How does Trump's tax decree affect the United States?

According to US media, the decrees, which took effect on March 4, impose a 25% tax on all imports from Canada and Mexico. For imports from China, the tax rate is between 10 and 20%.

Below are the opinions of experts shared with The Hill newspaper when assessing the impact of the new tax policy, issued by President Donald Trump, on the lives of American people.

Short-term market volatility

The Hill reported that the US stock market on March 3 plummeted after Mr. Trump declared that "there is no chance" for Mexico and Canada to avoid the 25% tariff.

On March 4, the stock market continued to be red when the Dow Jones Industrial Average fell 685 points, equivalent to a loss of 1.6%. Other indexes such as the S&P 500 and Nasdaq Composite also fell 1.3% and 0.4%, respectively.

US multinational investment bank Goldman Sachs estimates that a 25% tariff on goods from Canada and Mexico and a 10-20% tariff on goods originating from China would reduce S&P's earnings per share forecast by 2-3%.

Goods become more expensive

Many businesses and market forecasters have warned that Mr. Trump's tariffs on imports could lead to higher prices for consumer goods.

“The disruptions caused by tariffs could further exacerbate inflation, increase the cost of essential goods, and put financial strain on businesses and consumers,” said a statement issued by the US-based National Association of Wholesale Distributors (NAW) on March 4.

According to The Hill, the new tariffs will not directly increase the price of goods. Instead, businesses will have to deal with them in many other ways, including accepting increased costs.

Import tariffs hinder US economic activity

According to data from a number of research agencies, new tariffs on imports could reduce US gross domestic product (GDP).

The Yale Office of Budget Studies, a nonpartisan research center that assesses the fiscal and social impacts of U.S. government policies, predicts that real GDP growth in the United States will be 0.5% lower in 2025 and 0.1% lower in 2026 because of tariffs.

According to the same research lab, high tariffs on imported goods will have a stronger impact on low-income Americans.

The US Federal Reserve (FED) in Atlanta, Georgia, predicts that the US economy will be in recession in the first quarter of this year.

Political and cultural reactions

The Hill noted that the cost of living is one of the top issues attracting the attention of American voters in the 2024 presidential election. During the campaign, Mr. Trump raised the goal of reducing the cost of living for Americans and created a "wave" of anger about inflation aimed at the country's leaders at that time.

However, rising commodity prices due to tariffs and a “potential” slowdown in US economic performance could hurt Mr Trump’s economic appeal, which is the Republican’s biggest appeal to voters.

The new tariffs are also straining relations between the US and its neighbours. A recent YouGov poll found that 50% of Canadians view the US as “unfriendly or hostile”, while only 6% of Americans feel the same way about Canada.