Trump Tariffs Explained: Your Complete 2025 Guide

President Trump’s U.S. tariffs have turned the stock market into a roller coaster, with each announcement sending the market either falling or soaring. To help provide some clarity, we’ve put together this detailed guide that’ll help explain what the heck is going on. 

If you’re feeling nervous about what the future holds, don’t worry. So is pretty much everyone in America. Experts at Sherwood News believe that U.S. tariffs could be leading us toward a “do nothing” economy. Since most CEOs are unsure of what to do they might just end up…doing nothing. This would result in fewer new products, IPOs, and new business ventures in the coming months. But, it could also mean fewer layoffs.

Continue reading to learn everything you need to know about the Trump tariffs and how they might impact your finances.  

Table of contents

• President Trump tariffs explained

• Ask the experts: What should we expect from the Trump tariffs?

• Key features of the new U.S. tariffs

  • Key tariffs: Canada and China

• What to do before the new tariffs take effect 

• Navigating the Trump tariffs with confidence

President Trump tariffs explained

On April 2nd, President Trump announced tariffs on seemingly every developed country in the world calling them “reciprocal tariffs.” As expected, he targeted many major competing nations, like China. But, he also slapped tariffs on dozens of unexpected countries, like North Macedonia and Malawi. Apparently, the trade deficit with Malawi is what’s really been holding the country back.

As of April 9th, President Trump amended most of these tariffs and dropped them to 10% for 90 days to allow time for negotiations. The only exception was China, where President Trump raised tariffs to 125%.

So first things first: what’s a tariff? 

A tariff is a tax on an imported good. Tariffs have three main purposes:

1. Raise money for the U.S. government

2. Assist domestic producers 

3. Penalize foreign firms or countries 

In the official White House announcement President Trump stated that “the trading relationship between the United States and its trading partners has become highly unbalanced, particularly in recent years.”

He’s hoping that slapping tariffs on major trading partners will encourage U.S. companies to manufacture products in America. In theory, this will help create jobs, stimulate the economy, and decrease our reliance on other countries. 

However, many economists anticipate the tariffs will cause more pain than good for the U.S. economy because tariffs almost always lead to higher prices.

For example, if Apple has to pay a 20% tax to import its iPhones from China then it can just raise prices by 20% to offset the cost of the tariff. Nothing really changes in this scenario except that iPhones are 20% more expensive. The Trump Administration has already warned Americans of potential economic pain from his new tariffs.

Ask the experts: What should we expect from the Trump tariffs?

We asked several experts from CNBC what our readers should expect from the Trump tariffs. Here’s what they had to say:

“Lately, there has been a lot of misinformation about tariffs, often by those attempting to establish them as an economic strategy with our largest trading partners, friends and foes alike. Make no mistake, tariffs and/or a protracted trade war will adversely affect consumers’ buying power. When a country puts a tariff on imported goods, the additional tax that goes to the Treasury has to be absorbed by the company buying the goods, and they have a choice to eat the additional cost or pass it through to the consumer or other businesses that are buying the goods. The increased cost for consumers could lead to a pullback in demand and thus send the economy into a recession where companies will likely be forced to make job cuts.” 

– Dan Nathan, MRKT Call Host & CNBC Contributor

“Tariffs have the potential to make every aspect of our day-to-day lives more expensive. I would be focusing on the potential negative impact they could have on the jobs market” 

– Guy Adami, MRKT Call Host & CNBC Contributor

Check out Dan and Guy’s recent episode of their MRKT Call here.

Key features of the new U.S. tariffs

Here are a few of the most important things to know about the U.S. tariffs:

1. President Trump announced tariffs on dozens of different countries. 

2. The tariffs range from 10% up to 99%.

3. On April 9th, President Trump dropped tariffs to 10% for 90 days.

4. The tariffs are focused on balancing trade deficits with trading partners. 

5. The tariff plan might’ve been created with ChatGPT…wait what?

Axios reports that the U.S. tariff strategy is the same strategy that ChatGPT recommends when prompted to “calculate a tariff on another country to balance of trade to zero.” I guess even the country’s top officials can’t resist asking AI for help every now and then.

Key tariffs: Canada and China

The U.S. has entered into especially heated tariff wars with Canada and China. 

