Chicago-Kent College of Law Professor Sungjoon Cho provides insights into the reasons and potential impacts of imposing tariffs. According to Cho, "Generally there are two main goals of imposing tariffs. The first is to collect fiscal revenues of the government. The second is to protect a certain industry by creating trade barriers against foreign competition by making foreign products more expensive than rival domestic products."
On February 1, 2025, United States President Donald J. Trump imposed tariffs on goods from Canada, Mexico, and China. These measures were justified not only for economic protection but also as a means to curb illegal drug flow into the country. While the tariffs on Canada and Mexico were paused for negotiations starting February 3, a 10 percent tariff against China was enacted.
Cho explains that tariffs act as a tax on importers of foreign goods and notes mixed historical perspectives on their use. "Often domestic industries lobby government to erect or maintain tariff barriers to secure protection from foreign competition," he says. However, since World War II, global trade negotiations have generally reduced tariff levels.
While these reductions have fostered global economic prosperity, Cho warns that reinstating tariffs could reverse these benefits: "Initially importers, distributors, or retailers may absorb the tariff burden... But as the cost rises due to the tariff payment... businesses have no option but to shift the burdens to consumers by increasing sale prices."
He further elaborates that tariffs disproportionately affect lower-income families compared to higher-income groups and can lead to retaliatory actions from other countries in what he describes as a "tariff war." Additionally, with modern supply chains being complex, Cho highlights that half of U.S.-imported products consist of parts used in manufacturing other goods domestically: "Therefore, a tariff increase means an increase of production cost throughout the supply chain."
###