--- title: What Are Tariffs and Why Is Trump In Favor of Them? description: Trump has signed orders imposing tariffs on Canada, China, and Mexico. canonical: https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/ author: Rebecca Schneid article:opinion: false article:content_tier: free article:published_time: 2025-02-02T15:06:44.000Z article:modified_time: 2026-01-19T18:36:45.000Z article:section: Politics og:title: What Are Tariffs and Why Is Trump In Favor of Them? og:description: Trump has signed orders imposing tariffs on Canada, China, and Mexico. og:url: https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt3571eb29aec293c3/6998b29893610ce10dc2d695/donald-trump_2f821c.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 og:image:width: 1024 og:image:height: 576 og:image:alt: Donald Trump og:type: article twitter:card: summary_large_image twitter:title: What Are Tariffs and Why Is Trump In Favor of Them? twitter:description: Trump has signed orders imposing tariffs on Canada, China, and Mexico. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt3571eb29aec293c3/6998b29893610ce10dc2d695/donald-trump_2f821c.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 ---  # What Are Tariffs and Why Is Trump In Favor of Them? > Sponsored content. 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Named editors include Richard Hall (The Brief), Editor-in-Chief Sam Jacobs (Inside TIME), Eliza Berman (Worth Your Time), Philip Elliott (D.C. Brief), Justin Worland (Future Proof) and Harry Booth (In the Loop). Health Matters is written by TIME's health desk. #### How do I sign up for a TIME newsletter? Go to time.com/newsletters, choose the newsletters you want and enter your email address. There is no cost and no subscription requirement. ### Sources * TIME Newsletters: [time.com/newsletters](/c/time-nl-network-2026q3/newsletters?i=461f005e-2d36-4b39-bf12-1c938a1e7bf0&cr=time-nl-network-2026q3-v1)  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Updated: Jan 19, 2026 6:36 PM UTCPublished: Feb 2, 2025 3:06 PM UTC  President Donald Trump signs executive orders in the Oval Office in Washington, D.C., on Jan 20, 2025. President Donald Trump signs executive orders in the Oval Office in Washington, D.C., on Jan 20, 2025. Anna Moneymaker—Getty Images  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Updated: Jan 19, 2026 6:36 PM UTCPublished: Feb 2, 2025 3:06 PM UTC President Donald Trump has made good on his campaign promise to impose tariffs on imports from the United States’ three largest supplier countries—Canada, China, and Mexico. Trump [signed orders on Saturday evening](https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/), imposing 25% tariffs on imports from Mexico and Canada (though Canadian energy faces a lower tariff of 10%) and 10% tariffs on goods from China. Trump signed an [Executive Order](https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/) titled: “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border.” Trump discussed the tariffs in a series of posts on his social media platform, Truth Social. One update [announced the official orders of the tariffs](https://truthsocial.com/@realDonaldTrump/posts/113931044424714413), stating that the decision was made to “protect” Americans “because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.” In a second post, Trump included [a video of himself on the campaign trail](https://truthsocial.com/@realDonaldTrump/113931196721633756), where he promised the tariffs he is now imposing. Though tariffs have been used as useful tools by politicians, consumers and economists are concerned about whether, just weeks into Trump’s term, his tariffs could raise prices of goods and services. Many voters described grocery prices and general affordability issues as high on their voting priorities, but there is the possibility of these tariffs raising prices of groceries, gas, energy, and automotive sectors. With a heightened focus on tariffs and discussions about the potential benefits and risks, here’s what you need to know about the government-imposed taxes and why Trump is in favor of them. ## **What are tariffs?