What tariff retreats teach us

10 Feb 2025 2 min read

Daily update

US President Trump (temporarily) retreated from ending de minimis tariff exemptions. De minimis rules mean US consumers do not pay trade taxes on imports worth less than USD 800. This, alongside retreats from taxing Colombian, Mexican, and Canadian goods, emphasizes trade tax visibility. Consumers would notice the cost of these tariffs (affecting food and fuel prices, or the price of purchases from Temu), and would quickly realize that US consumers, not foreigners, pay tariffs. Highly visible tariffs lead to a quick retreat.
Taxing steel and aluminum is less visible to end-consumers. Taxing (bulk) imports from China is also less visible (imports from China tend to fall in price, so tariffs may mean less deflation, not price increases). Trade taxes in these areas are likely to be more enduring. They are still economically negative (a tax is a tax), but there are potentially fewer second-round effects.
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