Trump's tariffs defence meets economic reality
Business & Economy, As the trade war escalates, the impact is visible across multiple sectors, with major manufacturers bracing for price hikes and job cuts.
US President Donald Trump's decision to wage a tariff war with the world has rattled global markets. The S&P 500 dropped to its lowest level since before the 2024 election, reflecting investor concern.
Economy on the frontline?
The tariffs, which impact major goods trade, including Steel, Aluminium, and Auto parts, are projected to raise US consumer costs by an average of $1000 annually. Economists also warn that these moves could slash US GDP growth by up to 1 per cent this year, with some experts even predicting a potential recession. As the trade war escalates, the impact is visible across multiple sectors, with major manufacturers bracing for price hikes and job cuts.
Industry-wise impact
The auto industry is particularly vulnerable, with some vehicle prices expected to rise by as much as 25 per cent. Supply chains across North America face disruptions as carmakers warn of potential consequences. Farmers, in particular, face a double blow. Tariffs on US agricultural exports to China and Mexico threaten to undermine key export markets for products like Soybeans, Corn and Pork.
Homebuilders are also under pressure, with tariffs on raw materials and finished goods like appliances and cabinets driving up construction costs. The housing index has fallen 4.8 per cent in 2025. Aerospace suppliers are also facing growing concerns as Canada is the top US Aerospace import partner. Boeing, already grappling with supply chain issues, has seen its stock drop 3.9 per cent.
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Steel and Aluminium tariffs add another layer of impact, with Canada supplying 80 per cent of US primary Aluminum imports in 2024. With new duties in place, aluminium giant Alcoa warns of 100,000 job losses in the US. The company's stock is already down 17 per cent this year.
Meanwhile, Trump defended his tariff strategy in his latest Congress speech. 'Tariffs are not just about protecting American jobs. They're about protecting the soul of our country. Tariffs are about making America rich again and making America great again and it's happening and it will happen rather quickly. There'll be a little disturbance but we're okay with that. It won't be much,' he said.
However, critics argue that the economic costs outweigh the benefits. Inflation is projected to rise by 0.6 percentage points due to tariffs. Gas prices in the Northeast and Midwest could also rise 20 to 40 cents a gallon, putting additional pressure on American households. As the trade war builds, many question the long-term effectiveness of this aggressive trade strategy.