Tariffs — An Explainer

Updated September 8, 2026

What are tariffs?

Tariffs are taxes on imported goods. When targeted and strategically planned, they can counter unfair trade practices, serve as negotiation leverage, and generate revenue. When combined with subsidies in a national industrial policy, tariffs can support strategically important industries. They can also protect domestic jobs, address trade imbalances, and pressure foreign adversaries. But all tariffs are not created equally. Overly broad, poorly planned tariffs can harm the economy, trigger trade wars, and disrupt global stability.

Who pays for tariffs?

Tariffs are charged at U.S. ports when goods are imported. While sellers or importers may absorb some costs, research shows most tariffs are passed on to consumers. Even American-made products can get pricier if they use imported parts. According to Yale’s Budget Lab, Americans will spend $1,100 more under current tariffs. That’s effectively an 11% sales tax on US consumers, the highest since 1943 (excluding 2025). When Trump’s “Liberation Day” tariffs were first rolled out, the rate was 22.5%, the highest since 1909.

What’s the latest on Trump’s trade war?

Since taking office, President Trump has threatened, imposed, rolled back, reinstated, and delayed a confusing and chaotic array of tariffs against almost every nation in the world, including our largest trading partners. Trump initially claimed emergency powers to impose tariffs unilaterally by executive order, but the US Supreme Court struck many of them down, ruling that the president does not have the authority to tax. Trump has since turned to other mechanisms, including trade laws known as Section 122, which allows temporary tariffs in limited circumstances, and Section 301, which requires investigations and hearings to prove harmful trade practices. The legal rationale for these tariffs are also being challenged in court.

More than a year in, the trade upheaval has already taken a serious toll. Since January 2025, prices are up about 5%, US manufacturers reported 62,000 jobs lost, and the shifting policies are costing US farmers, small businesses, and major manufacturers billions. While Congress has the power to roll back or adjust Trump’s tariffs, House Republicans removed that ability last year. New legislation is required to restore it.

How have tariffs impacted the US economy?

While the situation remains fluid and changes frequently, financial markets, industry leaders, and economic indicators have responded negatively to the uncertainty and shifting sands. In just two days following Trump’s tariff plan unveiling, markets plunged dramatically, losing $6 trillion in value. Since then, major US manufacturers and farmers report lower profits, slower job growth, and higher inflation. All of this volatility creates serious repercussions for American workers, families, and businesses.

Job growth stalled: Outside health care, America’s job market has been remarkably weak. Since January 2025, the U.S. has added about 807,000 jobs overall, but health care accounted for 72% of those gains. Outside health care, the economy added only about 230,000 jobs over 19 months. Manufacturing has actually lost about 35,000 jobs since January 2025.
Higher prices for everyday goods: Tariffs are adding to the cost of everyday goods. Yale’s Budget Lab estimates that the tariffs imposed in 2025 raised the overall price level by about 1% during their first year. Meanwhile, actual consumer prices rose 5.1% since January 2025, including 4.4% for food, 4.4% for clothing and 16% for vehicle maintenance and repair.
Increased construction costs: Construction materials costs increased 15% since the January 2025, making housing and infrastructure projects far more expensive. Home builders estimated that tariffs added about $11,000 to the cost of building a home in 2025. Canada supplies about one-quarter of US softwood lumber, and current tariffs result in an overall tariff rate of 45% on Canadian lumber. The effects are showing up in construction activity: US housing starts fell 13.5% year over year in July 2026, with single-family starts down 15.7%.
Higher manufacturing costs: Tariffs made critical industrial inputs substantially more expensive. Since January 2025, US producer prices for steel are up 43%, copper 53%, and aluminum 57%. These materials are used throughout American manufacturing and construction, so higher input costs ripple through supply chains and ultimately raise the cost of products made in the US. The administration itself acknowledged that tariffs were affecting industries that rely on agricultural equipment, industrial machinery, and other metal-intensive products.
Farmers pushed to the brink: Farmers are warning the loss of export markets, inflated costs of tractors and equipment, combined with deportation disruptions of their labor force and the massive spike in diesel and fertilizer costs brought on by the war in Iran could spell disaster for US farming. Crop farmers are $34.6 billion in the red in the 2025/26 crop year.
Turmoil and uncertainty for small businesses: 97% of US importers are small businesses, and those small businesses account for one in three US imports. Tariffs have hit small businesses especially hard because they have less ability to absorb sudden cost increases or rapidly restructure their supply chains. More than 40% of small businesses said tariffs were a financial challenge in 2025. Among those affected, 76% passed some higher costs on to customers while 60% absorbed some themselves.
Economic slowdown: Economic growth lost momentum. GDP grew just 0.7% in late 2025 and 1.5% in the second quarter of 2026, as tariffs and energy costs add to economic uncertainty.

How do tariffs impact Maine?

Maine’s economy is deeply intertwined with Canada’s. Canada is Maine’s largest international trade and investment partner, and the relationship goes far beyond selling products across the border. Maine businesses rely on Canadian raw materials and energy, while Maine sends Canada manufactured goods and natural-resource products such as lumber, pulp and paper, seafood, potatoes and blueberries. The two economies are also closely connected through tourism, investment, and cross-border supply chains.

