Americans hold all sorts of views on tariffs. Some are opposed on free-market grounds. Others are in favor for reasons of national security or to bring back American manufacturing. Those debates are part of a normal democratic process. But President Donald Trump’s first weeks in office have shown that a principled discussion over tariff policy is simply not on the agenda, because the administration’s tariff policy is nonsense.

What we have is chaos. One U.S. uncertainty index of economic policy, which goes back to 1985, has been higher at only one point in the past 40 years: when the coronavirus pandemic began. That, of course, was a global phenomenon that the United States could do little to avoid. What’s going on now, by contrast, is entirely self-inflicted.

[Read: Trump’s most inexplicable decision yet]

Chaos is Trump’s calling card, but few could have expected how quickly the president would ricochet all over the place on the size, nature, and timing of—not to mention the justifications for—one of his signature policies. Before markets can adjust to one pronouncement, the world’s smartphones buzz in unison announcing that the wealthiest nation in the world, whose dollars hold up the global financial system, is hurtling in another direction once again.

Just consider this abridged timeline of the most significant twists and turns thus far:

November 25, 2024: Trump posted on Truth Social that on the first day of his new term, he would “sign all necessary documents to charge Mexico and Canada a 25 percent Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”

January 20, 2025: The first day of Trump’s term. No tariffs announced. Instead, Trump signed a memo directing the Commerce secretary to “investigate the causes of our country’s large and persistent annual trade deficits.”

January 26: After the Colombian president rejected U.S. military flights carrying deportees, Trump threatened 25 percent tariffs on all Colombian goods. Colombia threatened to respond but deescalated before the new taxes were put in place.

February 1: Tariffs against China, Mexico, and Canada are on.

February 3: Tariffs (for Mexico and Canada) are off.

February 4: Chinese tariffs go into effect, and the Chinese government announces retaliatory tariffs as well as export controls on key minerals.

February 11: Trump imposes a 25 percent tariff on steel and aluminum from all countries.

February 13: Trump threatens reciprocity to any country enacting tariff policies against the United States.

February 25: Trump raises the possibility of tariffs on copper.

February 27: Canada and Mexico tariffs maybe coming back on?

March 1: In the middle of a housing crisis, Trump raises the possibility of tariffs on lumber and timber.

March 4: Okay, yes, the Canada and Mexico tariffs are back on.

March 6: Just kidding, only for some stuff.

March 9: Tariffs “could go up,” Trump says on Fox News.

March 11: Ontario threatens 25 percent tariffs on electricity, causing Trump to promise a 50—yes, 50—percent tariff on Canadian aluminum and steel. By the end of the day, both countries backed off these threats.

March 12: A big day for tariffs. The 25 percent tax on all imports of steel and aluminum go into effect, and in retaliation, the European Union enacted duties on $28 billion worth of American goods, while Canada announced $21 billion in tariffs on American goods.

March 13: Not to be outdone, Trump threatened 200 percent tariffs on wine and other alcoholic beverages from Europe.

To recap, the United States is now in a trade war with its largest trading partner (Canada), its second-largest trading partner (the European Union), its third-largest trading partner (Mexico), and its fourth-largest trading partner (China).

It’s obvious to the point of cliché that businesses rely on regulatory—and fiscal—policy predictability in order to plan hiring, capital investments, and pricing strategies. And that means these past few weeks have been very rough. How can you begin a capital-intensive project if you have no idea what anything will cost? The chaos of the current trade policy is a strange parallel to the chaos that the Trump administration has unleashed on the federal government. One difference is evident, however: Although markets expected the new president to go on a deregulatory spree, they failed to take his affinity for tariffs seriously—or at least thought things would be executed a little more deliberately.  

An adviser to prominent energy companies told me that because “infrastructure projects require five to 10 years for permitting and construction,” some of her clients are pausing normal business decisions. “The current environment is so chaotic that it’s difficult to understand effects [on] permitting pathways, community approvals, and supply-chain costs.” She requested anonymity to speak freely about her clients’ struggles in the early days of the new Trump administration.

The big companies are in a better spot than small businesses. As we’ve already seen when the Big Three automakers were able to get direct relief from the tariffs, large companies that can provide Trump with good PR are able to get carve-outs from tariffs. But small businesses are less suited to absorbing shocks and are less likely to stay abreast of the day-to-day shifts of tariff policy. Many will be unable to game the system.

