Tariff Talk Special Edition

Good morning. It’s Friday, April 11.

The past week and a half has felt like whiplash. Trump’s latest tariff announcements sparked a wave of uncertainty. Markets shifted, group chats lit up, and many of us were left wondering what this all means for our investments, our businesses, and the prices we’ll be paying in the months ahead. The noise was loud, but the need for real perspective was louder. So we decided to dedicate this week’s Good Diet exclusively to tariffs. We’re covering what they are, how they work, the domestic fallout, the global tensions, the industries caught in the crossfire, and the fight over who really holds the power to set trade policy.

We put this together to help people make sense of what’s happening and move forward with more clarity. We hope it helps.

At Good Diet, we’re committed to earning your trust by delivering credible, reliable, and thoughtful news. Let us know what you love, what you’d like to see more or less of, or any other suggestions you may have. You can send feedback directly to me at [email protected].

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Best,

Rashad Drakeford

Co-Founder & Publisher, Good Diet

Tariffs: What They Are, How They Work, and Why They Matter

Tariffs have moved to the center of economic and political debates. Framed as a way to protect American industries, these import taxes often set off a chain reaction that affects consumer prices, business decisions, and global relationships. To understand what lies ahead, it's critical to understand how tariffs work and who really bears the cost.

• What Are Tariffs? Tariffs are taxes imposed on imported goods, calculated as a percentage of the product's value. In the U.S., these duties are collected by Customs and Border Protection at 328 ports of entry nationwide.

• Who Bears the Cost? While intended to be paid by foreign exporters, the financial burden of tariffs often shifts to American consumers. Importers, usually U.S.-based companies, pay the tariffs upon entry of goods. These companies frequently pass on the additional costs to consumers through higher prices. This can lead to increased costs for everyday items, affecting household budgets. ​

• Economic Rationale and Critiques: Tariffs aim to shield domestic industries from foreign competition by making imported goods more expensive. However, economists often view them as an inefficient revenue-raising tool. While they can protect certain sectors, tariffs may also lead to retaliation from trading partners and disrupt global supply chains. This disruption can result in unintended consequences, such as job losses in industries that rely on imported materials. ​

The Domestic Fallout of Trump’s Tariff Policies

President Trump's sweeping tariffs, averaging 27%, have placed significant strain on U.S. small businesses, which are responsible for nearly half of private-sector employment. While intended to protect American industries, these tariffs have led to increased costs and operational challenges for small enterprises. Compounding the issue, simultaneous cuts to support programs have left many small business owners navigating these challenges with diminished assistance.​

• Escalating Costs for Small Businesses: The tariffs have led to substantial cost increases for small businesses reliant on imported materials. Some entrepreneurs anticipate surcharges ranging from 25% to 75% on European imports. These added expenses threaten profit margins and may force businesses to raise prices or reduce operations.​

• Economic Indicators Reflect Strain: The Russell 2000 index, representing small-cap stocks, has entered bear market territory, declining over 20% since its post-election peak. In March, employment at the smallest firms decreased by nearly 100,000 jobs, indicating a contraction in the sector. These indicators suggest that small businesses are experiencing significant financial stress in response to the new tariff landscape.

• Reduction in Support Programs: Concurrently, the Trump Administration plans to cut approximately 2,700 positions—43% of the Small Business Administration's workforce—and reduce staff in other key support agencies. This includes dismantling the Commerce Department’s Minority Business Development Agency, which aids minority-owned businesses in securing loans and opportunities. The reduction of these support structures exacerbates the challenges small businesses face amid rising operational costs.​

The Global Impact of Trump’s Trade Policies

President Trump's recent escalation of tariffs—imposing up to 145% on Chinese imports—has not only intensified the U.S.-China trade conflict but also strained international alliances and introduced significant uncertainty into the global economy. While aimed at protecting American industries, these measures have prompted retaliatory actions, disrupted diplomatic relations, and unsettled financial markets worldwide.

