Tariffs in the second Trump administration

During his second term as President of the United States, Donald Trump enacted a series of steep tariffs affecting nearly all goods imported into the country. From January to April 2025, the overall average effective US tariff rate rose from 2.5% to an estimated 27%—the highest level in over a century. After changes and negotiations, the overall average effective tariff rate was 16.8% as of November 2025. US tariff revenue was $287 billion in 2025, a 192% increase from 2024.

Under Section 232 of the 1962 Trade Expansion Act, Trump raised steel, aluminum, and copper tariffs to 50%. He introduced a 25% tariff on imported cars from most countries and a 100% tariff on some pharmaceuticals. New tariffs on semiconductors and other sectors are under consideration.

Trump also claimed unprecedented tariff authority under the International Emergency Economic Powers Act (IEEPA). On April 2, 2025, he invoked the law to impose "reciprocal tariffs" on imports from all countries not subject to other sanctions. A universal 10% tariff took effect on April 5. Although plans for additional country-specific "reciprocal tariffs" were delayed in the wake of the 2025 stock market crash, they were implemented with changes on August 7. The de minimis exemption was eliminated effective August 29, 2025, under the IEEPA. Legal challenges to tariffs imposed under the IEEPA were consolidated into the case Learning Resources v. Trump; a decision by the Supreme Court is imminent.

The Trump administration argues that its tariffs will promote domestic manufacturing, protect national security, and substitute for federal income taxes. The administration views trade deficits as inherently harmful, a stance economists criticized as a flawed understanding of trade. Although Trump has said foreign countries pay his tariffs, US tariffs are fees paid by US importers of foreign goods. The tariffs sparked a trade war with Canada and Mexico and escalated the China–United States trade war.

Studies have shown that the tariffs have increased expenses and reduced earnings for companies and have increased costs for households. Jobs growth slowed significantly in 2025, and the promised growth in manufacturing jobs has not been realized. Corporate bankruptcies in the United States increased to the highest level since 2010. However, although many economists and economic research bodies predicted slower growth and even a possible recession due to the tariffs, U.S. GDP has continued to grow, which partially has been attributed to backtracking by Trump off of the initial high tariff rates.

Background

The 1990s and 2000s saw a dramatic expansion in global goods trade as improvements in communications and shipping technology made global outsourcing more feasible and trade deals reduced tariffs and other barriers to commerce. Although the aggregate gains to the United States were substantial, the benefits of globalization were unevenly distributed; high-skilled workers generally prospered, while Americans with fewer skills and less geographic mobility struggled to adapt to rapid economic change.

Although U.S. manufacturing employment had been declining for decades, job losses accelerated in the 2000s after the United States normalized trade relations with China. The surge in outsourcing, alongside advancements in automation, led to localized depressions in many manufacturing-dependent communities. Laid off manufacturing workers typically did not relocate or transition into new industries, even after their communities rebounded, and instead remained unemployed long term. Research indicates that these regions became more politically polarized and that their legislators increasingly supported protectionist policies.

During the 2000s, public opinion surveys and political rhetoric began to reflect growing skepticism toward international economic integration, a trend that intensified following the Great Financial Crisis. In 2008, Barack Obama blamed NAFTA for the loss of a million jobs and stated, "we can’t keep passing unfair trade deals like NAFTA that put special interests over workers’ interests."

According to Jeffry Frieden, 2016 "was the first time since the 1930s that both major parties had candidates for the presidential nomination who were openly hostile to economic integration, and that any major party had an actual nominee with similar views. The victory of Donald Trump in the 2016 presidential election marked the victory of an economic nationalism that had long been far from the mainstream of American politics." Trump’s embrace of restrictive trade policies and broad tariffs represented a sharp departure from the Republican Party’s general support for free trade over the preceding 70 years, and a partial return to the party’s protectionist orientation in the early 20th century.

First Trump administration

In 2018, Trump imposed tariffs on steel and aluminum imports. He also initiated the China–United States trade war, which subjected 60% of US-China trade to 20% tariffs. Most sources say that the trade war did not achieve its goals: instead, the U.S. trade deficit widened, growth slowed, manufacturing jobs did not return, and prices rose.

