Washington Watch: Tariffs and Trade Policy During the First 100 Days of the Second Trump Administration
The first months of 2025 saw significant shifts in the United States trade policy under the new Trump administration. During this time, broad tariffs were put into place which has impacted global commerce. These actions, supported by a national emergency declaration under the International Emergency Economic Powers Act (IEEPA), have led to considerable economic uncertainty. For North Carolina’s counties, changes and unpredictability in international commerce are particularly relevant due to the state’s $42.8 billion in global exports last year.
The Trump administration has repeatedly emphasized that tariffs are necessary to address trade imbalances, protect U.S. industries, and ensure national security by reducing reliance on imports and encouraging domestic manufacturing. By late April 2025, the complex and evolving situation included the implementation of a general 10% baseline tariff on most imports, a 90-day pause on higher country-specific reciprocal tariffs for dozens of nations pending negotiations (which is set to expire on July 9, 2025), and the enforcement of steep tariffs on specific countries, notably China, alongside active duties being imposed on specific sectors like steel, aluminum, and automobiles. As these policies continue to unfold and negotiations advance, further developments are expected, including likely adjustments as trade talks and diplomatic efforts continue.
Federal Tariff Actions Overview: January – April 2025
On January 20, 2025, a Presidential Memorandum was signed entitled “Preparing United States Trade Policy for Strategic Action,” directing federal agencies to evaluate and prepare for immediate shifts in tariff policy. Steps to start implementing changes commenced quickly. Additionally, an executive order was issued on February 1 that imposed 25% tariffs on most goods from Canada and Mexico, and 10% tariffs on China, citing border security concerns. These tariffs prompted retaliatory threats, and brief implementation pauses were later negotiated for Canada and Mexico. After earlier delays, the tariffs on Canadian, Mexican, and additional Chinese imports took effect on March 4. By March 12, the Trump administration also revisited industrial metal tariffs by implementing a 25% tariff on most steel and aluminum imports and removing prior exemptions.
The most sweeping changes occurred in early April. Invoking IEEPA and citing a national emergency over trade deficits and the lack of reciprocity, the Trump administration ordered a new tariff structure — a 10% baseline tariff on nearly all imports — to be implemented and made effective on April 5. Additional “reciprocal” tariffs targeting 57 specific countries (ranging from 11 to 50% or higher) were announced on April 9 but were suspended hours later for most nations (excluding China) for 90 days to allow further negotiations. This temporarily reverted affected nations to the 10% baseline. For China, however, the cumulative tariff rate rose sharply, reaching 145% by April 10 before stabilizing at that level amid reported ongoing bilateral talks. In response, the Chinese government introduced a new round of retaliatory tariffs on U.S. goods, with rates reaching as high as 125% on certain agricultural and manufactured products. Separately, 25% tariffs on imported cars and parts were imposed.
The tariff actions implemented in early 2025 have been substantial, with the U.S. tariff rates rising to levels not seen in decades and covering a large portion of U.S. imports. The weighted average U.S. tariff rate in April of this year ranged between 11% and 27%. Economic models predict potential negative impacts from these policies including annual GDP reductions near 1%, job losses in several sectors, and increased average household costs that could exceed $1,000 per year due to higher consumer prices. Despite the potential negative impacts on economic activity, the tariffs are also projected to generate substantial federal revenue, ranging from $1.5 trillion to $2 trillion over the next decade. These rapid policy changes have contributed to heightened market volatility and widespread economic uncertainty, which has been reflected in both Federal Reserve reports and business surveys, where trade policy is frequently cited as a top concern.
Key Sectors Impacted in North Carolina Counties
North Carolina’s economy is significantly intertwined with global trade, averaging over $35 billion in total exports annually since 2018 and supporting approximately 145,000 jobs. The tariff landscape presents potential risks and opportunities across several key sectors:
Agriculture: As North Carolina’s largest industry and a leading export sector (over $4.5 billion in 2022), agriculture faces heightened exposure. Retaliatory tariffs threaten markets for key commodities such as pork, poultry, tobacco, and soybeans and could lower prices received by farmers. North Carolina agricultural products could experience reduced international demand and increased price pressure. Farmers are also likely to encounter higher operating costs due to imports like fertilizers (e.g., potash from Canada) or other foreign components. These factors can impact the broader economy in rural counties dependent on agriculture.
Ports and Logistics: The state’s deep-water ports in Wilmington and Morehead City, and its inland port in Charlotte, handle significant volumes of international trade. A decline in imports due to tariffs, coupled with reduced exports from retaliatory policies, could lower the overall cargo passing through the North Carolina economy. This could also impact port revenues, regional employment, and the broader logistics network that supports transportation, warehousing, and supply chain operations in surrounding counties and across the state.
Manufacturing and Construction: Local manufacturers reliant on imported raw materials or components could see increased costs or delays due to supply chain disruptions — particularly in sectors using steel, aluminum, and electronics. Rising costs for construction materials may also strain county-level infrastructure budgets and project timelines, complicating efforts to maintain or expand public infrastructure.
Counties must closely monitor how these shifting trade policies influence their local economies, especially in terms of sector-specific effects and potential budgetary impacts.
Trade Policy Outlook
Federal tariff policies enacted in early 2025 remain a significant factor in the economy. The current trade policy landscape is characterized by uncertainty as ongoing negotiations and shifting stances continue to shape the economic environment. While some optimism exists regarding potential agreements and tariff reductions, many aspects of the trade negotiations remain unresolved, underscoring the significant economic stakes. The Trump administration has publicly signaled that some tariff levels could be recalibrated as part of ongoing trade negotiations, including specifically those imposed on China. The Chinese government has reiterated that meaningful trade dialogue will depend on the removal of unilateral U.S. tariffs. On May 12, 2025, the United States and Chinese governments reached an agreement to roll back their respective tariff increases by 115%, while maintaining a 10% baseline tariff. China also eliminated recent retaliatory duties and other non-tariff countermeasures. Most tariffs imposed on Chinese products since early April have been suspended for 90 days. However, key pre-existing U.S. tariffs remain in effect, signaling only a partial de-escalation. With both governments continuing to implement economic measures and national security concerns shaping trade policy, the current environment remains highly volatile.
The 90-day pause on higher reciprocal tariffs remains in place ahead of the early July expiration, while legal challenges to the validity of IEEPA-based tariffs proceed through the federal courts. In the meantime, businesses and county governments will need to continue navigating these shifting trade policies by tracking the status of tariff enforcement and monitoring for local impacts.
For North Carolina’s counties, potential impacts from these developments could affect key sectors of the state’s economy, including agriculture, ports, manufacturing, and others. As federal policies evolve, county leaders should monitor for federal trade policy updates, diplomatic developments, and implications on local economies and communities.
