Donald Trump’s ongoing trade wars with China, Mexico, and Canada threaten to damage the American economy, with experts and citizens alike looking for a safe way out. What are those off-ramps, and what can happen if we don’t take them?

We looked into the impact of these trade wars and how we can avoid any long-term damage. While the solutions may or may not be simple, making our leaders choose to take them is a different matter entirely.

How Tariffs Work

Tariffs are a tax imposed on goods imported into a country that is paid by the end consumer. Economists universally agree that tariffs are nearly always self-defeating and always harm the country and the industry they are implemented to protect.

Usually, tariffs are used by authoritarian or corrupt governments to strengthen domestic production or protect certain companies or industries. However, they usually end up harming those companies and industries.

Some countries often use tariffs as a political weapon during negotiations, but the harm caused by their implementation usually limits their usefulness.

Domestic consumers and customers always pay the cost of tariffs.

Where Are We Now?

Domestic production in the United States is less than its domestic consumption, meaning it does not produce enough goods in any sector to meet demand, so it must import goods to meet that demand. Due to the weakening of America’s labor protection laws, corporations found cheaper labor and materials abroad so they continue to manufacture goods outside the U.S. and then import them for sale.

The ongoing trade wars with China, Canada, and Mexico are based on this heavy trade deficit (which benefits American consumers) and a number of unfounded claims, misinformation, and lies from Donald Trump and his allies.

A trade war of any kind damages both countries involved, but given the size of the economies here, the damage can be enormous and widespread. Industries and entire sectors might be irreversibly harmed, with some countries facing recession.

There are two options to end these trade wars: either the defending countries give in to Trump’s demands (whatever they might be that week) or Trump must cancel his tariffs and other trade restrictions.

Trade Relations with China

Donald Trump started the trade war with China in 2018 after accusing them repeatedly of cheating and stealing from America, but relations between the two countries have always been frosty ever since the founding of the People’s Republic of China.

Ideological, military, geo-political, and economic forces have kept China and the United States at cross-purposes for decades.

The only thing that kept the United States from invading mainland China and overthrowing their government like it did in Vietnam, El Salvador, Iraq, Iran, Korea, Egypt, Guatemala, Indonesia, Cuba, Laos, the Dominican Republic, Guyana, Brazil, Cambodia, Chile, Bolivia, Ethiopia, Angola, Argentina, Afghanistan, Nicaragua, Grenada, and more was the military might of China and its support from the USSR.

The United States repeatedly attempted to fund and arm Burmese citizens and convince them to invade China, but they were defeated every time. Naturally, relations with China did not improve.

Yet trade between the two countries has steadily increased over the decades, with the United States importing significantly more than it exports to China. One of the primary driving factors behind this trade deficit is the difference in savings between Chinese and American families. Chinese families are able to save more than 30% of their disposable income, on average, while American families are only able to save 7%.

Today, government officials, military leaders, and politicians view China’s economic success as a threat and a challenge to U.S. geopolitical power.

In 2018, Trump imposed several tariffs and trade barriers on China, and President Biden continued those tariffs and levied additional tariffs on solar panels and electric vehicles, making the situation worse.

Nearly all economists who were asked about the proposed tariffs said that they would do more harm than good.

Upon his reelection, Trump continued his hostile anti-China rhetoric and proposed an unprecedented 60% tariff on all Chinese imports. As of February 2025, Trump has imposed only a 10% tariff on Chinese imports.

Naturally, China retaliated with its own tariffs. The United Nations announced that the tariffs imposed by the U.S. are “economically hurting both countries”. The trade war has resulted in China and the European Union significantly growing and strengthening their economic ties and the increased popularity of the Chinese Communist Party.

In the United States, companies passed the cost of the tariffs on to American citizens, raising the cost of almost every product between 10% and 30%. Approximately 300,000 jobs were eliminated in 2019 due to the trade war. The war harmed domestic farmers and markets and the trade deficit continued to grow.

Trade Relations with Canada

The trade relationship between Canada and the United States is the largest in the world, with more than $923 billion in goods crossing the border every year. This trade is vitally important to the growth and success of both countries, with Canada typically holding a deficit with the United States.