U.S. tariffs on China are currently 125% as of April 9th. This blanket tax would have very wide-reaching implications for American companies and families that rely on cheap goods from China. U.S. tariffs on Canada as of April include a blanket 25% on all goods, which would be especially worrisome for key imports like lumber, natural gas, and cars.

So, why is Trump putting tariffs on Canada? Your guess is really as good as ours. 

Now, on to the most important topic: what do these tariffs mean for your money?

How will the new tariffs impact you as a consumer?

Yale’s Budget Lab estimates that the Trump tariffs will cost U.S. families around $4,000 throughout the year (or $333 per month).

Additionally, you can expect lots of rapid-fire policy changes that lead to pricing volatility for goods and assets. Miscommunications in tariff policies have already led to the largest 30-minute stock market swing in history, per The Kobeissi Letter.

Here’s how you can prepare.

What to do before the new tariffs take effect 

There are a few key steps that you can take to prepare your finances for future volatility. 

👉 Get healthy financially and physically: Our latest Health is Wealth report uncovered that mastering your personal finances can actually lead to all-around improvements in your physical health. You can boost your personal finance knowledge by joining the Moneylion Money Master challenge* where we’re currently giving away a grand prize of $5,000. 

👉 Brace your budget: This is an ideal time to reevaluate your budget and identify high-cost areas that you may potentially need to cut in the coming months. You can brush up on this core topic by reading How to Make a Budget or Budgeting Basics.

👉 Evaluate needs vs. wants: You may need to make some difficult financial decisions in the coming months, especially if prices are soaring for different items. If prices skyrocket then it’s important to be honest about what’s a “need” and what’s a “want” in your budget.

👉 Compare prices: It’s possible that tariffs could lead to dramatic price differences for the same product. For example, Mexican-grown avocados might get hit with tariffs while California-grown ones don’t. If this happens then taking the time to compare prices across different stores could help save some cash.

👉 Find local alternatives: Finding local alternatives for items that you buy frequently is a great way to avoid the tariff pricing drama altogether. Remember, tariffs only apply to imported goods. If a store produces an item in America then it won’t have to worry about paying a tariff. 

👉 Seek substitutes: On a similar note, be on the lookout for cheaper alternatives to products that you use frequently.

👉 Buy in bulk: It’s also a good idea to stock up on non-perishables or household necessities before prices rise down the road. Consider joining a wholesale club like BJ’s and Costco to start buying in bulk if you don’t already.

👉 Prioritize big purchases: Been meaning to get a new phone or upgrade your car? It might make sense to make these larger purchases sooner rather than later before prices rise. Apple has already announced that it might be raising prices due to tariffs.

👉 Take advantage of sales: When you come across major sales, you should probably take advantage since prices will likely be higher down the road.

👉 Create a bounce-back game plan: Prepare for the reality that layoffs could be coming and arm yourself by creating a bounce-back game plan if you lose your job.

Navigating the Trump tariffs with confidence

We hope that you’ve found this U.S. tariff guide valuable! The Trump tariffs will undoubtedly lead to volatility over the coming months. But, at least we’re all along for the ride together.

One way to get better prepared for whatever happens next for the U.S. economy, consider joining MoneyLion today. With MoneyLion, you can tap into free, personalized tools to help with all things money. You can learn more about money every day, and even win some cash! 

We make money easy.

FAQs

What are tariffs?

Tariffs are taxes that a government places on goods imported from other countries. They make imported items more expensive, encouraging people to buy products made locally. 

How do tariffs work?

Tariffs work by adding a fee to imported goods when they enter a country. This fee is usually paid by the importer, who often raises prices for consumers to cover the cost. The goal is to make imported goods less attractive compared to local ones.

Who pays tariffs on imports?

Tariffs are paid by the company bringing goods into a country. This cost is often passed on to consumers through higher prices.

How do tariffs impact the economy?

Tariffs can protect local industries and jobs by making imported goods more expensive. However, they can also lead to higher prices for consumers and tension with other countries. In the long run, tariffs may slow down trade and economic growth if not managed carefully

How tariffs help the economy

Tariffs could benefit the U.S. by encouraging people to buy American-made products, which supports local businesses and jobs. They could also generate revenue for the government. 

Why is Trump putting tariffs on Canada?

Trump is putting tariffs on Canada as a way to reduce the U.S. trade deficit by encouraging domestic production and decreasing reliance on Canada’s goods.