In May 2019, Trump used tariff threats of up to 25% on Mexico to negotiate an expansion of his "Remain in Mexico" policy and the deployment of Mexican soldiers to help control illegal immigration. The Mexican government, led by Andrés Manuel López Obrador, deployed nearly 15,000 troops to the Mexico–US border and 6,500 troops to the Guatemala–Mexico border.

In 2020, the US, Mexico and Canada renegotiated the North American Free Trade Agreement (NAFTA) as the US–Mexico–Canada Agreement (USMCA) and recommitted to 0% tariffs on most products traded between them. Five weeks after the USMCA went into effect, Trump used an exemption for national security concerns to implement a 10% tariff on Canadian aluminum after claiming it was flooding the US market. He withdrew the tariff a month later, three hours before the 29th Canadian Ministry planned to retaliate.

2024 presidential campaign

During his 2024 presidential campaign, Trump pledged to impose even larger tariffs than in his first term, including 60% on China, 100% on Mexico, and 20% on all other countries. He also proposed tariffs to penalize US companies that outsourced manufacturing, such as a 200% tariff on John Deere. He proposed using tariffs to achieve a wide range of goals, including preventing war, reducing trade deficits, improving border security, and subsidizing childcare.

In April 2025, Trump suggested tariff revenues could eventually replace income taxes, at least for those making less than $200,000 per year, although others estimated it would cover less than 25% of that cost and less if import volumes fell. The Tax Foundation deemed the idea "mathematically impossible".

On November 5, 2024, shortly after the 2024 United States presidential election, Trump acknowledged that tariffs might cause "some pain" for Americans but said, "it will all be worth the price that must be paid".

In December 2024, Trump appointed tariff hard liner Peter Navarro as his Senior Counselor for Trade and Manufacturing. Stephen Miran, another tariff hard liner, was appointed chair of the Council of Economic Advisers.

Legality

Trade law

The U.S. Constitution was written in part because of tariffs. The Tariff of 1789 was the first major piece of legislation passed in the United States, and signed into law by President George Washington. The Constitution has detailed provisions regarding tariffs, particularly the Import-Export Clause and the Taxing and Spending Clause, including prohibiting states from imposing tariffs. In Federalist No. 12, Alexander Hamilton made the argument that tariffs on imports would need to be the primary source of revenue for the new federal government and that the federal government could more effectively impose tariffs on imports than the states could separately.

Although the Constitution grants Congress the sole authority to levy taxes, including tariffs, Congress has passed laws allowing the President to impose tariffs for national security reasons unilaterally. In his second term, Trump added tariffs to steel, aluminum, and auto imports under Section 232 of the Trade Expansion Act (TEA), which allows the President to modify imports if the Secretary of Commerce conducts an investigation, holds public hearings, and determines that the imports threaten national security. Trump directed the USTR to initiate similar investigations to impose tariffs under Section 301 of the Trade Act of 1974.

Trump also invoked unprecedented powers under the National Emergencies Act (NEA) and the International Emergency Economic Powers Act (IEEPA) by declaring multiple "national emergencies" related to border security, energy, and trade deficits. Declaring these emergencies allowed Trump to enact tariffs quickly without following the complex procedures required by TEA or other trade statutes and did not require congressional approval. While the IEEPA had been used to enact economic sanctions, it had never before been used to enact tariffs. As he signed the orders, Trump stated that declaring an emergency "means you can do whatever you have to do to get out of that problem."

To terminate a national emergency under the NEA, a member of Congress may file a privileged resolution requiring their chamber to vote on the topic within 15 days. Democratic representatives introduced resolutions to end several of Trump's national emergencies justifying tariffs, but these efforts were blocked by the Republican congressional majority. JD Vance cast a tie-breaking vote in the Senate to uphold the emergency underpinning the "Liberation Day" tariffs.

Legal challenges

Several countries initiated disputes regarding Trump's tariffs with the World Trade Organization (WTO), a regulator of international trade. However, the United States has de facto paralyzed the WTO since 2019 by blocking new appointments to its Appellate Body. Without a functioning Appellate Body, no final rulings can be made. On March 4, 2025, the US notified the WTO that it would suspend contributions to its budget indefinitely. The US was set to provide about 11% of the WTO's $232 million 2024 budget, a fee based on the country's share of global trade.

