Pro Tips
What Are Tariffs and How Trump Is Using Them
Apr 7, 2025
Understanding tariffs can be frustrating. As import taxes continue to rise, what will that mean for your business? How will they affect the products you buy and sell? If you're anxious about the answers to these questions, you're not alone.
Many financial experts and economists are worried about the rising tariffs' impact on the economy as a whole. This guide will help you understand tariffs, how they affect your bottom line, and what you can do to prepare for the impact of the ongoing Trump’s tariffs 2025.
GoMoon's solution can help you achieve your objectives. Our comprehensive guide will help you understand tariffs and how the current Trump tariffs may affect your business.
Table of Contents
What Are Tariffs and Why Do Governments Use Them?
What Are Tariffs? A Simple Definition to Get Us Started.
Tariffs are taxes charged on imported goods. When a country buys less of what it needs from foreign suppliers, it can impose tariffs on those goods to encourage more domestic purchasing. When tariffs are levied, the importer usually pays them, but that cost is passed on to consumers through higher prices. For example, if the U.S. imposes a 20% tariff on imported TVs from China, and a retailer imports a TV worth $500, an additional $100 tariff is paid. That cost typically gets added to the consumer price.
Types of Tariffs: Different Names, Different Purposes
There are several different types of tariffs, each with a specific purpose:
Ad Valorem Tariffs
A percentage of the value of the good. Example: 10% tariff on all foreign cars entering the U.S.
Specific Tariffs
A fixed amount per unit. Example: $25 per imported laptop, regardless of its price.
Compound Tariffs
A combination of ad valorem and specific. Example: 5% of the product's value + $10 per unit.
Retaliatory Tariffs
Tariffs are imposed in response to another country’s trade restrictions. Example: If Country A raises steel tariffs, Country B retaliates with tariffs on agricultural imports.
Protective Tariffs
Used to make foreign goods more expensive than domestic alternatives, encouraging local production.
Why Tariffs Go Up (And Down)
Tariffs serve both economic and political goals. Here are the core reasons why governments use them:
Protecting Domestic Industries
Tariffs raise the price of imported goods, giving local manufacturers a pricing advantage. This is crucial in sectors like steel, farming, or electronics, where governments may want to protect jobs, strategic independence, or national security. For example, if the U.S. imposes tariffs on Chinese solar panels, domestic solar manufacturers are more likely to remain competitive and hire locally.
Correcting Trade Imbalances
If a country imports far more than it exports, it creates a trade deficit. Tariffs often discourage imports and reduce that imbalance, assuming people will buy more local goods instead. Trump's 2025 tariff strategy is focused on reducing the trade deficit with China, Vietnam, and the EU, where the U.S. believes it has been mistreated.
Political Leverage & Diplomacy
Tariffs are also used as a bargaining chip in international negotiations. Countries may impose or threaten tariffs to:
Force trade partners to lower their tariffs.
Gain concessions in unrelated areas (e.g., intellectual property, currency controls).
Punish perceived unfair practices.
Example: The U.S. threatened tariffs on Mexico unless it took action to stem illegal immigration — tying economic policy to border control.
Revenue Generation (Less Common Today)
Historically, tariffs were a significant source of government revenue, especially before the rise of income taxes. While this is no longer the primary function in developed economies, some developing nations still use tariffs to fund public budgets.
The Side Effects of Tariffs
While tariffs can support domestic industries, they can also create economic ripple effects:
Higher Consumer Prices
Tariffs increase the final price of goods, which may lead to inflation.
Retaliation from Trade Partners
Countries hit with tariffs often respond with their own, triggering trade wars.
Supply Chain Disruption
Modern manufacturing is global. Tariffs can interrupt supply chains, raising costs even for local firms that rely on imported parts.
Market Uncertainty and Volatility
Unsure of how tariffs will evolve, investors reduce risk, causing swings in equities, currencies, and commodities.
