2025 in review: The year when the world went into war over Trump’s tariffs

It was the year of Donald Trump. And it was the year of the tariff. And when the US president wielded taxes like a weapon, it was all-out war. 

From two tiny and remote Antarctic outposts populated by penguins to the world’s second-largest economy, China, the tariff war swept up all in its wake, leaving governments scrambling to launch counter-measures. 

The world watched Trump reload his favourite economic bazooka and fire it in every direction throughout the outgoing year. What started as a campaign bluster became a worldwide tremor affecting everyone, from Chinese dollmakers to  Brazilian coffee farmers.

Trump, the official author of the ghost-written book The Art of the Deal, soon realised the havoc his tariff talk wreaked on the US economy. 

He started negotiating pauses and grace periods almost immediately after announcing a plethora of tariffs on all kinds of imports into the US.

One day, China faced a 125 percent tariff. The next day, a handshake lowered them to 10 percent. 

In short, the outgoing year saw Trump turn tariffs from a dormant economic tool into a main instrument of foreign policy by imposing sweeping duties on imports from nearly every country.

How it started

Invoking the International Emergency Economic Powers Act (IEEPA), Trump declared a national emergency over the trade deficit, leading to reciprocal tariffs announced on what the administration called the “Liberation Day” on April 2.

A majority of economists oppose the use of tariffs as studies show such duties often lead to higher costs for consumers and businesses, reduced export competitiveness and a decline in overall economic growth.

But advocates of tariffs claim that their use is necessary to protect local businesses from foreign competition and increase tax collection.

The imposition of import levies pushed the US average effective tariff rate to nearly 16 percent, levels not seen since the 1930s, a period of global economic downturn when the US resorted to heavy import duties to protect local industry.

The US has collected about $200 billion in revenue because of these tariffs. 

But the downsides of weaponising a negotiation tool to browbeat trade partners into economic submission are many: legal challenges, economic disruptions, and diplomatic rows.

In a helter-skelter manner, the US announced, paused, negotiated and revised tariff rates for different trade partners for the most part of 2025.

Some countries like Switzerland negotiated a lower tariff, while others like China managed to postpone rates as high as 125 percent through diplomatic engagement.

According to the Tax Foundation, an independent tax policy nonprofit, the Trump tariffs amounted to an average tax increase per US household of $1,100 in 2025 as the new duties raised the prices of everyday items. 

Colin Grabow, a policy analyst at the Cato Institute's Herbert A Stiefel Center for Trade Policy Studies, cautions against overstating the durability of Trump’s approach.

“It remains unclear how durable this revival of tariffs as a geopolitical tool will be,” Grabow tells TRT World.

He describes Trump’s 2025 tariffs as “less like a broad re-embrace of protectionism than a continuation of a highly personalised approach to trade policy”.

Grabow notes that tariffs fell out of favour post-World War II due to the belief that protectionism exacerbated the Great Depression, a growing consensus on their net economic costs, and the view of free trade as promoting prosperity and geopolitical stability.

Shifting tariff authority in the US from Congress to the White House further entrenched trade liberalisation, he says.

In Grabow’s assessment, Trump’s strategy has not overturned these foundations.

“Public support for international trade remains strong, and the tariffs themselves are unpopular as their costs become more visible,” he says.

Rather than a paradigm shift, the tariffs reflect one president’s priorities, as the post-war logic favouring trade liberalisation remains compelling, he adds.

Beijing-based analyst Jianlu Bi presents a starkly different perspective, viewing 2025 as a decisive break from the post-war order.

“President Trump’s trade policy represents the most aggressive revival of tariffs as a geopolitical tool in nearly a century, effectively ending the post-WWII era of trade liberalisation,” Bi tells TRT World.

By elevating average US tariff rates to the 1940s level, the administration shifted from rules-based cooperation to “reciprocal” leverage and economic nationalism, he says.

Bi identifies three dismantled pillars: multilateralism giving way to bilateral ‘Mar-a-Lago Accords’ with countries like Japan, Korea, and India; prioritising national security and resilience over efficiency in strategic sectors; and weaponising tariffs geopolitically through “secondary tariffs” on non-aligned nations.

Brazil and India, major economies with substantial trade relations with Washington, now face 50 percent tariffs on their exports to the US. 

US imports from Canada and Mexico, which remained free-trade partners of Washington for decades because of trouble-free diplomatic relations and geographic proximity, are now subject to a tariff of 35 percent and 25 percent, respectively.        

This exclusionary approach, Bi says, generated revenue and near-shoring but fractured the trading system and downgraded global growth projections.

The economic fallout in 2025 was significant yet uneven.

Grabow describes tariffs as “a tax, and a particularly inefficient one at that,” but adds that their global impact remained “mild, with continued expansion of trade”.

The value of global trade expanded by about $500 billion in the first half of 2025, according to the UN Trade and Development. In fact, global trade is on track to surpass its 2024 record-high level despite volatility, policy shifts and persistent geopolitical tensions.

Key mitigating factors included US reductions in initial ‘Liberation Day’ rates and limited retaliation, with the exception of China.

Meanwhile, other nations advanced liberalisation: “Just this week... the UK and South Korea signed an upgraded free trade agreement, and the EU and Mercosur continue to work on finalising (a free trade agreement),” Grabow says.

China appears to have weathered the tariff storm rather successfully. Even though its exports to the US dropped in 2025, Beijing managed to increase its sales of goods to the rest of the world, resulting in an all-time high trade surplus of over $1 trillion. 

Bi, however, insists the tariff war caused substantial disruption. “A large-scale tariff war... significantly disrupted international trade flows and dampened global economic output,” he says, with institutions like the IMF and World Bank citing a “measurable growth drag” despite truces and exemptions.

Responses from major partners varied. Grabow praised the EU’s approach: “The EU’s decision to forgo retaliation and even somewhat reduce its own trade barriers is a commendable response,” he says. 

This avoided escalation and benefited its economy, with hopes that US tariffs would prove temporary.

Bi highlights China’s “institutional resilience” that accelerated self-reliance and domestic consumption amid tariff wars. Proactive stimulus led the IMF to upgrade China's 2025 growth to around five percent, fuelled by innovation and leverage in critical supplies.

Pragmatism carries the day 

Amid the turmoil, Türkiye adopted a pragmatic strategy to survive the global comeback of tariffs, Mian Waqar Badshah of Istanbul University tells TRT World. “Rather than retaliating aggressively, Ankara emphasised strengthening regional trade ties... to reduce dependency on traditional Western markets,” he says.

Domestic support for exports and WTO engagement demonstrated Ankara’s resilience and diplomacy, avoiding confrontations and safeguarding national economic interests, he says.

Going forward, uncertainty persists amid ongoing legal battles.

Lower courts ruled IEEPA tariffs illegal, with the Supreme Court hearing arguments in November 2025 and a decision pending.

Grabow expects tariffs to endure for the remainder of Trump’s administration but notes potential replacements with levies under other authorities in case the US Supreme Court strikes them down. 

“Undoing tariffs... will require leadership, and it’s an open question whether that will be forthcoming.”

Bi sees consolidation going forward. “The global consensus... is that the era of low-tariff, globalised trade is firmly in the rear-view mirror,” with 2026 solidifying a “new normal” of higher trade barriers.

Badshah says tariffs will remain a headline issue, driven by geopolitics and climate policies like the EU Carbon Border Adjustment Mechanism that imposes carbon tariffs on carbon-intensive products.

“For countries like Türkiye, this means staying agile and focused on trade diversification,” he says.