• Strained Alliances and Diplomatic Tensions: Trump’s aggressive tariff strategy has alienated key U.S. allies, including Japan, South Korea, and the European Union, leading to a deterioration in longstanding diplomatic relationships. These nations have expressed frustration over the unpredictability of U.S. trade policies, which complicate collaborative economic planning and coordinated efforts to address global economic challenges. ​

• China's Strategic Positioning: In response to U.S. tariffs, China has imposed retaliatory tariffs of up to 84% on American goods and is actively seeking to strengthen trade ties with other nations. By promoting itself as a stable and open market, China aims to fill the void left by the U.S. in global trade leadership. This strategic repositioning could shift the balance of economic power and influence international trade norms. ​

• Global Economic Uncertainty: The abrupt implementation and subsequent partial rollback of tariffs have introduced significant uncertainty into global markets. Over the past two weeks, for example, Japan's Nikkei 225 index experienced notable volatility, including a 7.8% drop on April 7, followed by a 6% rebound on April 8, and a 4% decline on April 9. Similarly, Germany's DAX index and FTSE 100 have fluctuated, reflecting investor concerns over unpredictable U.S. trade policies. This environment of uncertainty hampers investment decisions and poses risks to global economic stability.

Who Really Controls Tariffs? The President or Congress.

While the Constitution gives Congress the authority to regulate trade and impose tariffs, decades of political compromise have shifted much of that power to the executive branch. Laws passed in the '60s and '70s gave presidents broad leeway to act unilaterally in the name of national security or economic emergencies, and President Trump has leaned hard into that authority. Now, as tariff threats ramp back up, some Republicans and Democrats alike are pushing to reassert Congress’s role before the U.S. enters another trade war without legislative oversight.

• The Constitution vs. Political Reality: Article I, Section 8 clearly gives Congress the power to “regulate commerce with foreign nations.” But over time, laws like the Trade Expansion Act of 1962 and the Trade Act of 1974 have allowed presidents to impose tariffs without needing Congress, especially when citing national security or emergency powers. Trump used this opening to levy hundreds of billions in tariffs during his first term — moves that reshaped trade flows and cost U.S. businesses and consumers alike.

• The Trade Review Act: Congress Tries to Take the Wheel: In response to Trump’s aggressive tariff agenda, a bipartisan coalition in Congress is backing the Trade Review Act, which would require legislative approval within 60 days for any presidential tariff to stay in effect. But key Republican leaders like House Speaker Mike Johnson and Senate Majority Leader John Thune have shown little interest in advancing the bill — a sign of internal party tensions and reluctance to challenge Trump’s authority. The president has already promised to veto any attempt to curb his tariff powers, making this not just a policy fight, but a broader constitutional clash over the limits of executive action in shaping the U.S. economy.

• Why This Fight Matters Now: Tariffs aren’t just economic tools — they’re political weapons. Trump’s proposals to raise tariffs across the board could affect over $500 billion in goods, potentially raising prices, straining alliances, and triggering retaliatory moves. The legislative battle over who controls those decisions will shape not just the economy, but America’s role in global trade for years to come.

Tariff Summer: Trade Wars and Economic Whiplash

As Trump ramps up his tariff threats heading into the summer, economists are warning that the effects could be felt hard and fast by everyday Americans. The stop-and-go nature of his trade approach—pauses, escalations, then more threats—has already created economic uncertainty that's slowing investment and jolting supply chains. What started as political posturing is now snowballing into a real economic drag—and it could reshape the landscape just as the economy was starting to stabilize.

• Consumer Prices Set to Surge: Economists from Oxford Economics and Moody’s warn that tariffs could raise prices on imported goods by 10% or more, especially on staples like electronics, clothing, and food. These costs often hit lower- and middle-income households hardest, as businesses pass increases down the line. A prolonged tariff war could push inflation back above 4%, reversing recent gains from the Fed’s rate hikes and stalling consumer spending.