Uncertainty may also be paralyzing the labor markets. As my colleague Rogé Karma reported last month, job switching is at its lowest level in nearly a decade, even though the unemployment rate remains low. Part of what’s going on is that lack of confidence in the future breeds risk aversion: Employers are too rattled to make a bet on a new hire, and employees are too worried to leave a safe position.

[Read: A great way to get Americans to eat worse]

Some people—such as those who are worried that a backlash may invigorate American support for free markets—would like the public to believe that the country is in the throes of an “economic masterplan” and that the chaos of this moment will cohere into a reasonable strategy. Color me skeptical. For one, the president and his team have yet to articulate a consistent set of arguments for supporting his vision. Instead, the justifications for the tariff policies change as fast as the policies themselves.

If the tariffs are about rebalancing America’s trade and restoring its manufacturing greatness, then why are they being removed? If they’re about improving America’s negotiating position vis-à-vis bordering nations on issues such as fentanyl and immigration, then why are we putting them on Canada?

Is Trump doing this to make Americans richer? Is he doing this to balance the budget? To hit back at other countries for their unfair policies? For national-security reasons? To solve the child-care-cost crisis?

As the Yale Law professor Jerry Mashaw wrote for Fordham Law Review, “The authority of all law relies on a set of complex reasons for believing that it should be authoritative. Unjustifiable law demands reform, unjustifiable legal systems demand revolution.” That our elected officials are required to explain themselves, to give reasons for the actions they take, is a cornerstone of democratic accountability. Without clear reasons, it’s not just businesses that are at stake. It’s democratic governance.

But if sifting through Trump’s roiling sea of rationalizations is important for democratic purposes, it’s also personally significant. Every business, worker, and consumer in the country has a stake in figuring out the why and what of tariffs.

[Read: Don’t invite a recession in]

Ideologues across the political spectrum resent the American voter’s materialism. Environmentalists moan that the public refuses to bear higher energy costs in order to help mitigate the effects of climate change; animal-rights advocates worry that people won’t pay to ensure better treatment of livestock; farm advocates who already benefit from distortionary subsidies have even advocated for price floors. Now it’s the economic populists insisting that the public should be willing to pay higher prices on the path to restoring American greatness. On Truth Social, Trump posted an article with the headline “Shut Up About Egg Prices,” and Republicans are insisting that it’s worth it to “pay a little bit more” to support the president. But “America First” has always been a better slogan than organizing principle. When people have the option to pay for domestic goods at higher prices, they opt out, time and again.

The speed with which Republicans have gone from hammering Democrats about high grocery prices to justifying the inflationary effects of tariffs is remarkable. Yet Republicans are likely to learn the lesson that Democrats did last November: Before they are Republicans, Democrats, or even Americans, my countrymen are consumers first.

If you were setting out to design a trade policy that would harm the American economy while undermining political support for its leadership, you might come up with something like the tariffs that Donald Trump just imposed on Canada, China, and Mexico.

The new tariffs will raise prices for American consumers, weaken the American auto industry, and prompt severe retaliation from America’s top trading partners. With respect to China, a case can be made that tariffs would promote U.S. national security and domestic industry if they were targeted and well designed. But Trump’s blanket 20 percent tariff on all Chinese imports is neither. Meanwhile, the 25 percent tariffs on Canada and Mexico are utterly incomprehensible. There is no grand economic vision, geopolitical strategy, or even political logic behind them. International trade, like all areas of public policy, is a game of weighing costs versus benefits. Trump’s tariffs are the rare policy that might turn out to represent nothing but cost.

The most widespread and direct effect of the new tariffs will come in the form of inflation. Tariffs, which are literally a tax on imported goods, are often passed on to consumers in the form of higher prices, and Mexico, Canada, and China together account for more than 40 percent of U.S. imports. Yale’s Budget Lab estimates that the new tariffs will cost the average household anywhere from $1,600 to $2,000 a year.

[William J. Bernstein: No one wins a trade war]

Those higher costs will disproportionately affect the specific items that American consumers pay the most attention to. Survey after survey has shown that discontent with the broader economy in recent years has been driven more by high grocery prices than any other category of spending. Mexico is the largest exporter to the U.S. of fruits, vegetables, alcoholic beverages, and sugar, and Canada is the top exporter of meat, grains, baked goods, and cooking oils.

