Trump’s Tariff Plan Promises Trade Shifts and Economic Challenges

As President-elect Donald Trump prepares to take office, his proposed tariffs on imports—particularly from China—are expected to significantly alter U.S. trade dynamics and economic growth, analysts predict.

Mary E. Lovely, senior fellow at the Peterson Institute for International Economics, anticipates a turbulent 2025 for trade, citing “uncertainty” as the defining theme. She highlighted potential disruptions in supply chains and increased costs for U.S. consumers and manufacturers during a recent media briefing at the Port of Los Angeles.

Decoupling from China
Lovely stressed that the U.S.-China trade relationship is increasingly strained, with tariffs from previous administrations already in place. Trump’s intention to escalate tariffs on imports could accelerate a “de-coupling” process, impacting trillions of dollars in global trade.

In 2023, the U.S. exported over $2 trillion in goods, according to Statista. However, Lovely warned that new tariffs, such as those under Section 301 of the Trade Act, could stifle trade flows. “Higher costs for intermediate goods will hurt manufacturers, and consumers may face a one percent price hike above inflation,” she noted.

Impact on Trade Partners and Supply Chains
Trump’s trade policies are expected to ripple beyond U.S.-China relations, with Mexico and Canada—America’s top trading partners—also bracing for potential renegotiations of the United States-Mexico-Canada Agreement (USMCA).

Gene Seroka, executive director of the Port of Los Angeles, noted shifts in manufacturing away from China to other parts of Asia. In Detroit, automakers and suppliers have started stockpiling inventory and preparing parallel supply chains to mitigate risks.

Economic and Job Market Fallout
While Trump’s tariff policies aim to bolster domestic manufacturing, analysts remain skeptical about their broader economic impact. Lovely pointed out that increased costs and restricted access to foreign markets could hinder competitiveness for U.S. manufacturers.

“Tariffs may create some jobs, but the net effect could be job losses in key manufacturing sectors,” Lovely said. “Higher production costs will make American goods less competitive globally, while consumers face reduced product choices and higher prices.”

Congressional Pushback Expected
Trump’s tariffs could face resistance from Congress, particularly in districts heavily reliant on international trade. Lovely emphasized the uncertainty surrounding long-term investments in manufacturing, with companies hesitant to commit resources amid unclear tariff policies.

A Measured Approach to Tariffs
Lovely anticipates a gradual rollout of tariffs, possibly in tranches starting in Q2 or Q3 of 2025. Electronics, including smartphones and laptops, could be among the first targets.

“Campaign rhetoric often gives way to measured policy actions,” she concluded, urging policymakers to carefully weigh the economic implications of sweeping tariff changes.