Covering Trump’s proposed tariffs? Here are 4 things you need to know

Across-the-board tariffs, even against major U.S. trading partners, were a central theme of President Donald Trump’s 2024 election campaign. On Jan. 2o, after he was inaugurated for a second term, Trump announced he planned to impose 25% tariffs on goods from Canada and Mexico on Feb. 1.

On Jan. 21, he suggested a 10% tariff on goods from China, though he told Fox News on Jan. 23 that he would “rather not have to use it.” During his first term, Trump imposed tariffs on certain products, including washing machines, solar panels, aluminum and steel. The Biden administration kept many of those tariffs and increased others, including a 100% tariff on electric vehicles made in China.

Covering tariffs is complicated work. Trump has at various times suggested that the U.S. ought to use tariffs to raise revenue, retaliate against perceived unfair trade conditions and restrict imports in order to support domestic manufacturers.

To give journalists a strong foundation for covering tariffs in 2025 and beyond, The Journalist’s Resource co-hosted an hourlong webinar on Jan. 16 with Econofact, a nonpartisan, online publication out of The Fletcher School of Law and Diplomacy at Tufts University.

I co-moderated the panel discussion with Michael Klein, the William L. Clayton Professor of International Economic Affairs at Tufts and founder and executive editor of Econofact. The panelists were:

One big takeaway? Follow the exemptions — the firms and industries that gain exclusions from tariffs.

“Just a call to all journalists: There are going to be so many exemptions to all of this,” Goldmark said. “And I suspect every exemption is a story.”

Here are 4 things to know if you’re reporting on tariffs.

1. Know the history of U.S. tariffs.

Tariffs were a major revenue generator for the federal government from the country’s founding through the Civil War. (The federal income tax as we know it didn’t exist before 1913.)

The second law passed by the first U.S. Congress in 1789 was  “An Act for Laying a Duty on Goods, Wares and Merchandises Imported Into the United States,” which imposed tariffs on many imported goods, including a tax on tea from China, India and Europe that ranged from 6 to 12 cents per pound.

But since World War II, the federal government has imposed tariffs sparingly.

Irwin described the government pursuit of tariffs as historically having one of three motivations:

• Revenue. Alexander Hamilton, serving as the first Secretary of the Treasury in 1789, had revenue in mind, Irwin said. Hamilton needed to pay back war debt and fund defense forces. “That’s why Congress passed very quickly a tariff act,” Irwin said.

• Restriction. The second historical reason for tariffs – restriction — aimed to curtail demand of imports in order to boost goods production in the U.S. Restriction was the dominant motivator for tariffs from the end of the Civil War through the Great Depression, Irwin said.

• Reciprocity. Finally, reciprocity is when tariffs are used to negotiate favorable trade terms between countries using a carrot-or-stick approach, Irwin explained.

The stick approach would include threatening countries with retaliatory tariffs for a variety of reasons, such as refusing to renegotiate trade deals.

The U.S. has largely used the carrot approach since WWII. As Irwin explained, this is “when the U.S. says, ‘We’ll pursue a policy of reciprocity wherein we will reduce our tariffs on your goods if you reduce your tariffs on our goods.’ And you reach a trade agreement to reduce trade barriers, expand trade, which is presumably mutually beneficial.”

Irwin noted that journalists can provide historical context for their coverage of tariffs today by introducing audiences to key players from tariffs past. In addition to Hamilton, there’s U.S. Senator Henry Clay, the Virginian and Kentuckian who helped broker an agreement to reduce cotton tariffs in the early 1830s. Plantation owners in the South were worried that Great Britain, one of their main trading partners, would retaliate with their own tariffs. Clay’s brokerage of the deal “helped save the Union,” Irwin said.

Then there are Reed Smoot and Willis Hawley, the federal legislators behind the Smoot-Hawley Tariff Act of 1930, which imposed broad tariffs that exacerbated the Great Depression, and led to the period of reciprocity after World War II.

But many Americans were not enamored with the McKinley tariffs, largely because they raised prices. In 1894, the tariffs were reduced.

Trump has pushed tariffs for all three reasons — revenue, restriction and reciprocity, Irwin said. But “you can’t really achieve all three objectives at the same time,” he said.

2. Know who pays for tariffs in the short and long run.

When a tariff is imposed on a good or all goods from a particular country, typically the responsibility of paying the tariff falls to the business doing the importing. Companies in the U.S. pay tariffs when they import goods subject to them.

“Trump has suggested that the tariffs are paid by other countries,” Cox said. “But this really isn’t true.”

Because businesses typically exist to turn a profit, companies often try to pass on the cost of the tariff to consumers in the form of higher retail prices, Cox explained.

“This is pretty straightforward, but it has a lot of complicated ripple effects,” Cox said.