In theory, American farms could ramp up production to offset some of those higher prices. But that process could take months or years, and will be made all the more difficult by Trump’s deportation agenda—nearly half of the agricultural workforce is composed of undocumented immigrants—as well as the tariffs themselves, which will raise the costs of foreign fertilizer and farming equipment, on which domestic producers rely heavily.

The primary economic case for tariffs is that they shift demand toward domestically produced goods, which, in theory, should boost American industry. “I would just say this to people in Canada or Mexico: If they’re going to build car plants, the people that are doing them are much better off building here,” Trump told reporters at the White House when he announced the new tariffs yesterday afternoon.

That may come as a shock to, well, the American auto industry. The Big Three car companies have practically begged Trump not to go through with the tariffs. Canada and Mexico produce more than half of the individual car parts that American automakers import every year to assemble their vehicles in the U.S., including multiple components for which there exist literally no American suppliers. A recent report found that the new tariffs could raise the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. American automakers “should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American work force,” Matt Blunt, the president of the American Automotive Policy Council, which represents the Big Three automakers, said in a statement yesterday. And automakers aren’t alone here. A broad survey of U.S. manufacturers found that the industry was already experiencing higher costs and lower employment in anticipation of the new tariffs.

The full economic cost of the tariffs will hinge on how Mexico, Canada, and China respond. Last month, Beijing placed 10 to 15 percent tariffs on American energy and car exports; today it added chicken, wheat, corn, soybeans, dairy, and other food products to the list. Canada has also announced that it will apply 25 percent tariffs on $30 billion worth of American goods and extend them to $125 billion worth of goods in three weeks. (Mexico has yet to respond with measures of its own but has said it will do so soon.) These retaliatory measures will make it harder for American producers—the ostensible beneficiaries of tariffs—to sell their products abroad.

The official justification for the tariffs is to force Canada and Mexico to address the supposed “extraordinary threat” posed by illegal immigration and fentanyl trafficking at America’s borders. This is a transparent pretext to allow Trump to declare a “national emergency” that empowers him to impose tariffs immediately and unilaterally. Last year, the Canadian border was responsible for just 0.2 percent of the fentanyl seized by U.S. border authorities and 1.5 percent of illegal border crossings. Meanwhile, illegal immigration at the southern border has plummeted since early 2024 to near-record lows, leading Trump himself to declare, “The Invasion of our Country is OVER.” The amount of fentanyl seized at the southern border fell by about 20 percent last year, and Mexican President Claudia Sheinbaum has presided over a major anti-cartel crackdown since taking office in October.

[Rogé Karma: Reaganomics is on its last legs]

Usually, when elected officials implement foolish policies, they do so because they believe the political upside outweighs the substantive downside. What makes Trump’s tariffs so unusual is that the politics of them also appear to be terrible. Trump promised to impose major tariffs during the campaign, and so he might feel that failing to follow through would undermine his credibility. But voters consistently cited inflation, not trade, as the single-most important issue in the 2024 election, and Trump also made promises to lower prices. Now he seems to be going out of his way to break them.

A month ago, when Trump decided to postpone the Mexico and Canada tariffs just before they were set to take effect, I argued that they were never anything more than a hollow threat. I now know I was wrong—but I still don’t understand why a president would follow through on a policy likely to generate so much political backlash for so little gain.

The question now is how long the new restrictions will last. Perhaps a swift political backlash in response to rising prices will compel Trump to find a new pretext to declare victory and get rid of the tariffs promptly. Or perhaps the president will not only keep the tariffs in place, but open up new frontiers in his trade war. Trump has already announced plans to levy reciprocal tariffs on all countries that currently impose any kind of trade barriers on the U.S.—a policy that the Budget Lab estimates would cost American consumers up to $3,400 a year—as soon as April 2. Until yesterday, I would have said there’s no way that would happen. Now I’m not so sure.

President Trump announces 25% tariffs on steel.

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When it comes to tariffs for Canada and Mexico, America is ending the week pretty much as it started. Over the course of just a few days, Donald Trump—following up on a November promise—announced 25 percent tariffs on the country’s North American neighbors, caused a panic in the stock market, eked out minor concessions from foreign leaders, and called the whole thing off (for 30 days, at least). But the residue of this week’s blink-and-you-missed-it trade war will stick.