** Simply put, ​​import tariffs, the kind of tariffs Trump is levying, are taxes placed on goods imported from other countries. There are also export tariffs, which are taxes on goods brought out of a country, though these are much more rare. There are several different types of tariffs, and the kind that Trump is imposing is known as an [“ad valorem tariff”](https://www.wto.org/english/thewto%5Fe/glossary%5Fe/ad%5Fvalorem%5Ftariff%5Fe.htm)—meaning the tax on imported goods is calculated as a percentage of the product’s value. ## **Who pays for tariffs?** Typically, tariffs are paid by domestic importers, and paid to U.S. Customs and Border Protection. However, economists often say that portions of the cost of tariffs ends up paid by consumers. In response to tariffs, sellers may hike up prices of the goods that they are importing for consumers. “Generally, it will make it more costly to import goods,” says Felix Tintelnot, associate professor of economics at Duke University. “With the one caveat: it is conceivable that the foreign exporter could reduce its price in order to maintain competitiveness and not lose out.” For example, since avocados are mostly imported from Mexico, with Trump’s new tariffs potentially making it more expensive to import avocados, grocery stores could raise the prices of avocados to make up for the added tax, Tintelnot explains. **Read More:** [_Why Trump’s Tariffs Could Raise Grocery Prices_](https://time.com/7177699/trump-tariffs-grocery-prices/) ## **Why is Trump in favor of tariffs?** Trump has said that he planned to impose tariffs on imported goods to boost American manufacturing and end, what he says, are unfair trade practices. “You see these empty, old, beautiful steel mills and factories that are empty and falling down,” Trump [declared in October 2024](https://www.facebook.com/abc7chicago/videos/watch-live/1247298312984271/) on the campaign trail. “We’re going to bring the companies back. We’re going to lower taxes for companies that are going to make their products in the USA. And we’re going to protect those companies with strong tariffs.” “A bilateral trade deficit is a terrible metric to focus on, because it's completely natural that bilateral trade deficits exist,” Tintelnot says. “It's like if you put a tariff on your local gym because you're paying them more than they're buying from you.” Trump has also stated that the tariffs are intended to stop the flow of undocumented immigrants and illegal drugs into the United States. “China makes the fentanyl, gives it to Mexico, puts it through Canada, puts it through different places, mostly Mexico, but also a lot through Canada,”[ Trump claimed while speaking from the Oval Office on Friday](https://www.youtube.com/watch?v=J--ZUaoV7RI). “And so all three haven't treated us very well.” **Read More**: [_What Donald Trump’s Win Means for the Economy_](https://time.com/7095898/donald-trump-economy-plan-2024/) ## **What are the potential impacts of tariffs such as the ones Trump is imposing?** Based on a 2024 study conducted by the Peterson Institute for International Economics, Trump's larger proposed tariff hikes [could increase the annual costs to U.S. consumers by $2,600](https://www.piie.com/research/piie-charts/2024/trumps-bigger-tariff-proposals-would-cost-typical-american-household-over)—which could hit lower-income Americans the hardest. Walmart’s CEO recently told [CNBC](https://www.cnbc.com/2024/11/19/walmart-says-new-trump-tariffs-could-raise-prices.html) that the chain might have to raise prices on items if the proposed tariffs go into effect. “We are getting vehicles from both Canada and Mexico, and then several of our food items in the grocery store are overwhelmingly sourced from Mexico,” Tintelnot said. “So there, we are expected to see price increases.” Trump’s first-term tariffs on steel, clothing, and [wooden cabinets](https://www.reuters.com/article/business/us-locks-in-tariffs-on-wooden-cabinets-from-china-idUSL1N2BH1QL/) did lead American producers to [boost production ](https://www.usitc.gov/publications/332/pub5405.pdf?campaign%5Fid=9&emc=edit%5Fnn%5F20241121&instance%5Fid=140209&nl=the-morning®i%5Fid=58432505&segment%5Fid=183739&user%5Fid=d5783b284e573f58b45248edc50ed255)of those things. But Tintelnot and other economists are worried that across-the-board tariffs could have large effects on inflation for American consumers. Tintelnot also says that these tariffs are different from the tariffs Trump imposed on China during his first term—some of which remained throughout President Joe Biden’s time in office. This is because tariffs are placed on whole items, so if a car was made in Mexico or Canada with U.S. parts, but then made in those countries, it would still be tariffed as it entered the United States. “Most of the stuff that's coming from China is sort of sourced from China or from elsewhere in Asia. However, with Canada and Mexico, we are going to experience that we are also actually \[indirectly\] tariffing Americans,” Tintelnot says.  