the Mexican government has been fighting drug cartels since 2006.