By Clayton Walters
Introduction
Picture a roaring arena, thousands of fans on their feet, and the unmistakable sound of cheers echoing through the air. It wasn’t just any hockey game—it was USA vs. Canada, a battle on ice that had more this time than just national pride at stake.[1] During the U.S. national anthem, Canadian boos could be heard even on live national television creating uproar amongst the U.S. players and fans.[2] The puck hadn’t even been in play for ten seconds before fists started flying, gloves were tossed aside, and three full-blown fights erupted in the opening moments. But beneath the aggression and the jeers lay something deeper—a rivalry that extended far beyond the rink.[3] This wasn’t just about hockey. This was about taxes.[4]
On February 1, 2025, President Trump engaged in an unprecedented tax policy that will forever invoke controversy and shake the United States’ role in historical international relations.[5] The International Emergency Economic Powers Act (IEEPA) (50 U.S.C. §§ 1701-1708) grants the President authority to regulate economic transactions in response to a national emergency that threatens U.S. national security, foreign policy, or economic stability.[6] However, no President has explicitly used IEEPA to impose tariffs—making President-elect Trump’s proposal a novel legal and constitutional issue.[7]President Trump signed an executive order on February 1st that would levy a 25% tariff on all imports from Mexico and Canada, with a reduced 10% tariff specifically on Canadian energy exports.[8] Additionally, a 10% tariff would be imposed on all imports from China.[9] The tariffs on China have become effective on February 4, 2025, while Canada and Mexico reached agreements to delay the tariffs until March 4, 2025.[10] On March 6, 2025 Trump postponed many of the tariffs imposed on Canada and Mexico, but still planned to impose ‘reciprocal’ tariffs start on April 2.[11]
On April 2, 2025, President Trump declared “Liberation Day”, announcing a 10% baseline tariff on all imports effective April 5.[12] Additionally, President Trump imposed higher “reciprocal” tariffs on 57 countries, with rates ranging from 11% to 50%, based on the administration’s assessment of unfair trade practices, effective April 9.[13] These unfair trade practices include trade imbalance, currency manipulation, giving state subsidies to steel, solar, and semiconductor industries that distort global markets, intellectual property theft, and importing goods at below market prices to undercut domestic prices.[14]
In response to these tariffs, China announced a plan to impose a 34% tariff on imports of all U.S. products on April 4.[15] On April 9 after the “reciprocal” tariffs went into effect, the Trump administration decided to suspend these higher rates for 90 days, while maintaining the recently imposed 10% levy on nearly all global imports.[16] China, however, was the exception, with the Trump administration raising tariffs on China to 125%.[17] This tariff even increased to 145% on April 10, with a 20% “fentanyl” tariffs being accounted for to address the threat of the influx of synthetic opioids, including fentanyl, flowing from China into the United States.[18]
This executive order has been unprecedented, as it is the first time a U.S. president has used the International Emergency Economic Powers Act (IEEPA) to impose tariffs.[19] This order has shown that this administration reflects a protectionist trade stance, moving away from multilateral agreements in favor of bilateral negotiations that use tariffs as a leveraging tool.[20] The purpose of such tariff policy has been to a) protect domestic industries, b) address trade imbalances, and c) respond to national security concerns such as border security. Despite the administration’s intentions behind the tariffs, they have unfortunately created negative consequences that include 1) a negative tax burden on consumers, 2) negative effects on domestic industries reliant on imported products, 3) and a strain on global trade relations that have been beneficial.