At least seven cases were filed in American federal courts challenging Trump's authority to impose tariffs under IEEPA. Central to each case is the argument that the imposition of tariffs, in the absence of clear congressional authorization, may constitute an overextension of executive power into areas that are traditionally reserved for the legislative branch. Several complaints invoke the nondelegation doctrine, asserting that the IEEPA, as applied, grants the executive branch an excessively broad scope of discretion. In addition to constitutional claims, the cases highlight significant economic consequences for states, businesses, and individuals, emphasizing the potential for such executive action to set a precedent for expansive policymaking beyond the intended purpose of emergency economic legislation.

Supreme Court

On May 28, 2025, the United States Court of International Trade (CIT) issued a summary judgement for V.O.S. Selections, Inc. v. United States and Oregon v. Department of Homeland Security and ruled Trump had exceeded his authority under the IEEPA. The CIT found the IEEPA tariffs "illegal because the triggering emergency (fentanyl trafficking and trade deficits) bore no rational connection to the trade measures imposed." In Learning Resources v. Trump, a Washington D.C. district court went further by holding that the IEEPA does not authorize tariffs at all. The United States Court of Appeals for the Federal Circuit upheld the CIT’s decision on August 29, 2025. The rulings were stayed pending appeal, allowing the tariffs to remain in effect.

The Supreme Court consolidated V.O.S. Selections and Learning Resources into a single case and heard oral arguments in November 2025. A decision is expected in 2026.

Key events and negotiations

January–March 2025

Trump was inaugurated for a second term on January 20. In his inaugural address, he pledged to "immediately begin the overhaul of our trade system to protect American workers and families."

On February 1, he declared several "national emergencies" regarding fentanyl trafficking and invoked the IEEPA to impose 25% tariffs on most goods from Mexico and Canada and 10% on goods from China. Tariffs on USMCA-compliant Mexican and Canadian goods were quickly suspended, but the "fentanyl tariff" on Chinese goods was raised to 20% on March 4.

On February 13, Trump announced plans to impose "reciprocal tariffs" on all countries with trade barriers against the US in April, prompting a wave of diplomatic outreach. Analysts and foreign governments expressed confusion over the administration's tariff strategies and openness to negotiation. Canada alleged that tariffs on its exports were intended to damage its economy and pressure annexation into the US. A Japanese trade official commented, "No matter who I talk to in the US administration, none of them knows what Trump is thinking. We don't even know what Trump wants to negotiate on." When Vietnam offered to eliminate all tariffs on American goods, economic advisor Peter Navarro dismissed the proposal. "This is not a negotiation," he said. "This is a national emergency based on a trade deficit that's gotten out of control."

On March 12, the administration imposed 25% tariffs on imported steel and aluminum products. First-quarter US GDP fell -.05%, but investors attributed the decline to a rush to import goods before tariffs took effect rather than to underlying weakness.

April–June 2025

On April 2, a day he called "Liberation Day", Trump declared a national emergency regarding the national trade deficit and announced "reciprocal tariffs" on all countries not subject to other sanctions. A minimum 10% tariff on almost all US imports took effect on April 5.

Panic induced by the announcement led to the 2025 stock market crash and new country-specific tariffs, planned for April 9, were paused for 90 days. However, after a retaliatory spiral, US tariffs on Chinese goods rose to 145% while Chinese tariffs on US goods rose to 125%. Steel and aluminum tariffs, a 25% tariff on automobiles imposed April 3, and other sector-specific duties also remained. Politico estimated that despite the 90 day pause, the remaining tariffs brought the average applied US tariff rate to 27%–the highest level in over a century.

CEOs of major US retailers warned Trump that the trade war with China would lead to visible price increases and product shortages by mid-May. The first cargo ships carrying Chinese goods tariffed at 145% arrived on May 6 with shipments cut in half. Trump reportedly pivoted his focus toward negotiation, sidelining Navarro and promoting Scott Bessent as his lead economic advisor.