Before the most recent round of tariffs on Canada hit roughly $170 million in local goods, the cross-border relationship already showed signs of strain. Excluding petroleum, Maine exports to Canada fell 18% through August 2025. Tariffs have also made imported goods more expensive and disrupted businesses, workers, and communities on both sides of the border that depend on this relationship. These are just some of the ways Mainers are impacted:

Forest products caught in the middle: Maine’s forestry exports to Canada dropped 20% in 2025. Forestry is a critical part of Maine’s rural economy, supporting almost 30,000 jobs and contributing more than $8 billion to Maine’s economy in 2024. It is also one of Maine’s leading export sectors, deeply integrated with Canada. Pulp mills can be hit twice by tariffs, buying Canadian wood and then selling finished products back to Canada. After new timber and lumber tariffs took effect, Maine exporters reported shipment disruptions, delayed investments, and canceled expansions. Woodland Pulp in Baileyville laid off 144 millworkers. One industry leader called the current conditions “the worst they have ever seen in 50 to 60 years in business.”
Depressed tourism: Canada called for its citizens to avoid vacationing in the US as retaliation. Canadian visitors spent $2.3 billion less in the U.S. in 2025 as travel across the border plunged. Before the trade war, Canadians spent more than $450 million in Maine, generating over $800 million in economic impact and $67 million in state and local tax revenue. The Maine International Trade Center reported a 43% drop in Canadian visitors in 2025. Sales in border towns dropped by more than by 3%.
Higher construction costs: Construction material prices are about 15% higher than in January 2025. These increases drive up housing costs, eat into builders’ profit margins, and make it harder for Maine to meet its ambitious goal to build 84,000 new homes in the next five years. Public projects are also affected. The city of Sanford, for example, was recently forced to change plans for a new fire house after steel tariffs added $970,000 to the cost.
Businesses are getting squeezed: More than 90% of Maine breweries faced higher costs from aluminum tariffs, according to the Maine Brewers Guild. Other Maine manufacturers reported higher prices even for U.S.-made materials. For example, one Portland-area manufacturer said its U.S.-sourced steel costs jumped 35% in a single month. The chaos and unpredictable cost fluctuations caused many of Maine’s small and mid-sized business owners and farmers to cancel projects and delay expansion. Two high-profile projects to redevelop shuttered lumber mills in Jay and Millinocket have been scrapped and put on ice because of tariffs, costing hundreds of new jobs.
Strains on the lobster industry: Maine’s lobster industry took a hit in 2025. Harvesters landed 8 million fewer pounds of lobster and earned $75 million less than in 2024. The Maine Department of Marine Resources says inflation, market uncertainty caused by tariffs, and unfavorable fishing conditions all contributed to the decline.
Unexpected costs ahead for municipal budgets: About 90% of municipal road salt used in the Saint John Valley comes from Canada, and a major Canadian distributor announced it will halt deliveries. Aroostook County communities already purchase thousands of tons of salt each year: Presque Isle plans to buy 2,000 tons and Fort Kent 1,000 tons for the coming winter. Even a $10-per-ton increase would add tens of thousands of dollars to local road budgets.
Higher energy costs could get worse: Nearly all of Maine’s heating oil comes from Canada. Prices have already shot up 52% since January 2025, although most of that pressure stems from the war in Iran. With about 70% of homes dependent on heating oil, Maine is more reliant than any other state. New England’s electricity grid is connected to Quebec and New Brunswick in five places. 58,000 customers in northern Maine get all of their electricity from New Brunswick. If Canada retaliates by cutting off power or raising fees, the impact will be severe.

Which tariffs are in place, and which have been knocked down?

