Strategic Tariffs, Stronger America
As the world enters a new era of
economic competition and geopolitical uncertainty, the United States faces a
critical question: will it continue to rely on fragile international supply
chains and outdated trade assumptions, or will it seize this moment to rebuild
domestic strength?
President Trump’s sweeping 2025
tariff agenda answers that question emphatically and despite controversy, it’s
the right move for America’s economic future and global leadership.
The latest analysis from The Tax
Foundation’s 2025 Trade Policy Impact Report, one of the most respected
nonpartisan sources on tax and trade policy, outlines the far-reaching effects
of these tariffs.
The findings show that while
there are short-term costs, the strategic benefits far outweigh them especially
if the tariffs are implemented fully and allowed to reshape the foundations of
U.S. economic policy.
A Transformational Tariff
Strategy
President Trump’s proposed
tariffs include those under the International Emergency Economic Powers Act
(IEEPA), targeting countries tied to fentanyl trafficking such as China, as
well as broad national security tariffs on steel, aluminium, and auto imports
from virtually all trading partners.
If enacted in full, these tariffs
would raise the average effective tariff rate to 12.1% the highest since 1941 and
bring in nearly $2.0 trillion in federal revenue over the next decade on a
conventional basis, or $1.3 trillion dynamically after accounting for behavioural
responses, according to The Tax Foundation.
Critics argue that these tariffs
would reduce U.S. GDP by 0.8%, but this figure lacks historical context. The
same critics failed to object when decades of offshoring and unfair trade led
to the closure of tens of thousands of U.S. factories and the loss of millions
of middle-class jobs.
A temporary GDP adjustment is a
small price to pay to rebuild the country’s industrial base and regain control
over strategic supply chains.
Reclaiming Economic
Sovereignty
Without the IEEPA tariffs which
were ruled illegal by the U.S. Court of International Trade in May 2025 and are
now at risk of permanent injunction the tariff package would be far less
impactful. The effective tariff rate would instead rise to only 4.4%, and
revenue raised over the next decade would drop by $1.4 trillion, down to just
$532.8 billion.
The strategic value of the IEEPA
tariffs cannot be overstated they target fentanyl-related imports, confront
China’s aggressive trade behaviour, and send a clear message that the United
States will defend itself economically as well as militarily.
In 2025, The Tax Foundation
reports that the full tariffs would increase federal tax revenues by $152.7
billion, or 0.49% of GDP making it the largest tax increase since 1993, and
significantly larger than any tax hike enacted during the Obama administration.
By contrast, without the IEEPA
tariffs, the revenue increase falls to just $36.4 billion, placing it outside
the top 20 tax increases in modern U.S. history. These are not abstract numbers
they represent the difference between bold economic leadership and
business-as-usual passivity.
Tariffs as Tools of Global
Strategy
Tariffs are not just economic tools;
they are strategic levers of geopolitical influence. In response to U.S.
actions, China, the EU, and Canada have imposed retaliatory tariffs on $330
billion in American exports.
The Tax Foundation estimates this
could reduce U.S. GDP by 0.2% and cut revenue by $132 billion. Yet, these costs
highlight the power of tariffs to pressure adversaries and rebalance trade.
President Trump’s “reciprocal”
tariffs 125% on Chinese goods and 50% on EU imports aim to counter nations that
exploit open U.S. markets while protecting their own.
As of mid-May 2025, the average
U.S. tariff on Chinese imports reached 51.1%, covering nearly all goods levels rivalling
the 2018–2020 trade war.
Additionally, EU exports now face
a 20% duty, up from 10% earlier in April, as part of a broader effort to
restore trade fairness.
For decades, U.S. producers have
faced steeper barriers abroad than foreign competitors have faced here. These
new tariffs correct that imbalance, incentivize domestic production, and reduce
dependence on nations that do not share America’s interests or values.
Industrial Revival and
Household Investment
The economic impact of tariffs on
American households is real but manageable. In 2025, the average household is
expected to face a tax increase of $1,155, rising to $1,397 in 2026.
However, if the IEEPA-based
tariffs are blocked, these figures drop sharply to just $275 in 2025 and $358
in 2026.
While these costs are not
insignificant, they are modest compared to the long-term benefits: revitalized domestic
manufacturing, enhanced national security, and the return of good-paying jobs
to communities that have long been overlooked.
Importantly, these household
estimates do not capture the broader economic gains such as stronger supply
chain resilience, increased consumer choice over time, and reduced
vulnerability to global disruptions like pandemics or geopolitical conflicts.
As the Tax Foundation points out,
the current projections understate the full cost of inaction, as they omit the
hidden toll of lost consumer options and price instability caused by foreign
supply shocks.
Maintaining America’s Role as
the World’s Leading Power
Perhaps most critically, these
tariffs are a reaffirmation of American leadership. For decades, the U.S. has
financed the rise of rivals by importing their subsidized goods while hollowing
out its own economy.
China’s weaponization of trade,
control over rare earth minerals, and role in the fentanyl epidemic show that
economic engagement alone will not induce reform. Tariffs, when used
strategically, impose consequences and create leverage that soft diplomacy cannot.
America cannot remain the
unipolar leader of the global order while depending on adversaries for its
industrial backbone.
A country that cannot manufacture
its own steel, semiconductors, or medical supplies cannot lead in war or peace.
The 2025 tariffs represent a decisive step toward reversing that dependency.
Choosing Strength Over
Complacency
The Tax Foundation’s
comprehensive report underscores a pivotal truth: the tariffs enacted under
President Trump particularly those leveraging the IEEPA mark the most
significant transformation in U.S. trade policy in a generation.
These measures are not rooted in
outdated protectionism; they are a strategic defence of American workers,
industries, and national sovereignty.
Yes, legal battles, political
opposition, and economic adjustments are inevitable. But the alternative is far
more costly: continued industrial decline, strategic dependence, and diminished
global influence.
Now is the moment to reaffirm American strength. These tariffs are not an end; they are a beginning. A down payment on a future where the United States reclaims control over its economic destiny. If America is to lead in the 21st century, it must first secure the foundations of its independence and resilience.
Kuala Lumpur.
03.06.2025
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