John,
Between three major deals and dozens of new tariffs across the board, President Trump has just pulled off one of the most dramatic shifts in U.S. trade policy in decades.
It is a big moment, and one that deserves to be understood.
Let us walk through what happened, what it could mean, and what comes next.
In the past two weeks, Trump has finalized bilateral trade agreements with Japan, the European Union, and South Korea. In exchange for lower tariffs than he originally threatened, those countries are pledging more than $1.9 trillion in combined purchases and long-term investments in the United States.
At the same time, new tariffs of up to 50 percent just went into effect on imports from Canada, India, Taiwan, Brazil, and others. The average U.S. tariff is now the highest it has been since the 1930s.
The goals are clear. The White House wants to use tariffs to make other countries open their markets and encourage more capital, more manufacturing, and more energy investment here at home.
That is the strategy. Whether it works is still an open question.
Although markets today are dropping in response to lower-than-expected job growth in July – and downward revisions of previous monthly employment stats – economic growth remains solid, hitting three percent last quarter. And inflation, which dogged President Biden during the length of his term, is lower than it was a year ago. And some of the loudest warnings about soaring prices or immediate retaliation have not come true.
Real Time host and commentator Bill Maher was one skeptic of Trump’s initial tariff plan. Still, this week he offered qualified praise for how it has gone so far, saying, “I see people out there just living their lives. And I would have thought — and I gotta own it — that the cut, that these tariffs were going to…sink this economy by this time, and they didn’t.”
Still, it is too early to say what the outcome will be. Major macroeconomic shifts from tariffs can take time to hit prices. While some consumer costs are already rising, especially in industries like apparel and autos, we can expect additional impacts as more supply chains adjust. And if our trading partners do not follow through on their investment pledges, the upside may be less than what the headlines suggest.
It is almost certainly too early to pass a verdict on Trump’s trade and tariff strategy. Here are a few facts we do know, however.
One important fact is that America starts from a position of strength. Imports make up only about 12 percent of U.S. GDP, compared to 35 percent in the European Union. That means we rely less on foreign goods than most rich nations, which gives Washington real leverage when it comes to setting the terms of trade. Read more from our policy team →
Another is that these tariffs are generating real money. More than $150 billion has been collected in tariff and customs revenue so far in 2025, a record sum that rivals the annual corporate tax haul. We tracked those numbers here →
And a final one. As noted by David Frum in The Atlantic, for most of the 1980s, 1990s, and early to mid-2000s, a majority of Americans were generally satisfied with the way things were going in the U.S. But since the Great Recession, that percentage has rarely exceeded a third.
There is a big-picture lesson in all of this.
For years, Americans were told the global trade system, like many of the other post-war institutions we grew up around, could not really be changed, that the rules were fixed. That any serious effort to shake things up would spark a crisis even if the status quo was not working for some Americans.
But the rules are changing. And whether or not you agree with this approach, it is clear something new is happening.
Trump is betting he can negotiate a better trading system for the millions of workers who felt left behind in the existing trading system. His bet could fail. It is also possible he has overstepped his authority: This week a federal appeals court heard arguments questioning whether President Trump has the authority to implement all these tariffs without Congressional approval unilaterally.
In 1932 – another period of disruption when Americans rebelled against an old order that was not working for them – President Franklin Roosevelt said:
"The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something."
This is a time that demands people in Washington, in Congress, and across America reimagine what is possible and engage in the persistent experimentation that has renewed American democracy time and again for the last 250 years. Some believe that fighting, resisting, and rejecting what they are against is sufficient. It is not. To get through this exceptionally difficult period, we need leaders who are willing to think new and do new.
Dan Webb