President Trump’s tariff policy is delivering measurable results, generating $113 billion in revenue and pushing key trading partners to the negotiating table. A new trade agreement with China is being fleshed out, and a deal with the European Union is reportedly close.
Since January 2025, President Trump has enacted sweeping tariff increases under his reciprocal trade policy, aimed at countries with significantly higher tariff rates than the U.S., which maintains a 3.3% average MFN rate. India averages 17%, Brazil 11.2%, and China 7.5%, though China’s rate is misleadingly low, as it imposes much higher tariffs on specific goods, often 25%, 40%, or more. These disparities have fueled the $1.2 trillion U.S. goods trade deficit and undermined domestic manufacturing and national security.
Launched on April 2, declared “Liberation Day” by the White House, revenue from tariffs will help fund tax cuts and reduce the deficit, while also countering foreign value-added tax systems that disproportionately affect U.S. firms.
Since President Trump modified U.S. tariff rates approximately 90 days ago, dozens of countries have expressed willingness to lower tariffs and eliminate non-tariff barriers to achieve more balanced trade with the United States. As of July 2025, 4 to 7 formal agreements have been completed, resulting in reduced tariffs from Trump’s initial “reciprocal tariff” rates. Under the U.S.-China deal, tariffs on Chinese goods dropped from 145% to 30%, and U.S. exports to China now face only 10%, down from 125%.
Trump maintained a 10% baseline tariff on U.K. imports. Japan secured a deal lowering its tariffs from 25% to 15%, while Vietnam’s rate was reduced to 20%, with double that for Chinese transshipped goods. Indonesia’s rate was cut from 32% to 19%, and Cambodia’s from 49% to 36%. The Philippines also reached an agreement with the U.S. on July 22. These deals reflect early progress in Trump’s effort to renegotiate global trade on more reciprocal terms.
Many major U.S. trading partners, including Canada, the European Union, and South Korea, face steep tariffs starting August 1, 2025, after President Trump extended the original July 9 deadline. Canada, facing a 35% tariff, is the most economically dependent on the U.S. and stands to suffer the most if a deal isn’t reached.
Over 75% of Canadian exports go to the U.S., accounting for up to 34% of provincial GDP and supporting more than two million jobs, particularly in provinces like Ontario, Alberta, and New Brunswick. Canada’s economy is further tied to the U.S. through deeply integrated supply chains and daily trade flows totaling $2.7 billion.
Canada’s economy depends not only on exports to the U.S. but also on foreign direct investment (FDI) driven by tariff-free access under CUSMA. In 2024, Canada attracted a record $85.5 billion in FDI, much of it tied to access to the U.S. market, as firms from Europe, China, and elsewhere established manufacturing operations in Canada to bypass U.S. tariffs ahead of President Trump’s second term.
New tariffs now threaten over $430 billion in exports and risk triggering an investor pullout if U.S. access is no longer assured. With such deep exposure, Canada is uniquely vulnerable in a Trump-era trade standoff. Reaching an agreement with President Trump is in Canada’s best interest, or the average citizen will see a decline in their standard of living.
Now that a trade deal with China is close, the European Union remains the most significant U.S. trading partner yet to reach an agreement. The EU faces a 30% tariff starting August 1, 2025, but negotiations are actively ongoing. President Trump has signaled openness to a deal, and EU officials confirmed continued high-level discussions. Meanwhile, at the June 2025 NATO summit in The Hague, Trump secured a landmark agreement: all NATO allies committed to raising defense spending to 5% of GDP by 2035, up from the longstanding 2% target.
This includes 3.5% in direct defense spending by 2032 and 1.5% on broader security. The agreement is expected to reduce the U.S. defense burden, previously nearly 69% of NATO’s total spending, and boost revenue for American defense firms as European nations procure U.S. weapons to meet the new goals. This dual-track strategy, leveraging trade negotiations while rebalancing NATO spending, represents a major political and economic win for the Trump administration.
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