History of Tariffs
Tariffs at their core are taxes imposed by governments on imported goods and services.[21] The idea behind such a mechanism is that taxing imports will protect domestic industries, generate revenue, and can be used as political leverage in bilateral treaty negotiations. Throughout the 19th and 20th centuries, countries like the United States relied heavily on tariffs as the primary source of revenue, and as a consequence it’s imposition was at the forefront of policy debates.[22] One of the most notorious tariff policies include the Smoot-Hawley Tariff in 1930 (Smoot–Hawley Tariff Act, 57 Stat. 912 (1930)), that raised import duties during the Great Depression.[23] However, this tariff had unintended consequences, as other countries retaliated by imposing their own tariffs on American exports, which led to a decline in international trade.[24] Such retaliatory actions increased costs for consumers and contributed to global instability, which worsened economic conditions in an already economically struggling era known as the Great Depression.[25] As economist Milton Friedman argued:
“The Smoot-Hawley Tariff was a disaster. It was the most extreme protectionist act in U.S. history and contributed significantly to the depth and length of the Great Depression.”[26]
Following such economic downturn, the vast majority of international nations adopted a stance of anti-protectionist policies, vehemently favoring the entry into multilateral free trade agreements such as the World Trade Agreement (WTO) and North American Free Trade Agreement (NAFTA).[27] The only remotely protectionist policy adopted by a U.S. executive administration during the late 20th century was the International Emergency Economic Powers Act (IEEPA).[28] The IEEPA was passed under President Jimmy Carter in 1977, and it grants the president broad powers to regulate international trade and financial transactions during national emergencies.[29] President Carter utilized the act in 1979, to freeze Iranian assets in response to the Iran Hostage Crisis and many other presidents have invoked IEEPA for sanctions on countries like North Korea, Russia, and Iran.[30]
Motives Behind Recent Tariffs
During President Trump’s first administration, he initiated a trade war with China through executive authority that affected a wide range of products including technology and consumer goods.[31] Citing national security concerns under Section 232 of the Trade Expansion Act of 1962, President Trump announced a 25% tariff on steel imports and a 10% tariff on aluminum imports that was largely imposed on long enduring American allies such as the European Union, Canada, and Mexico.[32] Unlike IEEPA, Section 232 of the Trade Expansion Act requires the President to impose tariffs only after conducting the required investigations and reports.[33]
Further tariffs under Section 232 included 30 to 50% imposed on solar panels and washing machines to aid from foreign competition and a 5% import tariff on all Mexican goods to curb illegal immigration.[34] While the following administration under President Biden eliminated much of these tariffs, the opposing party candidate shockingly, and often unknowingly kept much of the Trump administration tariffs, specifically on approximately $350 billion worth of Chinese goods, from consumer electronics to industrial machinery.[35] Not only were these tariffs on Chinese imports preserved, the Biden administration expanded the tariffs in May 2024 to solar cells, lithium-ion electric vehicle batteries, steel, aluminum, electric vehicles and medical equipment imported from China.[36]
The reasons behind the Biden administration adopting much of the tariffs imposed by Trump during his first term include the fact that tariffs could act as a shield from unfair trade practices, Chinese subsidized competition, and low-cost loans specifically with vital markets for semiconductors, solar energy, and critical minerals.[37] Additionally certain imports, specifically in sectors such as technology and critical minerals, were seen as potential threats to national security, and the imposition of tariffs by the administration sought to reduce such dependence on foreign sources.[38] Such dependence on global supply chains was exposed during the COVID-19 pandemic, and maintaining Trump administration tariffs was part of a strategy to encourage supply chain diversification.[39] Lastly, from a more liberal perspective, tariffs aligned with an appeal to labor unions and concerns about the negative impact of globalization including environmental concerns.[40] Upon entering his second term, Trump vowed to continue his protectionist policies, dubbing himself as a “tariff man.”[41] However, despite these intentions around creating tariffs, there have undoubtedly been unforeseen pitfalls from their imposition that include an increased burden on the American consumer, a negative impact on domestic industries, retaliatory tariffs, and economic uncertainty.[42]
Pitfalls of Tariffs