Canada is a member of NAFTA, along with the United States and Mexico, which has been an economic boon for all three countries. There have also been numerous talks about additional economic and political integration between the two countries, including a North American Currency Union, with a majority of citizens in both countries showing support for the idea. However, U.S. government fears about terrorism entering the country through Canada have stopped the talks from progressing.

Donald Trump threatened Canada with 25% tariffs on a variety of goods and industries. This led the Ontario Premier to propose stopping any imports of U.S. alcohol and threatened to cut off energy exports, which would leave New York, Michigan, and Minnesota without power. They have also threatened to cut off mineral exports that the U.S. uses for electric car batteries.

Nevertheless, Trump proceeded with his tariffs, implementing them in February 2025. Canada retaliated by imposing 25% tariffs on a handful of U.S. goods.

Around 60% of all the oil the U.S. imports comes through Canada, so any additional tariffs will see gas prices skyrocket. Canada is also the biggest steel supplier to the U.S., so a variety of industries will see steel prices rise.

Trump has delayed the implementation of the tariffs until March 4, 2025.

Trade Relations with Mexico

Mexico is also a member of NAFTA, which has been a major tool in elevating and strengthening North American trade.

Mexico is a major exporter of oil to the U.S. and supplies around 50% of the U.S.’s fruits and vegetables. It is also the third-largest steel importer to the U.S.

Along with Canada, Trump imposed 25% tariffs on a host of Mexican goods in February of 2025 while also accusing the government of having an alliance with drug cartels in a handful of racist rants. Mexico announced that it would retaliate with its own tariffs while calling Trump’s tariffs a “flagrant violation” of trade treaties between the two countries.

Trump has delayed the implementation of the tariffs until March 4, 2025.

The Off-Ramps with China

The United States benefits more from free trade with China than China does from America. At the same time, China sees increased consumer happiness and economic growth from open trade than America does. This is because most of the benefits of trade in America are given to the companies and upper class whereas the benefits in China are more equally spread out.

Over-estimation of China’s reliance on American exports, and an underestimation of China’s trade network, domestic production, and economic strength has plunged the United States headlong into a trade war that presents a lose-lose scenario to whatever president resolves it.

Suffice it to say, that a trade war between China and the United States can only end with China winning.

On the one hand, the president can admit that the tariffs were a bad idea and repeal them. This would mean increased productivity, lower prices, and other benefits, but would mean admitting defeat on the international stage.

On the other hand, continuing to restrict trade and wage the trade war hurts the United States far more than it hurts China. It also pushes other countries closer into China’s sphere of influence and strengthens China’s political and economic power.

Additionally, we can only hope and pray that China does not demand reparations or some kind of economic restitution if the United States does ever revoke the tariffs.

The Off-Ramps with Canada

Canada’s retaliation hit a number of industries and sectors but were primarily targeted toward Republican-led states that support Trump. They said they will continue to impose tariffs and other restrictions until Trump reverses his course.

Because both countries depend heavily on each other to survive, it is more likely that the United States will suffer more in the long term due to its imports of oil through Canada while in a trade war with Mexico at the same time.

Trump has demanded that Canada do something about fentanyl and illegal immigration. However, because almost no amounts of fentanyl (around 1% of all illegal fentanyl imports) enter the United States through the Canadian border, this will be a hard thing for Canada to stop, regardless of Trump’s public comments.

Also, there is almost no illegal immigration at the northern border, so the options for Canada to satisfy this demand are also limited.

It is unclear, therefore, what Canada should do to satisfy Trump’s ego and end the trade war. The safest and fastest way to end the war and prevent long-term damage to both countries would be for Trump to remove the tariffs.

The Off-Ramps with Mexico

Of all the countries involved in these trade wars, Mexico stands to suffer the most.

Experts predict that Mexico faces the risk of a “severe recession” if the tariffs are not removed. While both countries will suffer in the meantime, with irreversible damage, if push comes to shove, Mexico might be forced to capitulate first.

Since Trump’s reasons for imposing the tariffs were to stop the smuggling of fentanyl into the United States, convince manufacturers to move manufacturing to the mainland, and stop illegal immigration, Mexico might be forced to make some kind of concession in these areas.

The easiest route for both countries, of course, would be for Trump to undo his tariffs.

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