I’ve never been one to cheer when the specter of a trade war looms. So, when Donald Trump vowed during the 2016 campaign to slap tariffs on countries that “cheat,” I couldn’t help but feel uneasy. “Cheating” is a charged word—especially when wielded by politicians like Trump. It suggests intentional wrongdoing. Nevertheless, he claimed that other nations manipulated trade rules to gain an unfair edge, pointing to trade deficits as evidence that the U.S. was being exploited. As is often the case with Trump, his accusations lacked concrete proof.
Smoot-Hawley Tariff Act
The last time the U.S. waded into a full-blown trade war was in 1930—perhaps you’ve heard the name Smoot-Hawley Tariff Act tossed around during news programs. This protectionist policy was enacted about seven months after the onset of the Great Depression, and, at least in theory, it was meant to shield American farmers and manufacturers from foreign competition.
By the time Congress passed the Act in June 1930, the U.S. was already buckling under immense economic strain. The stock market had crashed in 1929, triggering a financial meltdown; businesses were crumbling, unemployment was skyrocketing, and millions of Americans were left jobless. Farmers, in particular, were struggling as crop prices nosedived. A tariff war—just what the country needed, right?
A couple of crucial points deserve attention. Farmers were facing tough times, but imports weren’t the main culprit. Throughout the 1920s, agricultural overproduction had saturated the domestic market, driving prices down. While many farmers were in dire financial straits, their woes were more a result of excess supply than foreign competition. Meanwhile, manufacturers had a mixed reaction to the Act. Some industries, like textiles and steel, did feel the pressure from imports, but others thrived thanks to global trade. This raises the question: was an all-out trade war really necessary?
Consequences of the Smoot-Hawley Tariff Act
In the short term, the Act did offer some relief to certain U.S. industries and even boosted tariff revenues by roughly $100 million in its early years. But the long-term effects? Not so pretty. The Act triggered a steep decline in U.S. exports, plummeting from $5.24 billion in 1929 to just $1.68 billion in 1933—a whopping 68% drop—thanks to retaliatory tariffs from other nations. Hardly a success story—unless worsening the Great Depression counts as one.
The 2018 Trump Trade War
Let’s go back to those “cheaters” Trump talked about during his 2016 campaign. He frequently touted tariffs as a tool to boost the U.S. economy and protect American jobs, arguing that imposing them on countries like China and Mexico would revive domestic industries and shrink the trade deficit. Tariffs, he claimed, weren’t just a trade policy—they were economic retaliation. “There have to be consequences,” he declared. And as a bonus, he insisted, they’d make the U.S. wealthier!
Now, let’s think about that “wealthier” part. Who actually pays tariffs? Importers. That means Walmart, Target, grocery stores—pretty much anywhere you shop—end up covering the cost. And, of course, they pass those costs straight to you. Considering that the U.S. doesn’t grow large crops of coffee beans, bananas, or avocados, tariffs apply to many essentials you buy regularly. So, do you feel wealthier?
Trump’s 2018 trade dispute had two fronts: the U.S.-China trade war and the trade disputes with Canada and Mexico. Before things escalated, the average U.S. tariff on Chinese imports was around 3.1%, while China’s average tariff on U.S. goods was roughly 8%. At the peak of the trade war, the U.S. was imposing tariffs as high as 124.1% on Chinese imports, while China retaliated with tariffs reaching 125% on certain U.S. goods. In January 2020, the Phase One Trade Deal eased some tariffs—but left many in place.
The Consequences for Americans
So, how much extra cash did you find in your wallet as a result of all this economic turbulence? Studies estimate that by the end of 2018, the tariffs were costing American consumers approximately $1.4 billion per month. On an individual level, the average U.S. household was paying around $800 more per year due to higher prices on tariffed goods.
U.S. farmers bore the brunt of the trade war. Between mid-2018 and the end of 2019, U.S. agriculture lost over $27 billion in export revenue, with $25.7 billion tied to China alone. To cushion the blow, Trump allocated $28 billion in federal aid through the Market Facilitation Program—a bailout funded by your tax dollars. But despite the compensation, farm bankruptcies still climbed from 498 in 2018 to 595 in 2019.
Bottom line? The 2018 U.S.-China tariff battle came with a hefty price tag. Estimates suggest the total cost exceeded $100 billion when accounting for lost trade, higher tariffs, and government compensation programs. And that’s before we even consider the financial fallout from conflicts with Canada and Mexico, which tacked on another $50 billion.
That’s $150 billion. Imagine what we, as a country, could have done with that. And you, personally, would have had more money in your wallet—if Trump had spared us all the fun.
The 2025 Trump Trade War
But Trump is Trump—you know, the self-proclaimed “very stable genius”! And this time, he steered us into yet another trade war—with the whole world! Obviously, the lessons of history are meaningless to Trump. On April 2, he announced sweeping global tariffs, dubbing the day “Liberation Day” and citing unfair trade practices, national security concerns, and the need to reduce the U.S. trade deficit.
So far, Trump’s trade war has cost the U.S. hundreds of billions of dollars. While exact figures are hard to pin down, estimates suggest that tariff-related costs, lost trade revenue, and supply chain disruptions have collectively exceeded $260 billion.
A recent analysis from The Budget Lab at Yale examined the effects of all U.S. tariffs and foreign retaliation imposed in 2025 through May 12. According to their findings:
- The overall average effective tariff rate has climbed to 17.8%, the highest since 1934.
- Prices have risen 1.7% in the short run, translating to an average $2,800 loss per household in 2024 dollars (after consumption adjustments, the increase settles at 1.4%, or $2,300 per household).
- Shoe prices are expected to jump 15% in the short run, while apparel prices will rise 14%—eventually reaching 19% for shoes and 16% for apparel.
- The unemployment rate is projected to increase by the end of 2025, with an estimated 456,000 fewer jobs.
Conclusion
When trade wars erupt, the financial fallout hits hard—and fast. Everyday consumers feel the sting as prices climb across essentials, businesses scramble to absorb rising costs, and entire industries face mounting uncertainty. Families, already living on the edge, suddenly find themselves paying more at checkout, whether for groceries, clothing, electronics, or home goods. Companies struggle with supply chain disruptions and shrinking profit margins, leading many to pass the burden onto customers.
Major retailers and manufacturers aren’t immune. Walmart has already announced they will raise prices due to tariffs and warns that food, toys, and electronics will become even more expensive. Best Buy has signaled that higher tariffs will force price hikes. AutoZone plans to pass tariff costs directly to consumers. Stanley Black and Decker has raised prices on tools and outdoor products—and isn’t done yet. Procter & Gamble and Hasbro have both acknowledged they’ll have to do the same. This isn’t just a temporary fluctuation—it’s a ripple effect spreading across every aisle.
For the nation, the economic toll is staggering—billions of dollars in lost trade, increased tariffs, and government bailouts. Jobs disappear. Household budgets tighten. Business uncertainty grows. And all the while, the question lingers: Who actually wins in a trade war? Because from where most Americans stand, it sure doesn’t look like the answer is “us.”
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