By Chao Deng
April 2, 2025
President Trump unveiled a new tariff regime on Wednesday that represents a fundamental rethinking of U.S. trade policy on a scale not seen since the post-World War II era.
The U.S. will impose 10% across-the-board tariffs on all imports and even higher rates for other nations that the White House considers bad actors on trade. The tariffs come on top of a series of duties that Trump already imposed early in his second term, including tariffs on many products from Canada, Mexico and China, as well as on steel and aluminum.
Trump confirmed that a 25% tariff on foreign-made automobiles would go into effect. Photo: Frederic J. Brown/Agence France-Presse/Getty Images
Trump’s rationale is that tariffs will resuscitate U.S. manufacturing, cut the U.S. trade deficit and help reduce the national debt. Detractors say the tariffs could upend global trade and lead to higher inflation. Here’s what to know about his latest announcement:
What tariffs did Trump impose?
All U.S. imports will be subject to a 10% tariff, effective April 5. Some nations, however, will be hit with higher tariff rates that start April 9. For example, a 34% duty will apply to China, 20% for Europe and 24% for Japan.
Trump called the latter a “discounted reciprocal tariff,” explaining that the U.S. will be charging half the tariff rate that many nations impose on U.S. products.
The White House posted more country-specific tariff rates on one of its X accounts.
A new 34% tariff on China will add to previous duties, such as the 20% tariff Trump imposed over fentanyl. The base tariff rate on Chinese imports will be 54%, before adding tariffs imposed during Joe Biden’s presidency or Trump’s first term.
Trump had flagged over the weekend that he might target almost all of America’s trading partners, but the combination of a universal tariff plus country-specific tariffs was a surprise.
Also in his speech Wednesday, Trump confirmed that a 25% tariff on foreign-made automobiles would go into effect on Thursday, April 3.
What are U.S. tariffs and who pays them?
Tariffs are import duties on goods coming into the U.S., so American companies and other businesses buying directly from foreign suppliers will pick up the initial tab. Who bears the ultimate burden evolves, however, as businesses in the supply chain factor in new prices and their own demand.
Importers wanting to limit the hit from tariffs can raise their prices, effectively passing along the tariff burden to American consumers and other businesses. But pain can be felt in the other direction too as American importers may decrease orders for newly tariffed imports that they can no longer afford.
What sorts of goods and countries will be affected?
Firms will have to pay additional 10% tariffs on all items they import to the U.S., from small, everyday items like cereal from Mexico, to large, expensive goods like Volkswagen cars from Germany.
Since the duties vary by country, some goods will be affected much more than others.
Vietnam, Sri Lanka and Laos will face some of the highest “reciprocal tariffs” of 46%, 44% and 48%, respectively. China, one the U.S.’s largest trading partners, will face an additional tariff rate of 34%.
Why is Trump using tariffs?
Trump says tariffs will help protect American businesses, move manufacturing to the U.S. and create jobs for American workers. He has also argued that tariffs would help narrow the U.S. trade deficit—the gap between how much the country imports and exports.
Many economists have been critical of Trump’s use of tariffs, warning that they are too blunt a tool for protecting the U.S. economy and addressing trade imbalances. They also argue that tariffs could raise prices on a host of goods for American consumers and businesses.
Trump has also turned to tariffs to extract political concessions from U.S. trading partners. After his threats to impose tariffs on Canada and Mexico earlier this year, both countries pledged to step up border-control efforts to curb migration and illegal drug flow into the U.S. The idea of tariffs has resonated with swaths of Trump’s political base.
How might tariffs affect American consumers and businesses?
Trump’s latest tariff announcement sent U.S. stock futures lower, with some investors worried about the prospect of slower growth and higher inflation. Prior to Wednesday, there had already been fears that more tariffs would help push the American economy into a recession.
The announcement gives some clarity to businesses, including those that rely on imported goods, although the broad and complex nature of the new tariff regime will take firms time to figure out.
Many economists have been adamant that tariffs will push up prices for American consumers, as firms pass along some of the additional costs. BlueBay Asset Management firm, a unit of RBC Global Asset Management, estimated that the new tariffs will push U.S. inflation up 1%. It said economic growth will likely slow to 1.5% but that the U.S. probably wouldn’t fall into recession.
Even before Trump’s tariff announcement, American families had already started to pull back spending. Sales have started to soften for airlines and convenience stores.
Automakers and parts manufacturers have said they were likely to pass some of the tariff costs on to consumers. Morgan Stanley estimates that, on average, vehicle prices could rise 11% to 12% to offset duties.
This explanatory article may be periodically updated.
Write to Chao Deng at chao.deng@wsj.com
Corrections & AmplificationsSome nations will be hit with tariffs higher than the 10% across-the-board rate that President Trump announced Wednesday. An earlier version of this article incorrectly said that further duties will apply on some nations’ goods after the 10%. (Corrected on April 2)
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