The consensus among economists is that the now-paused tariffs on Canada and Mexico would have caused significant, perhaps even immediate, cost hikes and inflation for Americans. Tariffs on Mexico could have raised produce prices within days, because about a third of America’s fresh fruits and vegetables are imported from Mexico, Ernie Tedeschi, the director of economics at Yale’s Budget Lab, told me in an email. But “uncertainty about tariffs poses a strong risk of fueling inflation, even if tariffs don’t end up going into effect,” he argued. Tedeschi noted that “one of the cornerstone findings of economics over the past 50 years is the importance of expectations” when it comes to inflation. Consumers, nervous about inflation, may change their behavior—shifting their spending, trying to find higher-paying jobs, or asking for more raises—which can ultimately push up prices in what Tedeschi calls a “self-fulfilling prophecy.”

The drama of recent days may also make foreign companies balk at the idea of entering the American market. During Trump’s first term, domestic industrial production decreased after tariffs were imposed. Although Felix Tintelnot, an economics professor at Duke, was not as confident as Tedeschi is about the possibility of unimposed tariffs driving inflation, he suggested that the threats could have ripple effects on American business: “Uncertainty by itself is discouraging to investments that incur big onetime costs,” he told me. In sectors such as the auto industry, whose continental supply chains rely on border crossing, companies might avoid new domestic projects until all threats of a trade war are gone (which, given the persistence of Trump’s threats, may be never). That lack of investment could affect quality and availability, translating to higher costs down the line for American buyers. Some carmakers and manufacturers are already rethinking their operations, just in case.

And the 10 percent tariffs on China (although far smaller than the 60 percent Trump threatened during his campaign) are not nothing, either. These will hit an estimated $450 billion of imports—for context, last year, the United States imported about $4 trillion in foreign goods—and China has already hit back with new tariffs of its own. Yale’s Budget Lab found that the current China tariffs will raise overall average prices by 0.1 to 0.2 percent. Tariffs, Tedeschi added, are regressive, meaning they hurt lower-earning households more than high-income ones.

Even the most attentive companies and shoppers might have trouble anticipating how Trump will handle future tariffs. Last month, he threatened and then dropped a tariff on Colombia; this week, he hinted at a similar threat against the European Union. There is a case to be made that Trump was never serious about tariffs at all—they were merely a way for him to appear tough on trade and flex his power on the international stage. And although many of the concessions that Mexico and Canada offered were either symbolic or had been in the works before the tariff threats, Trump managed to appear like the winner to some of his supporters.

Still, the longest-lasting damage of the week in trade wars may be the solidification of America’s reputation as a fickle ally. As my colleague David Frum wrote on Wednesday, the whole episode leaves the world with the lesson that “countries such as Canada, Mexico, and Denmark that commit to the United States risk their security and dignity in the age of Trump.”

Related:

The tariffs were never real. How Trump lost his trade war

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Round one of Donald Trump’s trade war has come to an inglorious end. The United States has suspended its threats against Canada and Mexico in return for border-enforcement measures that Canada and Mexico either were doing anyway or had done before without making much difference in the flow of drugs. What can Americans and others learn from this costly episode—other than not to repeat it? The following:

American tariffs hurt Americans.
President Donald Trump has always insisted that tariffs are paid by foreigners, that they put free money into the U.S. Treasury. Trump’s week-long tariff war confirmed that nobody else in the U.S. government or in American business believes him. The National Association of Home Builders published a letter to the president predicting that his tariffs would raise the cost of housing construction. Automobile stocks slumped because investors expected Trump’s tariffs to add thousands of dollars to the cost of each new vehicle. The senior Republican in the Senate publicly pleaded for potash to be exempted from tariffs so as not to increase fertilizer prices for his farm constituents, belying Trump’s claim that the higher prices would be paid by the exporters.

Tariffs beget retaliatory tariffs.
When Trump paused tariffs on Canada and Mexico, those countries halted their retaliatory actions. But China is proceeding with a range of tariffs against U.S. exports, reserving more retaliation for later. Americans are already paying for previous rounds of Trump trade actions against China. In the first Trump presidency, China cut its purchases of U.S. soybeans by 75 percent over a single year in 2018. Brazil in 2018 overtook the United States as the world’s largest soybean producer. During the campaign of 2024, the vice-presidential candidate J. D. Vance lamented that the United States had become a net importer of food. He omitted to mention that a reason for this status was precisely the harm done to U.S. farm exports by Trump’s first-term tariffs.