• Trade War Part II Is on the Horizon: Trump’s promises to escalate tariffs—especially against China and Mexico—could reignite the same trade war dynamics that defined his first term. Analysts expect retaliatory tariffs from key partners, potentially slashing U.S. exports and harming industries like agriculture, auto, and manufacturing. If fully implemented, Trump’s proposed policies could cut GDP growth by 0.6 percentage points in 2025, according to the Peterson Institute for International Economics.

• Uncertainty Undermines Recovery: The stop-and-go nature of Trump’s tariff strategy—paired with hints at temporary “pauses”—is already spooking markets and delaying investment decisions. Businesses are unsure how to price goods, manage supply chains, or plan hiring. This uncertainty is a tax in itself, one that slows down hiring, discourages expansion, and chips away at the post-COVID recovery many small and mid-sized firms were just beginning to feel.

Up First: Trump’s Tariff Response, Economics of Tariffs, SCOTUS Rules on Deportations (Listen)

“President Trump faces questions on whether tariffs will remain in place as he welcomes trade negotiations with other countries. Forecasters warn of a heightened risk of recession as tariffs could mean higher prices and slower economic growth. And, the Trump administration has two legal wins in its efforts to crackdown on immigration.”

BBC: China Now Faces 125% U.S. Tariffs in Trade War (Listen)

“In a dramatic change of policy, US President Donald Trump hikes China tariffs to 125% on goods entering the United States. Most other countries will now see a 90-day pause on higher import taxes. We hear from Everett Eissenstat, an international economics adviser in the first Trump White House, and Natasha Sarin, who advised Janet Yellen when she was Treasury Secretary. Also, Graham Allison from Harvard Business School shares his analysis after recent meetings with President Xi Jinping in Beijing. And, Karin Karlsbro, vice-chair of the European Parliament’s Committee on International Trade warns tensions between the EU and US are far from over.”

Business of Fashion: Trump’s Tariffs Change Everything (Listen)

“President Donald Trump announced an unprecedented wave of tariffs on April 2, imposing duties as high as 54 percent on fashion imports from key manufacturing countries, including China and Vietnam, and 20 percent on goods from the EU. These measures immediately sparked panic across global markets, ratcheting up the odds of a US recession and causing sharp stock price declines for major fashion brands such as Nike, Victoria's Secret and VF Corp.  Sustainability correspondent Sarah Kent and luxury correspondent Simone Stern Carbone join executive editor Brian Baskin and senior correspondent Sheena Butler-Young to break down the tariffs’ effects on manufacturing, luxury brands, consumer behaviour and potential future shifts within the industry.”

Planet Money: Tariffs: What Are They Good For? (Listen)

“For years, mainstream economists have basically said: tariffs are not good. They are an import tax paid by consumers, they've said, and they discourage free trade, and we want more! Because free trade has broadly led to more global economic growth. But global trade hasn't been all positive for Americans, and in the worldview of President Trump's administration, tariffs can be used to right some of those wrongs. And the U.S. has economic leverage. So if the U.S. wants to level the playing field, it should use that leverage, and use tariffs to accomplish its policy goals. Today on the show: the case for tariffs. We talk to a lonely economist who's been sounding the alarm for years that more and free-er trade isn't always better. And we speak to economists in President Trump's orbit who make the case for how tariffs can be a potent economic and political tool.”

Odd Lots: What Tariffs Are Doing to North American Freight (Listen)

“Amidst Trump's dramatic tariff moves, trade in North America remains uncertain. The USMCA hasn't been completely ripped up, but the region is anxiously anticipating a new trade regime. As such, shippers and carriers dealing with North American freight are in a state of limbo, waiting to see how it all shakes out. In this episode, we speak with experienced freight broker Matt Silver, now the CEO of Cargado, a company that sells logistics software to businesses dealing with US-Mexico trade. We talk about the strategies being used right now, what's changing, what truckers are doing, and how all players may adapt to the new reality.”