When US President Donald Trump initiated his trade war last April, he promised a new era for America—pledging to restore manufacturing, increase government revenue, and open new markets.
One year later, US tariff rates have reached their highest levels in decades, with the average effective rate rising to approximately 10%, up from about 2.5% at the start of last year.
Below are four significant ways these tariffs have transformed global trade.
1. US-China break-up accelerates
Trump shocked the world last April, dubbed Liberation Day, when he imposed a minimum 10% tariff on many foreign goods—targeting certain countries like China with even higher duties.
China responded with retaliatory tariffs, triggering a tit-for-tat escalation that pushed tariff rates into triple digits and briefly halted trade between the two economic giants.
These tensions eventually eased. By the end of 2025, tariffs on Chinese goods were 20% higher than at the year's start.
However, trade between the US and China suffered a significant decline.
The value of US imports from China dropped roughly 30% last year, while US exports to China fell more than 25%.
By year-end, Chinese goods accounted for less than 10% of total US imports—levels last seen in 2000 and down from over 20% in 2016, the year Trump was first elected.
Increased US imports from Vietnam and Mexico, where Chinese firms have expanded investments, indicate that business ties between the two countries have not fully unraveled.
However, the data suggest that the decoupling initiated during Trump's first term has now firmly taken hold, according to Davin Chor, professor and globalization chair at Dartmouth University's Tuck School of Business.
"When it comes to direct shipments, it has been very dramatic and it has been very decisive,"
Chor added that the major shift last year reflected companies acting on plans already underway. Even if Trump does not maintain his most aggressive tariffs, the break is likely to persist.
"I don't think you should expect things to go back to business as usual," he said.
2. Trade partners look elsewhere
Trump's tariff changes extended beyond Liberation Day. He raised levies on specific items such as steel, lumber, and cars, and ended rules allowing shipments valued under $800 to enter the US duty-free, among other measures.
Despite these new taxes, US imports grew by over 4% last year—slower than in 2024 but not indicative of isolationism.
Nevertheless, these measures prompted many foreign firms to seek buyers outside the US, while political leaders worked to strengthen non-US trade relationships.
This trend was evident even in countries like the UK, which faced a relatively modest 10% tariff on its goods.
Although the US remained the UK's top export destination in 2025, America's share of UK exports declined, while Germany, France, and Poland gained market share.
"Some people might be surprised—global trade as a whole...has held up quite well," said economics professor Jun Du of Alston University. "But there's a lot of re-wiring."
The US succeeded in securing trade changes from some countries to increase opportunities for US businesses, such as farmers, to export.
However, Trump's approach alienated allies and triggered shifts contrary to US interests—even in Canada, where most goods were ultimately exempted from tariffs under the North American Free Trade Agreement.
Canada recently agreed to reduce tariffs on thousands of Chinese-made electric vehicles from 100% to approximately 6.1%, marking a significant pivot toward China and a setback for American car manufacturers who have traditionally dominated the Canadian market.
"What is driving alarm is not as much the level of tariffs as it is the unilateralism," said Petros Mavroidis, professor at Columbia Law School.
3. Tensions with allies build
The tariff-induced tensions have extended beyond trade.
Canadian travel to the US declined by 20% last year, costing the US economy over $4 billion, according to the US Travel Association.
Tariffs have also complicated US efforts to build support on various issues, including the war in Iran and the renewal of a 28-year ban on tariffs on electronic transactions such as streaming, Mavroidis noted.
"How can you ask for co-operative behaviour when you screw them on trade?" he said. "You lose your soft power, which was the biggest advantage to the US. All of this is gone now and how do you build it back?"
While direct trade retaliation against the US has been limited so far, economist Michael Pearce of Oxford Economics warned that this may not continue.
"That's the significant risk—that over time we do start to see that retaliation in other ways," he said. "That's how damage from the trade war can spread."
4. Prices rise in the US
The tariffs announced on Liberation Day, which caused widespread concern, were ultimately softened after exemptions and deals with countries granting lower rates.
The major promises Trump made have not materialized.
Manufacturing contracted for much of last year, and foreign investment in the US declined despite some firms, including drugmakers, pledging increased spending, according to Tax Foundation analysis of government data.
In February, the US Supreme Court struck down the Liberation Day tariffs altogether, also questioning the surge in tariff revenue collected last year. The US government now faces returning more than half of the $260 billion collected.
The White House stated that it will take time for policies to yield results, citing commitments from firms and countries for substantial investments.
For now, the main impact of tariffs in the US has been increased business pressures and higher consumer prices.
Goldman Sachs estimated in October that about 55% of the new tariffs were passed on to consumers last year.
This contributed to raising the US inflation rate by roughly half a percentage point to about 3% compared to what it would have been without tariffs, Pearce said.
With affordability a key concern for many voters, this issue has complicated the Republican message ahead of the mid-term elections in November.
Despite tariffs weighing on consumer spending and business activity, the US economy still grew 2.1%, with unemployment at 4.4% in December.
"It's created a lot of noise, but I think it's difficult to say that it's had very significant negative macroeconomic impacts," Pearce said.
The White House pledged after the Supreme Court ruling to pursue its policies through other laws. How aggressively Trump will push these measures before the elections remains uncertain.
"I don't think we'll ever get back to Liberation Day levels," said Erica York, vice president of federal tax policy at the Tax Foundation.
