As of now, President Trump is gearing up to introduce a series of new, extensive tariffs on imports globally. Dubbed “Liberation Day” tariffs, these are projected to generate $6 trillion in federal revenue over a decade, with an additional trillion from automobile-related tariffs. However, the only thing being “liberated” here seems to be American consumers and taxpayers from more of their income. It’s time to brace yourself and your wallet.
If you’re doubtful whether Liberation Day is disadvantageous for most of us, recall that U.S. tariffs ultimately fall on U.S. consumers. The higher prices that result from these tariffs collected on foreign imports are passed on to us.
Additionally, the administration is already gearing up for economic damage control, planning emergency aid for U.S. farmers. This underscores an unspoken acknowledgment that the president’s trade policy, allegedly designed to bolster America, might provoke retaliations from our foreign trading partners, adversely impacting many American producers, notably those farmers who rely on global markets to distribute America’s agricultural abundance.
In a bid to mask the fallout from these policies, the administration is set to further strain the federal budget with bailout funds to mitigate the adverse effects on intended but unfortunate victims.
My assurance comes from prior experience. Remember during Trump’s initial tenure, the trade war with China led to retaliatory tariffs, causing a loss of $27 billion in agricultural exports for American farmers. In response, the government disbursed $23 billion in aid through USDA’s Commodity Credit Corp. One study shows that 92% of tariffs on Chinese goods were effectively paid by Americans through increased supermarket prices.
Prepare for a rerun as the administration intensifies tariffs, expanding them to include allies such as Canada, Europe, Mexico, and Japan.
Agriculture stands as one of the U.S.’s most export-reliant industries. When foreign partners retaliate, they set their sights on agricultural products like soybeans, corn, wheat, cotton, and pork due to their political and economic significance.
The National Corn Growers Association and American Soybean Association are already bracing for the impact. A member expressed to the New York Times the farmers’ need for “free and fair trade markets” over handouts.
Instead, farmers face uncertainty, dropping commodity prices, and the risk of exclusion from long-established markets as international buyers may pivot to competitors like Brazil, Argentina, and the EU. Even before any retaliation occurs, U.S. Secretary of Agriculture Brooke Rollins has promised farmers USDA support as the tariffs take effect. Sadly, the rest of us might not be as fortunate.
The tariffs from 2018 to 2020 already led to increased consumer prices on items like washing machines, vehicles, and electronics. Research from the Federal Reserve and universities confirmed that U.S. consumers bore nearly all the cost, while domestic industries saw minimal gains.
With a more extensive tariff scope now on the horizon, it’s the lower-income households, who spend larger chunks of their earnings on goods and have struggled with inflation, that might feel the brunt. This is a precarious situation for an economy already grappling with continually rising living costs.
Here’s where things could tip from bad to catastrophic: If the administration proceeds with these costly new tariffs, additional bailouts, and extends tax breaks without equivalent spending cuts, we could be staring at a massive fiscal shortfall.
Though Elon Musk and his Department of Government Efficiency are making spending cuts, and the administration is removing many costly regulations from the Biden era, it’s uncertain when, or if, the benefits of these changes will manifest. Many of these adjustments require congressional approval, and recently, Congress hasn’t been particularly proactive.
Trump’s gamble on tariffs isn’t just risky—it’s a losing strategy. Historical evidence shows that policies driven by economic nationalism result in more harm than good. While the long-term consequences remain to be seen, the immediate aftermath of Liberation Day is quite predictable—it’ll hurt our farmers, weigh down consumers, and stretch the budget deficit, all misleadingly cloaked under “America First.”
What the U.S. truly needs are open markets, responsible fiscal management, and stable trade alliances—not a repeat, or an escalation, of past trade conflicts.
Veronique de Rugy serves as a senior research fellow at the Mercatus Center at George Mason University. This article is a collaboration with Creators Syndicate.
