The 1-2-3s of Trump's Tariffs

Avocados, Oil, TVs, and Whiskey

President Donald Trump is rolling out a series of promised tariffs—import taxes aimed at reshaping global trade. And he’s already racking up a major victory.

On Tuesday, Israel announced it will drop all tariffs on U.S. imports.

The benefit will be felt by American agricultural exporters of products like tree nuts, soybean meal, and apples, which previously faced tariffs of 10-20% in Israel. The move will save U.S. exporters millions, and boost U.S. producers of those products, who will now have better market opportunities in Israel.

Reciprocal tariffs could have hit Israeli products hard, including diamonds, pharmaceuticals, and integrated circuits, impacting sale of foreign jewelry, medications, and electronics in the U.S.

Tariffs have deep roots in the U.S., dating back to the Tariff Act of 1789, one of the first laws passed by the new Congress, aimed at raising revenue for the federal government and protecting American industries. For much of the 19th century, tariffs were a primary source of federal income, often sparking debates over free trade versus protectionism. The Smoot-Hawley Tariff Act of 1930, which raised tariffs to record levels, is widely blamed for worsening the Great Depression by stifling global trade.

Simply put, a tariff is a government-imposed charge on imported goods, collected at the border as the products enter the country. And the media is full of reporters and commentators voicing various opinions and analyses on the Trump plans.

Yet polls consistently show many Americans don’t understand and cannot accurately describe tariffs.

This article will explore the practical aspects of Trump’s tariffs. Who really pays them? What are the best and worst case scenarios for impact to U.S. taxpayers? And how will the tariffs play out with real products from countries like Mexico, Canada, and beyond?

Read on for details.

Trump’s Pitch

President Trump has touted his tariffs as a game-changer for the U.S. economy. He argues they will protect American jobs, boost domestic manufacturing, and encourage consumers to buy U.S.-made products, all while saving taxpayers money.

Trump says tariffs first and foremost incentivize companies to bring production back to the U.S., bringing benefits in terms of jobs and revenue.

There are already examples that seem to bear that out. In response to President Trump’s tariffs, several companies have announced plans to shift production to the U.S. Nissan is expected to move some of its manufacturing from Mexico to American soil, as noted in a White House statement from March 2025. Similarly, Prepac, a Canadian furniture manufacturer, has decided to relocate its production to North Carolina, a move highlighted by the White House on March 21, 2025, likely to avoid the 25% tariff on Canadian goods.

The White House projects that a 25% tariff on foreign automobiles, slated to take effect April 3, could generate $100 billion in new revenue. That could pay for tax cuts or reduce the ballooning federal deficit, easing the burden on taxpayers.

By making imported goods pricier, tariffs aim to shift consumer preference toward American products, potentially revitalizing industries like steel and auto manufacturing. According to a study in the American Economic Review, Trump’s first term tariffs saw job gains of about 1,800 in steel and auto manufacturing. All told, in his first term, Trump imposed tariffs on $380 billion in imports, including 25% on steel and 10% on aluminum from countries like Canada and Mexico, as well as tariffs on Chinese goods.

He used these to negotiate, such as in 2019 when he threatened Mexico with tariffs to expand the “Remain in Mexico” policy, leading to Mexico deploying 15,000 troops to its border.

What’s the best case scenario, now?

If all $3.3 trillion of U.S. imports faced a 20% tariff, ING Think estimates that would raise $660 billion in revenue, which could supercharge domestic production and create a ripple effect of economic growth.

Trump also positions tariffs as a negotiation tool to secure better trade deals, pointing to Israel’s recent decision Tuesday to drop all tariffs on U.S. goods. That’s proof that his hardline stance can pressure allies into favorable agreements, potentially opening new markets for American exporters.

Tariffs vs. Taxes

A tariff is a tax imposed by a government on goods imported from another country, designed to protect domestic industries or pressure foreign nations on issues like trade imbalances or border security.

Unlike a general tax, which might apply to income or sales, a tariff specifically targets imported products, raising their cost to encourage buying local or to penalize other countries’ trade practices.

