Events surrounding President Donald Trump's imposition of additional tariffs are unfolding rapidly. On February 1, he signed an executive order imposing an additional 10-percent tariff on all goods from China and imports of energy resources from Canada, and a 25-percent tariff hike on all other imports from Canada and Mexico. However, the next day, Trump agreed to delay the imposition of tariffs on Canada and Mexico for 30 days. It is important to note that the U.S. imported a staggering $1.2 trillion worth of goods from Canada, Mexico and China in 2023, almost a third of total imports.

Trump has long stated that tariffs will be a major part of his economic policy. During the Inauguration Day parade at Capital One Arena, he stated bluntly: "I always say tariffs are [among] the most beautiful words to me in the dictionary." However, the overwhelming majority of economists believe that Trump's claims regarding the efficacy of tariffs are either misleading or intentionally deceptive.

By its economic definition, a tariff is an internal tax levied on goods imported into a country based on their value. Notably, the cost of this tariff is ultimately incurred by the domestic company that imports the goods rather than the foreign company that exports them.

Consequently, the higher prices for goods and materials will both directly and indirectly affect consumers. It is estimated that such increases will raise American budget revenue by $1.2 trillion; however, ultimately, American consumers will bear the cost.

During Trump's first term, his administration engaged in an aggressive trade war with China. At that time, the administration claimed that the burden of these tariffs would primarily fall on China. However, a detailed study has shown that this was not the case. Instead, according to Columbia Business School, nearly all the tariffs on the $362 billion worth of goods imported from China were passed on to American consumers and companies that purchase Chinese-made inputs.

The impact of these tariffs was especially important for low-income households, which usually allocate a large portion of their income to affordable goods from China, such as household items and electronics. Many other professional studies have found similar results.

In a September 2024 survey conducted by the Kent A. Clark Center for World Markets at the University of Chicago Booth School of Business, 98 percent of over 40 leading global economists agreed that tariffs significantly increase costs, which are often passed on to consumers in the country implementing the tariffs. It ultimately results in direct price increases.

Researchers from Harvard University, the World Bank, Massachusetts Institute of Technology and other institutions investigating the effects of Trump's first-term tariffs found no notable positive impact on overall employment within protected American manufacturing sectors.

President Trump's attempt during his first presidency to employ tariffs to rectify the trade balance also failed. According to the Federal Reserve Bank of St. Louis in the U.S., while the overall deficit in goods and services stood at $480 billion, or roughly 2.5 percent of GDP, in 2016, just before Trump assumed office, it grew to $653 billion by 2020, or 3 percent of GDP, despite all the tariffs.

Modern economic theory, grounded in practical examples, contends that free trade enhances economic output and income, whereas trade barriers inhibit economic growth and income. Increases in tariffs are transferred to producers and consumers through escalated prices. It ultimately leads to diminished incomes for both capital owners and laborers. Higher prices decrease returns on labor and capital, discouraging Americans from working and investing, contributing to lower output and living standards.

Thus, President Trump's new tariffs seriously threaten the American economy and its citizens. It is not too late to reconsider and turn to wisdom and common sense. 

The author is former prime minister of Kyrgyzstan, a distinguished professor of the Belt and Road School at Beijing Normal University and author of the book Central Asia's Economic Rebirth in the Shadow of the New Great Game (Routledge, London, 2023)