Canada's Prime Minister Justin Trudeau shakes hands with Donald Trump during a meeting at Winfield House, London on Dec. 3, 2019. Nicholas Kamm—Getty Images ## **How has Canada, Mexico, and China responded to Trump’s tariffs?** Both Canada and Mexico have debuted their retaliatory tariffs after Trump signed the orders on Saturday, which Tintelnot says could trigger a wider “trade war” and further accelerate inflation. “We don’t want to be here,” Canadian Prime Minister Justin Trudeau said[ in an address on Saturday evening,](https://www.youtube.com/watch?v=92rutFiIWAM) laying out retaliatory 25% tariffs on $155 billion of U.S. goods. On Sunday, Trudeau again [addressed the tariffs via X](https://x.com/JustinTrudeau/status/1886093691535704414) (formerly Twitter), writing: “Now is the time to choose products made right here in Canada. Check the labels. Let’s do our part. Wherever we can, choose Canada.” Mexico President Claudia Sheinbaum criticized America’s tariffs and[ announced on social media Saturday](https://x.com/Claudiashein/status/1885855974407446726) that she’s instructing the Secretary of Economy to impose a plan including “tariff and non-tariff measures in defense of Mexico's interests.” China’s foreign ministry released[ a statement](https://www.fmprc.gov.cn/eng/xw/fyrbt/lxjzh/202502/t20250202%5F11548196.html) on Saturday evening, stating China “firmly deplores and opposes this move” and will “take necessary countermeasures.” The statement also argues that China is tough on counternarcotics and that fentanyl “is an issue for the U.S.” On Sunday morning, Trump seemingly responded on Truth Social, arguing that if businesses make their product in the U.S., they won’t have to deal with the added charges. “The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the ‘Stupid Country’ any longer,” [he wrote.](https://truthsocial.com/@realDonaldTrump/posts/113934450227067577) He claimed that this will be the “golden age of America” but also acknowledged that there may be “some pain” felt due to the tariffs. Ultimately, Trump said it “will all be worth the price that must be paid.” Trump then specifically targeted Canada in [another post,](https://truthsocial.com/@realDonaldTrump/posts/113934520197790682) suggesting the country should become the United States’ “cherished 51st state,” and then they won’t have tariffs. “We pay hundreds of Billions of Dollars to SUBSIDIZE Canada,” he wrote.“Why? There is no reason. We don’t need anything they have.” ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/"},"headline":"What Are Tariffs and Why Is Trump In Favor of Them?","datePublished":"2025-02-02T15:06:44.000Z","dateModified":"2026-01-19T18:36:45.000Z","description":"Trump has signed orders imposing tariffs on Canada, China, and Mexico.","url":"https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/","keywords":["Donald Trump","News Desk"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/blt3571eb29aec293c3/6998b29893610ce10dc2d695/donald-trump_2f821c.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Rebecca Schneid","jobTitle":"Reporter","url":"https://time.com/author/rebecca-schneid/"}],"articleSection":"Politics","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/blt3571eb29aec293c3/6998b29893610ce10dc2d695/donald-trump_2f821c.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"Donald Trump","caption":"President Donald Trump signs executive orders in the Oval Office in Washington, DC on Jan 20, 2025.","creditText":"Anna Moneymaker—Getty Images","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/politics/","name":"Politics"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/donald-trump/","name":"Donald Trump"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/7212166/what-are-tariffs-trump-imposing-import-taxes/","name":"What Are Tariffs and Why Is Trump In Favor of Them?"}}]}] ```