Related Reading
• Trump News
• Trump Tax Plan 2025
• Trump Taxes
• Trump Tariffs Canada
How President Trump Is Using Tariffs in 2025
Donald Trump’s 2025 tariff plan is a bold scheme to rebuild American manufacturing by imposing steep economic penalties on foreign trade. The plan will likely cause severe disruption to global markets, creating volatility for investors and raising prices for American consumers.
The Core of Trump’s 2025 Tariff Plan: A Universal Economic Barrier
Trump’s current policy introduces a “Global Baseline Tariff” and a set of targeted “Reciprocal Tariffs.” These policies aim to penalize countries with trade surpluses against the U.S. and rebuild American industrial potential.
Global Baseline Tariff – 10% Across All Imports
Effective Date: April 5, 2025. This is not a targeted tariff — it’s a blanket tax. Whether a product comes from a U.S. ally or rival, it’s now subject to an extra 10% cost upon entry. Importers bear the price, but it’s ultimately passed on to American businesses and consumers. The goal is to incentivize domestic sourcing and production by making foreign goods comparatively more expensive.
Reciprocal Tariffs – Targeted at Trade “Abusers”
Beyond the global 10%, Trump’s trade team has introduced much steeper tariffs on countries that:
Run large trade surpluses with the U.S.
Already impose high tariffs on American goods.
They are seen as engaging in currency manipulation or IP theft.
Country-specific rates include:
China: 54% (base 10% + additional 44%)
Vietnam: 46%
European Union: 20%
United Kingdom & Australia: Remain at the 10% baseline
These tariffs are retaliatory in nature—they are meant to punish or pressure countries that Trump sees as taking advantage of the U.S. They’re also a negotiation tactic—high tariffs are meant to drive countries to the table and renegotiate trade deals more favorable to U.S. exporters.
Elimination of De Minimis Exemption (China & Hong Kong)
Previously, goods valued at $800 or less were exempt from import tariffs under the de minimis rule, allowing eCommerce goods (like packages from Shein or Temu) to enter duty-free.
Trump’s change:
Eliminates this exemption for China and Hong Kong.
Imposes either:
30% duty or
A flat $25 fee per item, rising to $50 by June 1, 2025
Consumers shopping online for affordable goods will see steep price increases.
Strategic Goals Behind Trump’s Tariff Approach
This isn’t just economic policy — economic warfare and political branding.
Rebuild American Manufacturing
Trump wants to force supply chains to return home by making imports more expensive. This would benefit U.S. manufacturers in the automotive, textile, electronics, and steel sectors.
Punish “Unfair” Trading Partners
Countries with massive trade surpluses are told to buy more American or pay the price. Tariffs serve as pressure to open foreign markets to U.S. goods.
Appeal to Domestic Populist Base
The policy is popular among voters who believe globalization has hollowed out American jobs. Tariffs offer a straightforward narrative: “We win, they pay.”
Weaponize Trade for Foreign Policy Leverage
Tariffs give Trump a tool to extract concessions beyond economics, such as immigration control (e.g., Mexico) or technology restrictions (e.g., China).
The Economic and Market Impact So Far (Q2 2025)
Rising Inflation Risk
Importers are raising prices to cover tariff costs. Price pressures in electronics, apparel, and essential goods are already evident in CPI figures.
Global Trade Disruptions
China, Vietnam, and the EU are threatening retaliatory tariffs. Supply chain redirection is causing shipping delays and cost overruns.
Currency Volatility
The Yuan (CNY) has weakened under pressure, driving USD/CNH higher. Emerging market currencies (MXN, VND) have become more volatile as investors fear capital controls or reduced exports. Traders are pricing in future interest rate changes depending on the impact of inflation.
Equities and Crypto
Tariff-sensitive U.S. sectors (retail, auto, agriculture) have seen sharp corrections. Bitcoin has briefly rallied during tariff escalations as a hedge against monetary instability, then corrected on liquidity concerns. Stablecoins (USDT, USDC) have risen in on-chain volume as traders move to safety.