One such pitfall of these tariffs include inflation that have resulted in higher costs for American importers and is passed on to consumers.[43] Essential goods such as food, electronics, and clothing are expected to become more expensive, exacerbating inflation.[44] A study published in the Quarterly Journal of Economics estimated that U.S. consumers and firms experienced a real income loss of $7.2 billion due to the 2018 tariffs, primarily because of increased import prices.[45] Additionally, tariffs have been associated with job losses, particularly in sectors reliant on imported materials.[46] Industries such as construction and manufacturing, face increased production costs due to tariffs on steel, lumber, and auto parts.[47] Higher production costs can lead to reduced competitiveness and potential job losses in these sectors.[48] The Tax Foundation estimated that the 2018-2019 trade war tariffs reduced long-run U.S. GDP by 0.2% and resulted in approximately 142,000 fewer full-time equivalent jobs.[49] Analysts even suggest that tariffs did not achieve their intended goal of boosting domestic manufacturing, reducing the trade deficit, and increasing revenue.[50] Because of the increased costs for both domestic consumers and business, the Federal Reserve may be forced to delay interest rate cuts due to rising inflation, slowing economic growth within the United States.[51]
Additionally, the unpredictability associated with tariff policies can deter investment and slow economic growth.[52] Nobel laureate Joseph Stiglitz argued that the uncertainty from on-off tariff plans and disregard for the rule of law made the U.S. a “scary place to invest,” potentially leading to stagflation.[53] This explains why when President Trump announced “retaliatory tariffs” on April 2, the U.S. stock market experienced significant declines with the Dow Jones falling approximately by 9.5%, the NASDAQ dropping 11%, and the S&P 500 declining 10% over the same period, representing its worst two-day performance ever.[54]
In addition, tariffs disrupt established and reliable North American supply chains, leading to inefficiencies and increased costs for businesses.[55] Companies may need to seek alternative suppliers or relocate production, incurring additional expenses.[56] It is furthermore concerning when considering the existence of retaliatory tariffs, just like the ones passed in response to the Smoot-Hawley Tariff that only exacerbated the great depression. A study by the Quarterly Journal of Economics found that retaliatory tariffs led to a 9.9% decline in U.S. exports within targeted products.[57] Such retaliatory measures harm U.S. exporters, particularly in agriculture and manufacturing, leading to decreased sales and potential job losses.[58] These trade measures also damage both diplomatic and economic relationships that will hinder future cooperation on trade and other international issues with long-established allies.[59]
Conclusion
In conclusion, despite the appeals of tariffs to incentivize domestic industry growth, shield from unfair trade practices, mitigate national security concerns, act as leverage in other more concerning policy issues such as border control, increase supply chain diversification and lastly aid labor unions and address negative consequences of globalization, such short-term gains must be recognized with the pitfalls of protectionism that include inflation for consumers, unemployment in sectors reliant on imports, uncertainty that renders stagflation from investors, disruption of reliable North American supply chains, retaliatory tariffs that historically exacerbated economic depressions, and a deterioration of diplomatic ties with allies.
The final score of the violent and controversial hockey game between USA vs. Canada resulted in a hard-fought U.S. victory of 3-1 over Canada.[60] Much like with the Trump administration tariffs, Americans celebrated this immediate and visible victory, treating Canada less as an ally and more like a rival. Yet, in the midst of such celebration and applaud to executive steadfast action by President Trump, there exists hidden long-term consequences from the economic strain and fracture between Canada and the United States that linger far beyond both the hockey game and Trump’s second term. Victory, in both hockey and tax policy, is never as simple as the scoreboard makes it seem.
[1] Gregory Svirnovskiy & Kelly Garrity, ‘A Little Bit of a Political Flair’: Canada-US Hockey Match Is the Latest Battle Between Two Neighbors, Politico (Feb. 20, 2025, 9:01 PM EST), https://www.politico.com/news/2025/02/20/hockey-trump-canada-tariffs-00002396
[2] Id.
[3] Id.
[4] Id.
[5] Wyatte Grantham-Philips, A Timeline of Trump’s Tariff Actions So Far, PBS Newshour (Apr. 10, 2025, 1:22 PM EDT), https://www.pbs.org/newshour/economy/a-timeline-of-trumps-tariff-actions-so-far.
[6] International Emergency Economic Powers Act, 50 U.S.C. §§ 1701–1708 (2018).
[7] Michael D. Ramsey, President Trump’s Tariff Powers and the IEEPA, 107 Geo. L.J. Online 45 (2025).
[8] Exec. Order No. 14,100, 90 Fed. Reg. 11,223 (Feb. 1, 2025).
[9] Id.
[10]U.S. Trade Rep., U.S.-Canada-Mexico Joint Statement on Tariff Delay (Mar. 1, 2025).
[11]White House Press Release, Statement by President Trump on Reciprocal Tariffs (Mar. 6, 2025).
[12]White House Press Release, Statement on “Liberation Day” and Tariff Policy (Apr. 2, 2025).
[13]Id.
[14]U.S. Trade Representative, 2025 Special 301 Report on Foreign Trade Barriers (Apr. 2025).
[15]Ministry of Commerce of the People’s Republic of China, Press Release on Retaliatory Tariffs (Apr. 4, 2025).
[16]White House Briefing, Suspension of Reciprocal Tariffs (Apr. 9, 2025).
[17]Id.
[18]Exec. Order No. 14,103, 90 Fed. Reg. 13,776 (Apr. 10, 2025).
[19]See 50 U.S.C. §§ 1701–1708.