A “reciprocal tariff,” a term Trump has championed, means the U.S. matches the tariff rates that other countries impose on American goods. For example, if another country has already been charging a 10% tariff on U.S. exports, the U.S. would slap a 10% tariff on that country’s imports.

According to the White House, Trump is simply equalizing an unequal economic situation that’s existed for years, allowing foreign countries to take advantage of the U.S. at the expense of American businesses and taxpayers.

Who Pays the Tariff?

Economists say that tariffs are directly paid by the U.S. companies that are importing the foreign goods. Those companies may pass the cost onto consumers through higher prices, eat part or all of the increased costs, purchase goods from countries that aren’t tariffed, or purchase more American products.

A study from the Tax Foundation claims that Trump’s tariffs on Canada and Mexico could reduce U.S. GDP by 0.2% and cut 223,000 jobs, with after-tax incomes dropping by 0.6% on average, with a burden borne by Americans.

Real Examples

• Mexico: Avocados
  Mexico supplies over a quarter of the fresh fruits and vegetables in the U.S., including most avocados, according to NPR. Trump imposed a 25% tariff on most Mexican goods starting March 4 (though he later exempted goods compliant under the free trade United States-Mexico-Canada Agreement (USMCA) until April 2).

  • Before Tariff: A typical avocado might cost $1.50 at your grocery store.

  • After Tariff: The American importer, such a Mission Produce, pays a 25% tariff, adding $0.38 per avocado. To cover this, the importer might raise its prices, and the final grocery store could charge $1.88— assuming the full cost is passed on.

  • Impact: Guacamole could get pricier, and consumers might feel the pinch on other Mexican produce like tomatoes and berries. But Mission Produce CEO Steve Barnard has said the company would focus on sourcing from Peru and California to mitigate the impact, proving Trump’s point about encouraging purchase of non-tariffed U.S. products.

• Canada: Crude Oil
  Canada is a major supplier of crude oil to the U.S., with 4 million barrels per day fueling American refineries, according to Reuters. Trump has announced a 25% tariff on most Canadian imports, but a lower 10% tariff on energy products.

  • Before Tariff: A barrel of Canadian crude oil might cost $80.

  • After Tariff: A 10% tariff adds $8, increasing it to $88 per barrel. Refineries pass this cost down, potentially raising gasoline prices by a few cents per gallon.

  • Impact: The American Fuel & Petrochemical Manufacturers warned that this could mean higher energy costs for consumers, especially in the Midwest, where refineries rely heavily on Canadian oil. However, Trump argues that the U.S. can boost domestic crude oil production to offset the impact, and increased drilling in states like Texas and North Dakota could create jobs and keep energy prices stable.

• China: Flat-Screen TVs
  Trump raised tariffs on all Chinese imports to 20% on March 4. China is a major source of electronics like flat-screen TVs.

  • Before Tariff: A 55-inch TV might retail for $400.

  • After Tariff: A 20% tariff adds $80 to the importer’s cost. If fully passed on, the TV’s price could rise to $480.

  • Impact: With the holiday season behind us, consumers might delay big purchases, and retailers like Walmart could see thinner margins if they absorb some of the cost. The White House counters that the tariffs will encourage companies to manufacture electronics in the U.S., creating jobs and reducing reliance on China.

• European Union: Whiskey
  After Trump’s imposed a 25% tariffs on steel and aluminum imports on March 12, the EU planned a 50% tariff on U.S. whiskey, in retaliation. Trump then threatened a 200% tariff on European alcohol in retaliation for that.

  • Before Tariff Threat: A bottle of French cognac might cost $50.

  • After Tariff: A 200% tariff would add $100, pushing the price to $150.

  • Impact: Bars and restaurants might swap out European spirits for American ones, but consumers who prefer imported brands could face sticker shock. However, the EU delayed its planned 50% tariff on U.S. whiskey to mid-April after Trump threatened the 200% tariff.

Read Sharyl Attkisson’s five star bestseller: Follow the $cience: How Big Pharma Misleads, Obscures, and Prevails.