[Read: The tariffs were never real]

There’s not much point in negotiating trade treaties with the United States.
Trump renegotiated NAFTA during his first term, replacing it with his USMCA deal. Now, in his second term, he has reneged on that. Trump’s version of NAFTA offered a range of legal ways to terminate the agreement; he did not use any of them. He did not even pretend that Canada or Mexico had somehow defaulted on their end of the bargain. He simply ignored the deal and proceeded with his tariffs under a series of contradictory excuses.

Days earlier, Trump had issued a flurry of threats against Colombia, which also has a trade agreement with the United States. Again, Trump ignored all the legalities of the treaty; again, he used trade as a weapon to resolve nontrade disagreements.

Mexico and Canada have oriented their economies to the U.S. under first NAFTA and then USMCA. That probably will not alter even after Trump’s episode of blackmail. But other countries, farther away, may wonder whether there’s any point in signing deals with such a bad-faith partner as the United States has become.

“Friend-shoring” is a fiction.
As relations have worsened between the United States and China, many in the U.S. government have looked to friend-shoring as a way to keep most of the benefits of free trade. The idea is to redirect U.S. purchasing power away from hostile China and toward more trustworthy partners. The assumption behind the term is that those partners will gladly trust the United States.

Trump, Vice President Vance, and their allies in Congress have threatened unilateral military action against Mexico; Trump himself indulges in speculation about the forced annexation of Greenland from NATO ally Denmark and about absorbing Canada as a 51st state.

Maybe that’s all just a lot of ugly talk. But the president has made clear that so-called friendship with the United States does not ensure anything for America’s partners: not trade access, not the security of treaties, not even their territorial integrity and national independence.

Friend-shoring imagined extending trade with American allies. Trump-shoring means that today’s ally can become tomorrow’s enemy, without cause or even warning.

Instability is the future.
Trump has now allowed North American trade a 30-day reprieve. His supporters want to claim that he won big concessions worth all the tumult he caused. Such claims are transparently untrue. Canada had made its big proposals for more cooperation on border issues back in December. In any case, as former Prime Minister Stephen Harper has observed, illegal drugs are much more likely to flow north into Canada than south from Canada. Mexico’s offer to (once again) shift National Guard units to the border from other duties inside the country is generally recognized as symbolic. The Wall Street Journal’s editorial page correctly identified the embarrassing truth in a headline on Monday: “Trump Blinks on North American Tariffs.”

Trump is a uniquely emotionally needy president, prone to impulsive vindictiveness.

In 2019, Trump Chief of Staff Mick Mulvaney forbade Homeland Secretary Secretary Kirstjen Nielsen to discuss threats to the integrity of the 2020 election. Such discussions upset Trump, The New York Times reported, by reminding him of questions about Russian interference in the 2016 election. In mid-November 2020, Trump refused to hear or think more about the coronavirus pandemic even as fatalities spiked to their peak. An aide explained to The Washington Post that Trump was “just done with COVID … It just exceeded the amount of time he gave it.” For two weeks after the election of 2020, he forbade his administration to cooperate with the transition process and denied Joe Biden’s team access to information and the funds required by law.

[Read: A handbook for dealing with Trump threats]

As Trump confronts derision about his splendid little trade war of February 2025, will he lash out again? And how is any business of any size supposed to plan for the future when the president creates economic crises to act out his ravenous ego needs?

“America First” makes it safer not to be America’s ally.
In 2024, the U.S. ran a trade deficit with Canada of about $55 billion. That same year, it ran a deficit with Vietnam of about $123 billion, more than twice as much, and with Thailand of about $46 billion, only slightly less. Yet it was Canada, not Vietnam or Thailand, that Trump threatened with tariffs.

One difference: Canada is as a rule closely aligned with the United States. By geography, by history, by ideology, Canada has few geopolitical options. Vietnam and Thailand, however, have worked hard to balance their relationships with the two greatest powers, and hostile U.S. action against either could swing that country toward China, away from the United States.

A lesson of Trump’s trade war that all the world will hear: Countries such as Canada, Mexico, and Denmark that commit to the United States risk their security and dignity in the age of Trump. Countries such as Vietnam and Thailand that carefully navigate between the two great economic powers without making undue commitments maximize their security and their dignity.

To reward non-aligned countries and punish U.S.-aligned ones might seem a reckless, even a perverse, choice by a U.S. president. But that’s the president Americans have, and the choice he has made for them.