By the end of June, the US had only signed a deal with the UK and a 90-day temporary deal with China. Under terms expiring November 9, as extended, China lowered tariffs on US goods to 10% and resumed exports of rare-earth elements, while the US lowered its tariff on Chinese goods to 30% (10% baseline + 20% fentanyl) and cut de minimis tariffs to 54%.

Trump walked back some of his tariffs that preceded the 2025 stock market crash, inspiring the phrase "Trump Always Chickens Out." The stock market subsequently reached new highs.

On June 4, Trump doubled the tariffs on steel and aluminum imports from 25% to 50%, and on June 12, he expanded them to include household appliances like refrigerators and dishwashers.

Second-quarter US GDP rebounded to 3.8% as imports normalized.

July–September 2025

On August 1, the Bureau of Labor Statistics released revised data showing a sharp slowdown in hiring, which some attributed to uncertainty caused by tariffs. Trump dismissed the data as "rigged" and fired the BLS Commissioner. Trump also called for the removal of Federal Reserve Chairman Jerome Powell, who had warned that tariffs could fuel inflation and resisted Trump's calls to cut the federal funds rate.

Country-specific "reciprocal" tariffs were postponed and changed several times before finally taking effect on August 7.

Trump notified foreign governments of adjustments to their "reciprocal" tariff rates in a series of letters. In one letter to Brazil, he threatened a 50% tariff while denouncing charges against Jair Bolsonaro, an ally facing trial for the 2022 Brazilian coup plot. On July 30, Trump declared Brazil’s actions a US "national emergency" and imposed an additional 40% tariff on top of a 10% "reciprocal" tariff.

On July 31, the US announced its first "secondary tariff," targeting India to penalize its trade with Russia. Beginning August 27, Indian exports faced an extra 25% tariff and a total baseline tariff of 50%.

October–December 2025

On October 1, new tariffs on large trucks, cabinets, and furniture took effect. A 100% tariff on "any branded or patented" pharmaceutical product also began, unless the companies were building manufacturing plants in the US.

On October 10, President Trump made new threats against China, including an additional 100% tariff starting November 1, in retaliation of China's broadening of export controls on rare earths. China announced retaliatory measures. However, after meeting with CCP General Secretary Xi Jinping in South Korea on October 30, Trump announced the US would cut the "fentanyl tariff" on Chinese goods entering the US from 20% to 10% in return for soybean and other farm product purchases and easier access to rare earths. The US also was expected to suspend an expansion of export controls. The trade deal lowered tariffs on Chinese goods to levels similar to or below those on other countries.

On November 14, Trump exempted a variety of agricultural products from "reciprocal" tariffs or Brazilian tariffs after acknowledging domestic demand and lack of production capacity. Newly exempted products included coffee, tea, tropical fruits, cocoa, spices, bananas, oranges, tomatoes, and beef.

By December 2025, half of all US imports had been exempted from Trump's IEEPA tariffs, although some of the remaining were targeted by section 232 tariffs.

January–March 2026

On January 17, Trump threatened an additional 10% tariff on goods from 8 European countries unless they supported his purchase of Greenland. He said that the tariff would begin February 1, and rise to 25% on June 1 unless a deal was reached. It was unclear how Trump could enact such a law, particularly because 6 of the countries traded as part of the European Union trade bloc alongside other countries. On January 21, 2026, Trump said he wouldn't impose tariffs on several European nations after he reached the "framework of a future deal" on Greenland and the Arctic region with NATO Secretary-General Mark Rutte.

Section 232 tariffs

Section 232 of the Trade Expansion Act (TEA) allows the President to modify imports if the Secretary of Commerce conducts an investigation, holds public hearings, and determines that the imports threaten national security.

Steel and aluminum

On March 12, the US imposed 25% tariffs on all steel and aluminum imports, aiming to strengthen domestic production. On April 2, aluminum tariffs expanded to include empty aluminum drink cans and canned beer. The measures expanded Trump's first-term steel and aluminum tariffs by eliminating all exemptions and raising the aluminum tariff from 10% to 25%. Trump also mandated that steel be "melted and poured" and aluminum "smelted and cast" in the US to qualify for duty-free status to prevent tariff circumvention.

