United States President, Donald Trump. (Allison Robbert, Getty Images via AFP)
A range of economic indicators suggests that the executive orders imposing tariffs since Donald Trump took office are not showing any signs of achieving their intended goals of protecting American enterprises and stimulating economic growth. Instead, these policies have led to increased prices across most categories of goods.
From household appliances and everyday necessities at major retailers to steel materials for construction, price hikes have eroded consumer purchasing power. Middle- and lower-income Americans have suffered the most. The United States Bureau of Labour Statistics released new data on 12 March showing that in February, the CPI rose 2.8% year over year. The core CPI, which excludes food and energy costs, increased by 3.1%, well above the Federal Reserve’s 2% target. This indicates that inflation remains stubbornly high even after a sharp surge in January.
The persistent rise in prices has had a tangible effect on consumers, with spending falling by 0.2% in January, the steepest decline in nearly four years. As inflation remains high and economic growth slows, concerns about stagflation in the US are escalating. The Federal Reserve Bank of Atlanta projects that GDP may contract by 1.5% in the first quarter of 2025.
Trump’s tariff policies have sparked dissatisfaction among the US public and businesses alike. Warren Buffett, US investor, philanthropist and the chairperson and chief executive of Berkshire Hathaway, and Ford chief executive Jim Farley recently warned that these punitive tariffs could fuel inflation, harm consumers and “blow a hole” in the economy.
The international response has been equally severe. After US tariffs on steel and aluminum imports from the European Union took effect on 12 March, the EU announced a package of retaliatory measures, preparing to impose tariffs on €26 billion euros ($28.4 billion) worth of US exports. Canada followed suit, unveiling retaliatory tariffs on $20 billion worth of US goods and aligning with Europe in pushing back against tariffs on Canadian steel and aluminum.
There is a growing global consensus that protectionism is a dead end and that trade wars have no winners. Amid persistent inflation and sluggish economic activity, the US must reassess its trade policies and take meaningful steps to ease the burden on consumers and restore market confidence. If it fails to do so, the US economy risks slipping into recession.
Canada and China also slapped retaliatory tariffs on U.S. exports — actions poised to significantly affect the American agricultural industry. Canada, China and Mexico are the top three destinations for US farm exports. In 2024, the US exported $191 billion in agricultural and related products, nearly half of which went to these three markets. Any escalation of tariffs targeting these nations will put pressure on US farmers.
Trump’s higher tariffs on goods from Canada, Mexico, and China in an effort to reduce the US trade deficit has only intensified concerns among agricultural stakeholders. On one hand, retaliatory tariffs from these trading partners have sharply eroded the international competitiveness of US agricultural products. On the other hand, American farmers rely on imported farm equipment, fertilisers and pesticides, and the resulting increase in costs is adding further financial strain. About 855 of the potash fertiliSer is imported from Canada.
US agricultural organisations have sounded the alarm, warning that a trade war will primarily harm those who depend on international trade for their livelihoods, with US farmers being among the hardest hit. The Western Growers Association reported that Canadian retailers have recently cancelled orders from American suppliers.
Analysts note that US farmers are facing their third consecutive year of losses, particularly in key cash crops such as corn and soybeans. Rising production costs and declining export income have created a dual financial squeeze, leaving many struggling to stay afloat. As tariffs disrupt established trade relationships, US farm products are losing their competitive edge in global markets.
The drop in exports not only translates to lower farm incomes but could also lead to an oversupply of crops, pushing domestic prices down further.
Trump’s tariff strategy, rather than strengthening American industry, has inflicted tangible harm on consumers, businesses and farmers alike.
Striking a balance between trade protection and the long-term sustainability of the agricultural sector has become an urgent challenge. Without a significant course correction, the consequences of these misguided policies will continue to reverberate across the US economy.
Dr Imran Khalid is a freelance columnist on international affairs based in Karachi, Pakistan.