Africa-Press – Eritrea. trade in 2025 was shaped by heightened uncertainty driven by US President Donald Trump’s protectionist trade and tariff policies targeting major trading partners, including China, Canada, Mexico, and the EU.
While the future of several tariffs remains subject to a Supreme Court ruling, an impact has already been made on global trade.
Trump, having campaigned heavily on tariffs, took office for his second term on Jan. 20 and used tariffs as bargaining chips to revitalize domestic manufacturing. His policies however, have fueled the fire of uncertainty in global trade.
He imposed and then suspended tariffs throughout the year, making 2025 a year defined by tariff volatility.
The average effective tariff rate in the US rose from below 3% at the end of 2024 to 16.8% in 2025, — its highest since 1935 — according to Yale University Budget Lab.
On his first day in office, Trump ordered federal agencies to conduct comprehensive reviews of trade policies — the same day on which he signed a myriad of executive orders. On Feb. 1, he imposed additional tariffs of 25% on imports from Canada and Mexico and 10% on imports from China, claiming a fentanyl and migrant crisis.
Tariffs on Canada and Mexico were suspended for 30 days after the two countries took steps to enhance border security, while the 10% tariff on China took effect on Feb. 4. The 25% tariffs on Canada and Mexico later came into force on March 4, while the tariff on China was raised from 10% to 20% on the same day.
Trump reversed course again on March 6, signing an order exempting goods covered by the US–Mexico–Canada Agreement from tariffs until April 2.
However, Trump unveiled his trade magnum opus on that day, dubbed Liberation Day, announcing sweeping tariffs with a base rate of 10% and reaching as high as 50%.
Trump said these rates varied in line with the tariffs and non-tariff barriers other countries applied to the US. His reciprocal tariffs came into effect on April 5, while higher tariffs on specific countries were planned to be activated on April 9.
Trump backtracked again as he suspended the additional tariffs for 90 days on all countries except China.
The US and China subsequently entered a tariff war, whereby Trump raised his reciprocal tariffs on China to 125%, bringing the total rate to 145%, and Beijing imposed similar retaliatory tariffs.
Following the escalation, US and Chinese officials met in Geneva in May, agreeing to reduce tariffs for 90 days. The US tariff on Chinese goods was temporarily reduced to 30% starting May 14.
Talks continued in the UK in June, Stockholm in July, and Madrid in September, culminating in a preliminary framework agreement reached in Kuala Lumpur in October.
During the 90-day tariff pause, the US signed trade agreements with the EU, the UK, Japan, and South Korea, while Trump sent tariff-related letters to several countries.
Trump signed an executive order on July 31 to propose changes to reciprocal tariffs — imposing tariffs ranging from 10% to 41% on around 70 trading partners. Some rates were raised compared to April 2 levels, while others were reduced.
He later signed a separate order raising Canada’s tariff rate from 25% to 35%, and increased Brazil’s rate from 10% to 50%, citing alleged threats to US national security. Trump also cited India’s alleged oil purchases from Russia as justification for raising its tariff rate from 25% to 50%.
In another policy reversal, the US exempted certain agricultural products from reciprocal tariffs effective Nov. 13.
In November, Trump also signed an executive order excluding some Brazilian agricultural products from additional tariffs.
Sectoral tariffs
In addition to country-specific measures, Trump imposed sectoral tariffs throughout the year.
Steel and aluminum tariffs of 25% targeting all countries took effect on March 12, later rising to 50% on June 4.
A 25% tariff on imported cars, light commercial vehicles, and basic auto parts came into force on April 3.
On Aug. 1, the US introduced a 50% tariff on copper and announced plans to impose a 100% tariff on branded and patented drugs from companies without US production facilities as of Oct. 1.
A 10% tariff on raw and processed lumber and a 25% tariff on certain wood flooring, kitchen, and bathroom cabinets took effect on Oct. 14.
These rates are set to rise to 30% and 50%, respectively, on Jan. 1, 2026.
A 25% tariff on imported medium- and heavy-duty vehicles and their parts, along with a 10% tariff on buses, came into force on Nov. 1.
Tariff revenues bring in billions to US budget
Tariff revenues rose sharply after Trump’s policies took effect in February.
Net tariff revenue stood at $7.3 billion in January, which is when Trump took office. While this rate fell slightly to $7.2 billion in February, it rose to $8.2 billion in March, according to Treasury Department data.
Tariff revenues surged to $15.6 billion in April, $22.2 billion in May, $26.6 billion in June, $27.7 billion in July, $29.5 billion in August, $29.7 billion in September, and $31.4 billion in October.
In November, net tariff revenue reached $30.8 billion, up 358% year-on-year.
Total net tariff revenue for January–November amounted to $236.2 billion.
American economy remains resilient despite a turbulent year
Despite early concerns over inflation and recession due to tariffs, the US economy showed resilience in 2025.
After contracting 0.6% in the first quarter, the economy rebounded strongly in the second despite the tariff-induced uncertainty and rising costs.
Strong consumer spending drove the US economy to grow 3.8% in the second quarter, and by 4.3% in the third quarter, its fastest growth in two years.
Rising exports and falling imports, alongside strong consumer spending, contributed to the surge in the third quarter.
Trump said the positive economic data was due to tariffs and projected continued improvement.
The US trade deficit fell 10.9% to $52.8 billion in September, its lowest level since June 2020.
Annual inflation in the US stood at 2.7% in November.
Trade policy uncertainty to persist
The World Trade Organization forecasts global goods trade to grow 2.4% in 2025 and 0.5% in 2026 amid rising tariffs and uncertainties in trade policies affecting the global trade outlook.
The International Monetary Fund raised its global economic growth forecast for this year from 3% to 3.2% and maintained its forecast for next year at 3.1% in its October report.
The IMF noted that economic growth remained resilient in the first half of the year due to the limited impact of protectionist trade on economic activity and prices, but warned that trade policy uncertainty is expected to remain high throughout next year just as it was in 2025.
Supreme Court to decide future of tariffs
Trump’s tariffs were challenged in the US Court of International Trade by several private companies and states.
On May 28, the court ruled that the reciprocal tariffs exceeded presidential authority under the International Emergency Economic Powers Act.
The Trump administration appealed, and the Court of Appeals temporarily suspended the lower court’s ruling.
On Aug. 29, the Court of Appeals largely upheld the lower court’s decision but delayed cancellation of the tariffs, allowing time for the administration to file an appeal to the Supreme Court.
The parties presented their arguments in the case heard by the Supreme Court on Nov. 5.
The Trump administration plans to continue imposing tariffs based on other legal grounds if the Supreme Court ruling goes against it.
The decision to be made will determine the future of billions of dollars in tariff revenue.
In 2026, all eyes will turn to the Supreme Court ruling on the tariff case, as well as on topics such as whether the tariff truce between the US and China will hold up and what the outcome of the review process of the trade agreement with Canada and Mexico will shape up to be.