Tariffs on steel and aluminum imports were increased to 50% on June 4. The UK remained at 25% while it continued to negotiate a trade deal announced the previous month. On June 12, the White House announced steel tariffs would expand to include a range of major household appliances beginning on June 23. The tariffs expanded to include 407 additional products on August 19.

In 2023, the US imported 44% of its aluminum and 26% of its steel. Canada was its largest supplier of both, accounting for more than half of aluminum and two-thirds of primary aluminum imports. The US was the world's largest producer of aluminum through 2000 but accounted for less than 2% of the global supply by 2021, largely due to high electricity costs making it less competitive in the global market.

Copper

Trump ordered a probe into copper imports on February 25. On July 9, Trump announced a 50% tariff on copper imports would take effect on August 1. On July 30, 2025, Trump announced that the tariffs would not apply to cathode copper.

The U.S. imports nearly half of the copper it uses, with 60% of imports coming from Chile. Chilean state-owned miner Codelco, which sends roughly one-third of its copper exports to the US, was at first expected to lose significant revenue.

Automobiles and auto parts

In January 2025, Trump announced broad tariffs on Canada and Mexico, threatening the highly integrated North American auto supply chain. Due to decades of free trade agreements including USMCA, factories in the US, Canada, and Mexico are accustomed to shipping auto parts back and forth multiple times during the manufacturing process. The three largest US automakers lobbied for exemptions, warning the tariffs would hurt American companies more than foreign competitors. Trump agreed to delay tariffs on USMCA-compliant vehicles. Non-USMCA compliant brands manufacturing in Canada or Mexico, such as BMW, were affected starting March 4.

On April 3, 2025, when Trump imposed a new 25% tariff on all imported cars, including those from Mexico and Canada. Economist Arthur Laffer estimated car prices would increase by $4,711, compared to $2,765 if the USMCA exemption remained available.

While the 25% tariff extended to auto parts on May 3, 2025, Trump exempted parts made in Mexico or Canada that were compliant with the USMCA. On April 29, 2025, he exempted carmakers that pay a 25% on imported cars from paying other tariffs, such as those on steel and aluminum, and provided a rebate on a proportion of tariffs paid for the next two years. By the end of 2026, he had also reduced auto part tariffs to 10% for UK and 15% for Japan, South Korea, and EU through negotiations.

Solar panels from Southeast Asian countries

During his administration, President Joe Biden announced preliminary tariffs of 21.31% to 271.2% on Chinese solar panel makers with factories in Malaysia, Cambodia, Vietnam, and Thailand to support American manufacturers complaining of dumping. The Biden administration raised the alarm over China's high investments in factory capacity for clean energy goods. In April 2025, the Commerce Department finalized plans with the lowest tariff at 41%. Products from Cambodia faced duties of 3,521% because its producers did not cooperate with the US investigation.

Lumber and furniture

On September 29, Trump announced 10% tariffs on imports of softwood timber and lumber. He also announced 25% tariffs on kitchen cabinets, bathroom vanities, and upholstered furniture effective October 14.

In September 2025, Trump announced tariffs on large trucks, kitchen cabinets, bathroom vanities, and upholstered furniture, to begin on October 1.

Pharmaceuticals

On April 1, 2025, the United States Department of Commerce initiated a Section 232 investigation into pharmaceuticals, including "both finished generic and non-generic drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients and key starting materials, and derivative products of those items."

In September 2025, Trump announced a 100% tariff on "any branded or patented" pharmaceutical product, unless the companies were "breaking ground" or had "under construction" pharmaceutical manufacturing plants in the US. The tariff was expected to have limited impact because most large drug manufacturers already had or were building American facilities. The tariff took effect on October 1, 2025.

On December 1, 2025, the UK secured a 0% tariff on its pharmaceutical and medical technology exports in exchange for a commitment to invest more money into the US. The country also pledged to spend around 25% more in new and effective treatments, the first major increase in over two decades.

Additional proposals

Semiconductors

On April 1, the Department of Commerce initiated a Section 232 investigation into ""imports of semiconductors and semiconductor manufacturing equipment."