Recently imposed and in effect

Canada: Canada has been hit particularly hard by Trump’s tariffs despite being the United States’ largest trading partner. Tariffs on Canadian goods have changed repeatedly since 2025, including a 50% additional tariff on more than $27 billion worth of Canadian products that took effect in August 2026, under a rarely used provision of the 1930 Tariff Act. The tariffs target products including alcohol, dairy and other goods, and come on top of tariffs imposed under other trade authorities. Trump also moved to block Canadian products from government contracts. Canada announced that it will retaliate with its own tariffs, matching US tariffs “dollar for dollar.”
Section 301 tariffs: In July 2026, after the Supreme Court ruled many of Trump’s widespread tariffs unconstitutional, the administration turned to a new trade law, which allows tariffs to be enacted to combat harmful trade practices. Trump imposed a 10%-12.5% tariff on more than 80 countries that together represent 99.4% of all US imports. The administration claims the tariffs are needed to prevent forced labor, though trade experts pan the new tactic as vastly excessive.
China: Despite a one-year trade truce negotiated in October 2025, China is now subject to the new 12.5% Section 301 tariff on goods covered by the July 2026 forced-labor action. These are layered on top of longstanding tariffs imposed under prior administrations.
Aluminum, steel & copper: Steel and aluminum imports are subject to 50% tariffs, up from 25% in June 2025. Copper products are also subject to tariffs, with rates varying by product. These tariffs matter well beyond the metal industry: steel, aluminum, and copper are basic inputs for construction, manufacturing, automobiles and infrastructure.
Autos & auto parts: A 25% tariff on imported automobiles and many auto parts took effect in April 2025. The rules include exemptions and special treatment for US-Mexico-Canada-Agreement compliant vehicles and parts, and the administration subsequently created temporary credits for some U.S. automakers. A 25% tariff on medium- and heavy-duty trucks and many truck parts, and a 10% tariff on buses, took effect in November 2025.
Timber & lumber: A 10% tariff on imported timber and lumber took effect in October 2025, on top of other tariffs affecting Canadian lumber. Canada is by far the largest foreign supplier of softwood lumber to the United States.
Cabinets, vanities, furniture: Tariffs on imported kitchen cabinets, vanities and upholstered wooden furniture began at 25% in October 2025. In 2026, cabinet and vanity tariffs rose to 50%, while the rate on upholstered wooden furniture rose to 30%.
Pharmaceuticals: The administration has imposed tariffs of up to 100% on some imported brand-name pharmaceuticals and pharmaceutical ingredients, with exemptions and different treatment for countries that have negotiated trade agreements with the United States.

Upcoming

September 28, 2026: A ban on imports of many dairy products, most alcohol, and motorcycles from Canada takes effect.
January 1, 2027: Tariffs on all Canadian automotive imports will jump to 50%. A 15% tariff on refined copper is expected.
January 1, 2028: All imported generic drugs will face tariffs of 100%. The tariff on refined copper doubles to 30%.
January 1, 2029: All imported generic drugs will face tariffs of 200%.

Ruled unconstitutional

Liberation Day tariffs: Trump overstepped his authority when he used an emergency provision to impose sweeping tariffs ranging from 10% to 50% on about 90 countries in April 2025. Using a calculation method derided as “nonsense” by experts, the list even included remote islands inhabited only by penguins.
Trafficking tariffs: In February 2025, Trump used the same emergency provision to impose tariffs on the US’s three biggest trading partners: Mexico, Canada, and China. This time, the national emergency was claimed to stem from undocumented immigration and fentanyl trafficking.
Bolsonaro tariffs: Despite the US running a trade surplus with Brazil, Trump used the emergency provision to slap 40% import taxes on Brazilian imports because he opposed the treatment of their ousted former president.
Russian oil tariffs: Trump added a 25% tariff to existing Liberation Day tariffs on India, using the emergency provision to protest its purchase of Russian oil.

Expired

Global “baseline” tariff: After Trump’s April 2025 10% global baseline tariff was ruled unconstitutional, Trump turned to another trade provision, Section 122, to reapply them. This time, the tariffs were limited to 150 days and could only be renewed by Congress. The tariffs expired in July 2026.

Retaliation

Canada responded to Trump’s first round of tariffs by launching an immediate 25% retaliatory levy on about $100 billion worth of US goods. Citizens were also urged to buy Canadian and avoid vacationing in the US, including Maine. In response to Trump’s tariffs on auto imports, Canada enacted a 25% levy on US auto imports not covered by the USMCA trade agreement. After trade talks collapsed in August 2026 and Trump imposed a 50% tariff on more than $27 billion in Canadian goods, Canada implemented a new round of retaliatory tariffs on a wide range of US products, including US steel, appliances, wood and paper products, and dairy.
China responded to fluctuating US tariffs by retaliating in equal measure with its own tariffs and also by dramatically reducing US imports and limiting exports of materials essential for US manufacturing. In May 2025, China stopped buying US soybeans, a major export worth about $12.6 billion, and suspended exports of minerals and magnets. As part of the October 2025 one-year trade truce, China slowly began buying soybeans again. But because of loopholes allowing China to stockpile cheaper soybeans from other countries, purchases have been slow. US agricultural exports to China dropped 67% in 2025. Soybean sales alone plunged 75%, costing American farmers roughly $9.6 billion in exports.

Did you know…?

Nearly a quarter of oil America consumes per day comes from Canada. About 60% of US crude oil imports are from Canada, and 85% of US electricity imports as well.
The US imported about 8 million cars and light trucks in 2024.
About 17% of the alcohol consumed in the US comes from the EU. The US exports about $4 billion worth of alcohol each year.
In 2024, China purchased 5% of US farm exports worth an estimated $29 billion. One quarter of the nation’s soybean crop is exported to China.
As a result of Trump’s first trade war, China stopped buying Boeing aircraft. Before the tariffs, China accounted for 25% of Boeing’s sales.
After China slapped steep retaliatory tariffs on US lobster, Canada’s lobster sales to China more than doubled.
Maine is the 3^rd largest seafood exporter in the US. Seafood is our state’s top export, closely followed by transportation equipment.
84% of Maine exporters are small businesses.
International trade supports 1 in 5 (170,300) Maine jobs. Foreign-owned companies employ 37,300 Maine workers.