Author: Abby Maxwell, Senior Policy Associate
Editor: Anayana White, Head of Communications
Timeline of Recent Tariff Actions
The administration has taken the following actions using Tariffs as of May 1st, 2025:
- Imposition of tariffs on Chinese imports effective February 4, 2025
- Tariffs on Canadian and Mexican goods (violating USMCA), March 4, 2025, after a one-month pause from the original effective date of February 4, 2025
- Expanded tariffs on steel and aluminum products for all countries take effect on March 12, 2025
- Tariffs on automobiles and motor vehicle parts announced March 26, 2025, effective for cars April 3, and for auto parts no later than May 3.
- Ending the de minimis rule on April 2, 2025
- Retaliatory tariffs from Canada, Mexico, China, and the European Union, April 2, 2025
- Use of the International Emergency Economic Powers Act (IEEPA) to enact tariffs, limiting Congressional oversight, April 2, 2025
- Increased the reciprocal tariff rate on China from 34% to 84% on April 8, 2025, and then again from 84% to 125% on April 9, 2025
- Announcement of a 90-day pause on increased reciprocal tariff rates, excluding China, reverting back to 10% baseline, April 9, 2025, effective through June 9, 2025
- Clarification through a memo on semiconductor and certain electronics exemptions from reciprocal tariffs, April 11, 2025
- USTR (United States Trade Representative) announcement of several actions, including phased fees on Chinese shipping, April 17, 2025
- Prevention of “stacking,” to avoid multiple tariffs applying to one article through an executive order, April 29, 2025
- Proclamation amending previously imposed 25% tariffs on automobiles, providing temporary relief for vehicles assembled in the U.S. with foreign components, April 29, 2025
The administration has paused, changed the timelines, and expanded these tariffs several times over the last few weeks. For more details, see these timelines from CNN and ABC.
Understanding the New Tariff Landscape and Its Impact on Businesses
As the administration imposes new tariffs, the American Sustainable Business Network is working to share relevant information for the business community. In the past few months, tariff policy changes have caused mass confusion, stock volatility, and real economic impacts. To better understand current events, ASBN welcomed Adam Hersh, Senior Economist at the Economic Policy Institute (EPI), to our April Policy Forum: Tariffs & the Impact on Business. Hersh specializes in international trade and industrial policy and engaged our members in a robust discussion about tariff policy. The following blog draws from that policy forum to give an overview of tariffs, their real-world impacts, and the potential motivation for the administration’s current policies.
What Are Tariffs and How Do They Work
A tariff is a tax imposed on U.S. imports. Legally, this tax is paid by the U.S. importer, not foreign entities. The goal of tariffs is to redistribute benefits from consumers and foreign producers to domestic producers that compete with imported goods. They function as a tax on consumption and a subsidy for domestic producers. The United States imports approximately $4 trillion annually in goods and services, primarily from Canada, Mexico, and China.
Tariffs can be legitimate fiscal policy tools if used strategically in a limited and targeted manner. For example, tariffs have been used to protect domestic industries from unfair competition and mercantilist practices and to shield workers from unfair competition. Tariffs were used in the European Union Carbon Border Adjustment Mechanism (CBAM) to promote worker rights and environmental protections by confirming that the price of embedded carbon is paid on goods imported to the EU to avoid undermining EU climate goals. However, tariffs alone are insufficient and must be paired with other complementary policies to support industrial development.
Tariff Limitations
According to Hersh, tariffs cannot solve economic challenges, such as trade deficits and tax inequalities, by themselves and should not be used as a substitute for industrial policy. Tariffs will not fix trade deficits, because other countries may retaliate with their own policies. In addition, tariffs may cause the dollar to appreciate or gain value, which would make American-made products more expensive to sell abroad. Tariff revenue is also an unrealistic substitute for income tax, as it is a regressive tax.
Understanding Regressive Tax
A regressive tax is one that creates a larger burden on lower-income taxpayers than on middle- or higher-income taxpayers. The Tax Foundation states, “[t]axes on imports (tariffs) are regressive in that they apply to consumption, and lower-income households tend to consume a greater share of their incomes than higher-income households. But they are particularly regressive because the tariff schedules tend to apply higher rates to lower-end goods than they do to luxury goods…” To put it simply, regressive taxes like tariffs place a higher burden on lower-income populations across the U.S. Tariffs are a tax that ultimately burdens small businesses and lower-income consumers.
Tariffs: Not a Complete Solution
Tariffs alone cannot address the complexities of manufacturing, including reliance on imported components and other market failures; therefore, it is not a complete solution but one tool that should be used strategically and sparingly.
Dissecting the Reasons Behind Current Tariffs
The administration has stood behind its tariff plans with the reasoning that these tariffs will rebuild manufacturing, eliminate trade deficits, raise tax revenues, ensure reciprocity and fairness, and gain bargaining leverage in international trade negotiations.
Hersh countered these points by explaining that these reasons are not based in reality, and are not effective approaches. “This is not the way to rebuild manufacturing,” says Hersh, “and they're doing all kinds of other policies that are undermining manufacturing, including getting rid of subsidies for manufacturing investments in chip semiconductors.” Additionally, trade deficits are determined by macroeconomic factors. The tariffs are not genuinely reciprocal or fair. And lastly, it is impossible to block imports and collect taxes on them effectively and simultaneously.
The Looming Impact on Small Businesses
The recent widespread implementation of tariffs and targeted high tariffs, like the recent 125% tariff hike on Chinese goods, threatens small businesses the most. Higher prices on inputs, supplies, and services with imported content, coupled with possible supply chain disruptions, affect the availability of key products. When businesses' costs go up to manufacture and receive goods, businesses are forced to raise prices and shift the burden to already financially constrained consumers. In some cases, that shift will be enough to put some small businesses out of business entirely.
“Small businesses, as you know, just have less access to the kinds of facilities and financial products they need to weather these storms.” Hersh concluded that we may see “more market concentrations in large monopolist firms.”
The uncertainty brought about by tariffs and an unknown response from the Federal Reserve means that it is likely that more small businesses will fail and fewer new ones will start. This could lead to further dominance by large businesses with more resources to shift manufacturing to the U.S. and to navigate uncertain times. However, even the larger companies will have challenges, as it can take millions of dollars to start new manufacturing facilities and many years to get new operations up and running.
During our April Policy Forum: Tariffs & the Impact on Business, an in-meeting poll of attendees confirmed that business leaders are concerned, angry and frustrated about tariff announcements. Two-thirds responded that higher input and material costs are of most concern.
The polls also found:
- 62.5% of small businesses expect tariffs to increase production costs
- 50% said tariffs will make them less competitive in their markets
TIME recently published a piece titled “How Economic Uncertainty Can Lead To Recession,” which describes some of these real and troubling impacts of the administration’s tariffs. From consumers holding off on hiring landscapers to businesses advising employees to cancel non-critical business travel, the underlying reasons stem from the uncertainty caused by sweeping tariffs.
The Path Forward
It is critical for business leaders to share their stories about the impacts of these tariffs with legislators and the media. Congressional action is the clearest path for change and for action, and the business voice has the power to make a difference.
ASBN will continue to be a voice for our community in this time of great uncertainty. Today, we call on business leaders to “Tell Your Story.” Together, we can make a difference.
Additional Resources
To learn more about Adam Hersh and The Economic Policy Institute’s work, see the Tariff FAQ and the Federal Policy Watch.
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