What the GoMoon Platform Does
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
Related Reading
• Canada Tariffs
• Canadian Tariffs On US Goods Prior To 2025
• Mexico Tariffs
• Is Trump Getting Rid Of Income Tax
• Trump Economic Plan
• Reciprocal Tariffs
How Trump’s Tariffs Affect Financial Markets (Forex + Crypto)
The Forex Market Gets Weird: Trump Tariffs Affect Currency Pairs
Tariffs don’t just impact trade—they create chaos in the global economy, which moves currency prices. Forex is among the first and fastest markets to respond to Trump’s tariff announcements. That’s because tariffs influence two key macroeconomic factors: trade flows (imports and exports) and interest rate expectations (inflation + central bank response). Here’s how Trump’s 2025 tariff strategy affects significant currency pairs:
1. USD/CNH (U.S. Dollar / Offshore Chinese Yuan)
Why it sensitive
Trump’s tariffs specifically target China, raising total tariffs on Chinese goods to 54%.
This makes USD/CNH the primary battleground for the U.S.–China trade friction.
How it reacts
Tariff escalation → CNY weakens → USD/CNH spikes.
Suppose China retaliates (e.g., currency controls or counter-tariffs), further upside.
Trader takeaway
Expect sharp upward moves on tariff news, with volatility clustering around policy announcements—an excellent pair for momentum trading when headlines hit.
2. USD/JPY (U.S. Dollar / Japanese Yen)
Why it sensitive
JPY is a safe-haven currency.
When tariffs trigger market fear, investors flee risk and buy the Yen.
How it reacts
Tariff shock → risk-off → USD/JPY drops.
If Trump delivers a pro-business tone or hints at negotiation, → USD/JPY stabilizes or rises.
Trader takeaway
Watch JPY as a fear barometer.
It tends to spike during first-response volatility.
3. USD/MXN (U.S. Dollar / Mexican Peso)
Why it sensitive
Trump’s policy ties immigration and trade together, especially with Mexico.
Tariff threats or border action cause capital to flee Mexican assets.
How it reacts
Deportation/military border enforcement → MXN weakens → USD/MXN surges.
Trade diplomacy resumes → USD/MXN calms or drops.
Trader takeaway
High-beta pair.
Tariff and immigration rhetoric create daily volatility, which is significant for short-term positioning.
4. EUR/USD (Euro / U.S. Dollar)
Why it sensitive
The EU faces a 20% tariff under Trump’s reciprocal plan.
That undermines Europe’s export position and sours investor sentiment.
How it reacts
U.S. raises tariffs on EU autos or tech → EUR weakens → EUR/USD drops.
If Trump pressures the Fed to cut rates, → USD weakens → EUR/USD rises.
Trader takeaway
EUR/USD often reflects bigger-picture shifts in post-tariff Fed and ECB policy positioning.
Bitcoin Isn’t Just a Digital Currency: It’s a Macro Hedge
You might not think tariffs and Bitcoin go together—but in today’s macro-aware world, they do. Crypto trades global sentiment, and Trump’s tariffs influence: risk appetite, inflation expectations, and dollar trust. Here’s how:
1. Bitcoin (BTC/USD)
Why it sensitive
BTC is a hedge against inflation, fiat devaluation, and geopolitical instability.
How it reacts
Trump tariffs → fear of U.S. inflation or global slowdown → BTC spikes.
Tariff-driven dollar strength → BTC may pull back (short term).
If Trump mentions regulation alongside tariffs, → BTC sells off faster.
Trader takeaway
BTC is now a macro proxy.
Watch how GoMoon.ai scores tariff announcements in terms of long-term or short-term positioning.
2. Ethereum (ETH/USD)
Why it sensitive
Follows BTC but reacts more sharply to market-wide risk sentiment.
How it reacts
Tariffs = fear = ETH initially rallies with BTC.
If global liquidity dries up (e.g., if the Fed hikes due to inflation), ETH will dump harder than BTC.
Trader takeaway
ETH has a higher beta.
It is used for volatility plays but is quicker to take profits.
3. Stablecoins (USDT, USDC)
Why they sensitive
When tariff panic spreads, many crypto traders move funds into USDT or USDC to sit out the storm.