[20] Michael D. Ramsey, President Trump’s Tariff Leverage: IEEPA and Protectionism, 107 Geo. L.J. Online 112 (2025).
[21]Alan V. Deardorff, Terms of Trade and Tariff Effects, in Glossary of International Economics (2006).
[22]Douglas A. Irwin, Clashing over Commerce: A History of US Trade Policy 117–18 (2017).
[23]Smoot–Hawley Tariff Act, Pub. L. No. 71-361, 46 Stat. 590 (1930).
[24]Barry Eichengreen, Globalizing Capital: A History of the International Monetary System 98 (1996).
[25]Id.
[26]Milton Friedman, Free to Choose: A Personal Statement 49 (1980).
[27] Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 3; North American Free Trade Agreement, U.S.-Can.-Mex., Dec. 17, 1992, 32 I.L.M. 289 (1993).
[28]International Emergency Economic Powers Act, 50 U.S.C. §§ 1701–1708 (2018).
[29]Id.
[30]President Jimmy Carter, Exec. Order No. 12,170, 44 Fed. Reg. 65,729 (Nov. 14, 1979).
[31]Chad P. Bown, US-China Trade War Tariffs: An Up-to-Date Chart, Peterson Inst. for Int’l Econ. (Apr. 12, 2025), https://www.piie.com/research/piie-charts/2019/us-china-trade-war-tariffs-date-chart.
[32]19 U.S.C. § 1862 (2022); Presidential Proclamation No. 9705, 83 Fed. Reg. 11,625 (Mar. 8, 2018).
[33]Chase D. Kaniecki, Trump Tariffs: What’s Happened, What’s Potentially Coming, and How to Prepare, Cleary Gottlieb (Jan. 30. 2025) https://www.clearytradewatch.com/2025/01/trump-tariffs-whats-happened-whats-potentially-coming-and-how-to-prepare/
[34]Presidential Memorandum on Adjusting Imports of Washing Machines and Solar Panels, 83 Fed. Reg. 3,547 (Jan. 23, 2018); White House Statement on Tariffs and Border Security (May 30, 2019).
[35]U.S. Int’l Trade Comm’n, Economic Impact of Section 301 Tariffs on U.S. Industries (2023).
[36]Office of the U.S. Trade Rep., May 2024 Tariff Adjustments on Strategic Chinese Imports (May 2024).
[37]Id.
[38]Council on Foreign Relations, Supply Chains and National Security (2023).
[39]U.S. Dep’t of Commerce, COVID-19 and Critical Supply Chain Review (2021).
[40]AFL-CIO Position Paper on Strategic Tariffs and Labor Rights (2022).
[41]Donald J. Trump, Remarks at Campaign Rally in Dayton, Ohio (Jan. 2024).
[42]Brookings Inst., Protectionism’s Second Wind: Assessing the Trump Tariff Legacy (2025).
[43] Amiti, Mary, Stephen J. Redding, and David E. Weinstein. 2019. “The Impact of the 2018 Tariffs on Prices and Welfare.” Journal of Economic Perspectives 33 (4): 187–210.
[44]Id.
[45]Id.
[46]U.S. Chamber of Commerce, The Cost of Tariffs on U.S. Industries (2023).
[47]Id.
[48]Tax Foundation, Updated Tariff Impact Model (Feb. 2020).
[49]Id.
[50]Chad P. Bown, Did Trump’s Trade War Deliver?, Peterson Inst. for Int’l Econ. (2021).
[51]Federal Reserve Board, Monetary Policy and Inflation Outlook (Mar. 2025).
[52]Joseph Stiglitz, Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump (2018).
[53]Id.
[54] CBS News, Stock Market Plummets a Day After Huge Gains on Tariff Pause Announcement, CBS News (Apr. 10, 2025), https://www.cbsnews.com/news/stock-market-down-trump-tariff-trade-war-04-10-2025/.
[55]Council on Foreign Relations, Tariff Chaos and Supply Chain Disruptions (2022).
[56]Id.
[57]Amiti, Mary, Stephen J. Redding, & David E. Weinstein, supra note 43.
[58]U.S. Dep’t of Agriculture, Impact of Retaliatory Tariffs on Farm Exports (2019).
[59]Brookings Inst., Trump’s Tariff Legacy and Global Diplomacy (2025).
[60]Gregory Svirnovskiy & Kelly Garrity supra note 1.
