The Trump administration's approach to tariffs has generated significant discussion and concern. From President Donald Trump's inaugural speech, it was clear that his administration intends to overhaul the U.S. trade system. "I will immediately begin the overhaul of our trade system to protect American workers and families," Trump stated. He emphasized using tariffs as a tool for protecting domestic industries and raising revenue, potentially replacing income taxes with tariffs.
The America First Trade Policy, released on January 20, targets nine government entities. It aims to promote investment, enhance industrial and technological advantages, defend economic and national security, and benefit American workers and businesses. As part of this policy, federal agencies have been directed to investigate unfair trade practices by April 1, 2025.
Trump also mentioned the creation of a new agency, the External Revenue Service, for tariff collection. This proposal raises questions since U.S. Customs and Border Protection already collects tariff revenue.
The policy begins public consultations on the United States-Mexico-Canada Agreement (USMCA) ahead of its review in July 2026. Types of tariffs under consideration include country-specific tariffs under Section 301 of the Trade Act of 1974 and product-specific tariffs under Section 232 of the Trade Expansion Act of 1962.
During his campaign, Trump pledged tariffs ranging from 10% to 20% on all imports. He threatened higher tariffs on China if certain conditions were not met and proposed a 25% tariff on goods from Mexico and Canada related to migration issues.
In a video message to the World Economic Forum in Davos, Switzerland, Trump encouraged businesses to manufacture in America or face tariffs: "My message to every business in the world is very simple: Come make your product in America... But if you don’t... you will have to pay a tariff."
A recent example of Trump's tariff strategy occurred when he imposed an emergency 25% tariff on Colombian goods after Colombia refused entry to U.S. deportation flights. The situation was resolved when Colombia agreed to accept deportation flights.
Economists warn that Trump's tariff plans could increase costs for businesses and consumers while complicating efforts to reduce inflation. The Congressional Budget Office has noted both potential benefits like lower budget deficits due to increased revenue and drawbacks such as GDP decline and inflation rise.
The California Chamber of Commerce (CalChamber) supports free trade worldwide but opposes protectionist legislation that may lead to higher consumer prices and limited product choices. The CalChamber continues advocating for reduced taxation and regulatory burdens while promoting strategic negotiations over heavy tariff policies.