How it reacts
On tariff escalation days, stablecoin on-chain volumes spike.
Watch stablecoin flows to gauge genuine crypto sentiment during volatility.
Trader takeaway
Rising stablecoin inflows = risk-off mode.
Use this signal to time exits or manage exposure.
Tariffs Create Chain Reactions That Move Markets
Tariffs don’t just move prices directly—they create economic conditions that influence broader investor behavior. Here’s how:
1. Inflation Expectations
Tariffs mean higher import costs, which raise consumer prices. Traders price in future rate hikes, strengthening the USD short-term.
2. Central Bank Reaction (Especially the Fed)
Fed watches inflation closely. If Trump tariffs drive CPI up, hawkish Fed language follows → stronger USD.
3. Capital Flight
If they're hit with tariffs, investors may pull out of emerging markets (like Vietnam, Mexico). Currencies like VND and MXN weaken.
4. Risk Sentiment Shift
Equities dump, gold rises, VIX spikes → crypto moves depend on whether the fear is U.S.-based or global.
Real-Time Analysis with GoMoon.ai
GoMoon.ai makes it easier for traders to understand which assets are reacting and why: AI-rated impact scores tell you which pairs are most likely to move based on similar past tariff announcements. You can set alerts for keywords like “Trump tariffs,” “China,” or “import tax” to stay ahead of volatility. The event replay tool lets you study how USD/CNH, BTC, or ETH reacted in the past during tariff escalations. This means you’re not guessing—you’re using data-backed event correlations to time your trades.
What the GoMoon Platform Does
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
How Traders Can Trade Trump Tariffs Effectively
Use GoMoon.ai to Detect and Time Tariff Events
GoMoon.ai isn’t just a calendar — it’s your first responder during macro volatility. Here’s how to use it effectively for trading tariffs:
1. Set Targeted Alerts
Create keyword alerts for Trump, tariff, import tax, China, Vietnam, trade war, crypto regulation, USD policy, supply chain, and de minimis. Enable country-specific alerts, e.g., for tariff mentions involving China, EU, Mexico, and Vietnam.
2. Monitor AI Impact Scores
When a new tariff-related event is detected, GoMoon.ai scores it from 1–10 based on how similar past events affected markets. 8–10: High volatility likely (suitable for breakout trades) 5–7: Possible pullback or delayed move <5: Typically noise or priced in
3. Replay Historical Tariff Events
Use the event replay feature to view how markets behaved during the 2018–2019 U.S.–China trade war, April 2025 Global Tariff Launch, and any previous retaliation events. This gives you pattern recognition to guide your positioning.
Forex Trading Strategies for Tariff Events
1. USD/CNH Breakout Strategy (China-Focused Headlines)
Why it works:
Trump’s tariff announcements hit Chinese assets directly, and USD/CNH is usually the first mover.
How to trade it:
Use GoMoon.ai alert + sentiment score to confirm strong anti-China rhetoric.
Watch for early volume surge around USD/CNH support/resistance zones.
Enter on confirmed breakout candle (15m or 1H).
Set stops below the last swing low or technical breakout level.
Bonus tip:
If GoMoon's impact score is 9+, scale it in or use a pyramid.
2. USD/JPY Risk-Sentiment Fade
Why it works:
JPY is a haven. When Trump tariffs trigger panic, USD/JPY drops fast and deep.
How to trade it:
Wait for the initial panic move (strong red candle).
Use GoMoon.ai to assess sentiment.
Expect a mean-reversion bounce if the AI score falls after the first spike.
Enter long on bullish engulfing or support hold.
TP at mid-range or pre-news price.
This trade is great for fading overreactions.
3. EUR/USD Interest Rate Drift Strategy
Why it works: Tariffs increase inflation expectations → Fed may stay hawkish → USD strengthens against the Euro.
How to trade it: Combine GoMoon impact alerts with inflation commentary. Enter short EUR/USD on confirmed reversal patterns after tariff news. Hold position through CPI, PCE, or Fed speaker events if inflation narrative continues.