On August 6, Trump threatened to impose tariffs of "approximately 100% on chips and semiconductors", but would exempt companies that were building or that had committed to build in the US. Trump referenced Apple Inc., which had committed to invest $100 billion over four years into US manufacturing, as a possible exclusion.

Films

On September 29, 2025, Trump threatened to impose a 100% tariff on films made outside of the US; however, no details were provided and the tariff was never implemented. Trump justified the tariffs by saying that US film production has increasingly moved to lower-cost locations overseas, resulting in job losses for American industry workers and that US film industry was dying a "very fast death" due to incentives that other countries offered to draw American filmmakers. He described these incentives as a "national security threat" and the films as "propaganda."

Country-specific tariffs implemented under IEEPA

Click at right to show/hide "List of reciprocal tariffs by country"

"Reciprocal" tariff rates Region As of August 1, 2025 As of April 9, 2025 Afghanistan 15% 10% Algeria 30% 30% Angola 15% 32% Bangladesh 20% 37% Bolivia 15% 10% Bosnia and Herzegovina 30% 35% Botswana 15% 37% Brazil 10% 10% Brunei 25% 24% Cambodia 19% 49% Cameroon 15% 11% Chad 15% 13% China 10% 34% DRC 15% 11% Ecuador 15% 10% Equatorial Guinea 15% 13% European Union 15% 20% Falkland Islands (UK) 10% 41% Fiji 15% 32% Guyana 15% 38% Iceland 15% 10% India 25% 26% Indonesia 19% 32% Iraq 35% 39% Israel 15% 17% Ivory Coast 10% 21% Japan 15% 24% Jordan 15% 20% Kazakhstan 25% 27% Laos 40% 48% Lesotho 15% 50% Libya 30% 31% Liechtenstein 15% 37% Madagascar 15% 47% Malawi 15% 17% Malaysia 19% 24% Mauritius 15% 40% Moldova 25% 31% Mozambique 15% 16% Myanmar 40% 44% Namibia 15% 21% Nauru 15% 30% New Zealand 15% 10% Nicaragua 18% 18% Nigeria 15% 14% North Macedonia 15% 33% Norway 15% 15% Pakistan 19% 29% Papua New Guinea 15% 10% Philippines 19% 17% Serbia 35% 37% South Africa 30% 30% South Korea 15% 25% Sri Lanka 20% 44%  Switzerland 39% 31% Syria 41% 41% Taiwan 20% 32% Thailand 19% 36% Tunisia 25% 28% Turkey 15% 10% Uganda 15% 10% United Kingdom 10% 10% Vanuatu 15% 22% Venezuela 15% 15% Vietnam 20% 46% Zambia 15% 17% Zimbabwe 15% 18% All other non-exempt countries 10% 10%

On February 13, 2025, Trump directed his staff to research both monetary and non-monetary trade barriers imposed by foreign countries against US exports and to develop custom "reciprocal tariffs" to counter and penalize each one. He instructed them to consider factors such as existing tariffs, exchange rates, and trade balances in their analysis. Trump announced that he would unveil his plan on April 2, 2025, a date he referred to as "Liberation Day".

On April 2, 2025, Trump declared a national emergency to address what he described as a "large and persistent US trade deficit" and invoked the IEEPA to impose a 10% minimum "reciprocal tariff" on nearly all other countries, effective April 5, 2025. He also announced higher "reciprocal tariffs" for 57 countries and territories that would begin April 9. The Office of the United States Trade Representative (USTR) said the "reciprocal tariffs" aimed to "drive bilateral trade deficits to zero". However, even countries with which the US ran a trade surplus, such as Australia, received a tariff of 10%.

Reactions

Federal Reserve chairman Jerome Powell described the tariffs, and their likely economic impact, as "significantly larger than expected." Zanny Minton Beddoes, editor-in-chief of The Economist, called the announcement "the biggest trade policy shock" in history.

Formula

The administration's formula for calculating trade barriers simplified to dividing a nation's bilateral trade deficit with the US by the value of its exports to the US. The "reciprocal" tariff rate applied by the US was half of that result. Economic experts criticized this formula for being overly simplistic with little relation to trade barriers, with The Economist describing it as "almost as random as taxing you on the number of vowels in your name." Economists cited by the USTR said the White House had misinterpreted and incorrectly applied their research. Anson Soderbery, whose work was cited, said his research was meant to discourage exactly the types of policies the White House was implementing.