3. Know the price and employment effects of tariffs.

One effect is that domestic companies can charge more for the same products that importers have to pay tariffs on. If U.S. winter jacket manufacturers see their foreign competitors raise prices due to tariffs, they’re likely to raise prices too.

Consumers then face higher winter jacket prices from both domestic and foreign producers, Cox explained. And the tariff is only collected on imported goods, meaning there’s no additional government revenue when domestic producers raise prices. The outcome is overall higher prices for consumers, without extra government revenue from domestic producers.

“There’s this idea that by insulating industries from cheaper foreign competition, it’ll make U.S. producers more profitable,” Cox said. “I think there’s an awareness that this may cause some higher prices for consumers, but it has the benefit of potentially saving or creating jobs in protected industries. This is the kind of benefit that policymakers tend to see from imposing tariffs.”

And the same thing happens when tariffs are levied on inputs as when they are levied on finished goods. In the case of a hypothetical tariff on steel, U.S. steel manufacturers are likely to respond by raising their prices, to at least match the new, higher prices of imported steel.

There are also what are called “downstream” effects. If input prices rise, production becomes more expensive. To make up for that lost profit, those domestic manufacturers using foreign or domestic inputs are likely to raise prices, Cox said.

They can also fire workers. The number of workers in industries that use an input can be far greater than the number of workers in companies that produce the input. For steel, the number of jobs in industries that use steel outnumber the jobs in steel-producing industries by 80-to-1, Cox has found in her research. 

“So, what this means is that, for any single worker that imposing steel tariffs potentially protects, there are 80 workers in industries that are going to be potentially harmed by having higher steel costs,” she said.

4. Know that there are stories to be told about how businesses ‘contort themselves’ to get around tariffs.

While tariffs may seem, on the surface, to be a bit esoteric, the fact that they are placed on real, tangible items is helpful for reporters. That means stories can be written or produced that follow a product from importation to store shelves.

“The thing that is especially convenient for journalists is that every tariff connects to specific products that you can touch,” Goldmark said. “So, you can go and find the thing that is being subject to a tariff.”

Planet Money did this in 2015 with red-and-white Santa suits, which they used to explore the concept of “tariff engineering.” Because tariffs can be imposed on specific items or categories of items, so-called “festive articles” were not subject to tariffs. Regular clothes, however, did have a tariff and some of the nicer Santa suits were classified as clothing.

But put a Velcro closure on the suit, instead of a zipper, and it was more likely to be categorized as a festive article — not subject to a tariff. It’s one example of how producers might “engineer” their products so that importers can avoid tariffs, and they can boost their sales.

Tariff engineering is like tax avoidance. Both are legal and entail working within the system. Trade fraud is more akin to tax evasion. Both entail breaking the law get around paying tariffs or taxes.

This past August, Planet Money mixed true crime and tariff policy in “The Trade Fraud Detective,” which followed the saga of an executive of a company that produces hoses for power steering in automobiles as he tried to figure out how a foreign competitor was still offering lower prices after 25% tariffs went into place.

Following a lengthy investigation, the executive found the competitor appeared to still be manufacturing in China but was passing its product through companies in Thailand to make it seem like the hoses were being made there — to evade the tariff.

“It can be very blatant political corruption where people in Congress or in the administration favor certain groups for certain reasons, and they’re carve outs,” he said. “So, it becomes a really kind of messy situation that’s just rife for corruption and creating great economic inefficiencies.”

Bonus tip: If audiences are confused about the various aspects of tariff policy — about who pays them, for example — reach out to U.S. importers and ask them to explain. Are they the ones paying tariffs? Or are foreign companies paying them? Economists may offer expertise contrary to what the presidential administration is saying, but hearing it from importers, who can show the money for tariffs coming out of their bank accounts, is also powerful, Goldmark says.

Data resources

Links to government web pages sometimes change, move or disappear. When working with data, we recommend you download what you need to your local server or computer, if possible. Read our tipsheet on organizing your research.

Import Tariffs Overview and Resources, a compilation of data an information sources, from the U.S. International Trade Administration.

Harmonized Tariff Schedule, a searchable database of tariffs on all goods imported into the U.S.

Harmonized System Codes, the numerical codes associated with individual products. Knowing these codes is helpful, and often necessary, for finding information on exclusions and other governmental actions on specific goods or classes of goods.

Tariff exemptions on goods from China during the first Trump administration, from the Office of the U.S. Trade Representative.

Agricultural Tariff Tracker, a searchable database of agriculture-related tariffs, from the U.S. Department of Agriculture.

FTA Tariff Tool, a searchable database of tariffs on goods to and from countries with which the U.S. has a free trade agreement, from the U.S. International Trade Administration.

Regulations.gov, a clearinghouse for publicly available regulatory materials, including Federal Register notices. Tariff exclusions are published in the Federal Register.

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