Crypto Trading Strategies for Tariff Volatility
1. BTC/USD Sentiment Spike Play
Why it works:
When fiat confidence drops (especially when Trump pressures the Fed or escalates trade war), BTC acts as a store-of-value hedge.
How to trade it:
Use GoMoon.ai to track anti-Fed or inflationist rhetoric tied to tariffs.
Buy BTC on support retests during news volatility — especially if stablecoins start surging in volume.
Set tight stops under support or the Bollinger Band bottom.
Bonus signal:
Combine GoMoon sentiment score with USDT dominance rising on-chain.
2. ETH/BTC Short-Term Correlation Ride
Why it works:
ETH follows BTC during macro-driven moves but with higher volatility.
How to trade it:
When BTC reacts to tariffs (up or down), it rides in the same direction as ETH/BTC.
Use shorter timeframes (5m–30m) and tight trailing stops.
Exit at key Fibonacci levels or when BTC momentum stalls.
3. USDT/USDC Defense Strategy
Why it works:
During high tariff-driven panic, traders exit risk and sit in stablecoins.
How to trade it:
Allocate capital to stablecoins before a major Trump speech or policy announcement.
Wait until markets settle, then re-enter BTC or altcoin trades with less slippage.
Tip:
Use GoMoon calendar to schedule your defense hours around high-risk windows.
Multi-Asset Strategy for Advanced Traders
If you trade across markets (e.g., forex + crypto or indices), here’s how to coordinate your positions based on Trump’s tariffs:
Macro Hedge Setup Long
BTC or Gold Short:
USD/MXN or DAX index (if Europe targeted)
Hedge:
Long VIX or short SPX.
This protects against sharp risk-off moves while keeping upside open on inflation hedges.
Risk Management Tips When Trading Tariff Events
Expect whipsaws.
Tariff announcements often lead to fakeouts before an actual move starts.
Use confirmation candles.
Reduce position size.
Volatility is higher, spreads widen—protect your capital.
Use event scoring.
Don’t overtrade low-impact events.
Trust GoMoon.ai’s 1–10 scale to guide sizing.
Time your trades.
Don’t trade immediately after a headline.
Let the first reaction unfold, then step in.
Have a max daily loss.
News-driven moves can get messy, especially if contradictory statements follow.
Use Our AI-powered Economic Calendar Tool for Free Today
The 2024 presidential election is looming, and former President Donald Trump is ramping up his trade rhetoric. He slapped tariffs on thousands of products as president, claiming they would help revive American manufacturing. In 2025, when the next round of tariffs expires, the newly elected president will have a decision to extend them, let them expire, or renegotiate them. What will happen if Trump is re-elected and decides to extend those tariffs? If you trade products affected by these tariffs, it could dramatically impact your positions.
Targeting China
Many of the tariffs enacted during the Trump administration targeted China, with the goal of punishing the country for unfair trade practices and intellectual property theft. Economists agree that these tariffs haven’t worked, and in fact, they have hurt the U.S. economy more than China’s. If Trump is re-elected, he’s likely to continue his hard-line approach to China, which could mean even more tariffs.
What Would New Tariffs Look Like?
If Trump were to impose new tariffs, they would likely target the same industries as before. In addition to his previous tariffs on Chinese imports, Trump threatened tariffs on other countries, particularly those in the European Union, that he deemed unfairly subsidizing their industries. New tariffs from a Trump administration could also target imports from countries with free trade agreements with the U.S., such as Mexico and Canada.
What Happens Next?
Market reactions to Trump’s trade policies during his presidency were swift and severe. If he is re-elected and announces new tariffs, it could create a similar shock to the market. If you trade any products that tariffs could affect, staying informed on any developments regarding Trump’s potential new tariffs in 2025 is critical.
What the GoMoon Platform Does
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets. We've packed everything traders need: Live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides clear, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
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• Steel Tariffs
• What Happens If We Go To War With China
• Canada Tariffs On US Goods
• Military Pay Raise 2025
• Colombia Tariffs