Excluded goods

Tariffs on certain goods were excluded. These included all articles subject to 50 USC 1702(b), such as books and other informational materials, goods separately impacted by Section 232 tariffs, products from Mexico and Canada compliant with USMCA, except for goods targeted by Section 232 tariffs, imports from countries subject to Column 2 of the HTSUS, which at the time were Cuba, North Korea, Russia, and Belarus. Smartphones, computers and various electronic parts were exempted on April 11. Various agricultural products, including coffee, tea, fruits and beef, were exempted on November 14, 2025.

Market crash and tariff pause

The "reciprocal" tariff announcement led to a global market crash. The S&P 500 Index fell over 274 points or 4.88%, the second largest daily point loss ever, and the Nasdaq Composite fell over 1,050 points or 5.97%, the largest point loss in its history. Market volatility continued as the 10% base tariff took effect and China began to retaliate. The bond market also began selling off in a scenario called bond vigilantism.

On the morning of April 9, the prices of U.S. assets including equities, the US dollar, and bonds declined significantly. That afternoon, Trump announced on Truth Social that "reciprocal" tariffs above 10%, which had gone into effect that morning, would be paused for 90 days for all countries except China. China's minimum tariff rate was increased to 145%, while imports from all other countries were sustained at the 10% rate. Other global tariffs imposed under section 232 also remained in effect.

Trump told reporters, "I thought that people were jumping a little bit out of line ... You know, they were getting a little bit yippy, a little bit afraid". He said he had been watching the volatility in the bond market. Treasury Secretary Scott Bessent said the pause was meant to provide time for bespoke negotiations with each country.

Stocks surged within minutes of the pause announcement, with the S&P 500 rising 9.52% for its largest one-day gain since 2008. Markets continued to rise in after further policy rollbacks and the S&P 500 set a new all-time high on June 27, 2025. Analysts suggested Trump's threats had lost credibility and that Trump Always Chickens Out.

Negotiations with each country

The administration announced only three trade agreements by July. While negotiations took place, the tariffs were delayed again to August 7, when they finally took effect after modifications as a result of various trade agreements.

Closure of the de minimis exemption

Executive Order 14256

Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People's Republic of China as Applied to Low-Value Imports
Front page of Executive Order 14256
Type	Executive order
Number	14256
President	Donald Trump
Signed	April 2, 2025
Federal Register details
Federal Register document number	2025-06063
Publication date	April 7, 2025

The de minimis exemption waived tariffs on packages valued under $800 to reduce administrative burdens.

On Liberation Day, President Donald Trump also signed Executive Order 14256, which eliminated the de minimis exemption for imports from China and Hong Kong, and Executive Order 14257, which directed the United States to end the de minimis exemption globally once customs infrastructure was capable of doing so.

On July 4, 2025, Trump signed the One Big Beautiful Bill Act which included a provision to eliminate the de minimis exemption for all countries beginning on July 1, 2027. A few weeks later, Trump imposed an earlier deadline by signing Executive Order 14324. This order, which cited the IEEPA, ended the de minimis exemption globally on August 29, 2025.

Secondary tariffs

"Secondary tariffs" are a new trade policy introduced by the second Trump administration that resemble secondary sanctions. Unlike primary tariffs, which directly target a specific country, secondary tariffs penalize third-party countries or entities that trade with the targeted nation.

On March 24, following actions such as the March 2025 Venezuelan deportations, Trump signed an executive order imposing a 25% tariff on nations that purchase oil from Venezuela at the Secretary of State's discretion. He subsequently threatened secondary tariffs on countries purchasing Russian oil and on countries that trade with Iran.

On August 6, Trump ordered the first "secondary tariff" on India while citing authority under the IEEPA. Beginning September 17, 2025, Indian exports to the US faced an additional 25% tariff to penalize India for buying Russian oil.

Impacts

Though Trump claimed in December 2025 that "inflation has stopped", the consumer price index (CPI) began increasing in the months following his April 2025 announcement of tariffs.