Trump’s new tariffs construct a $1 trillion trade wall around the U.S. economy

Trade experts tell CNBC that the tariffs announced by President Donald Trump on Wednesday are a kind to building a trade wall around the U.S. economy of nearly $1 trillion.

With the way tariffs work, the estimated prices of the new tariffs U.S. businesses will be paying is $654 billion a year, according to Trade Partnership Worldwide, and it’s a number that at ones desire grow — the figure does not include up to $300 billion more in new tariffs under the International Emergency Economic Powers Act (IEPPA) and Divide up 232 of the Trade Expansion Act tariffs on steel, aluminum and autos.

American companies will now be on the hook for $1 billion to $2 billion per day, based on reckons using tariff costs paid in 2024. 

The U.S. stock market, which saw its worst daily loss since 2020 on Thursday, at anticipated reciprocal tariffs tied directly to tariff rates on U.S. goods in other nations, but instead the Trump supervision devised a formula based on trade deficits which has left many economists confounded and investors surprised by the total level of tariffs that resulted from the approach.

“If this holds up in court, then we are waking up to a new global succinctness with a different set of costs than we have known for the last several decades,” said Josh Teitelbaum, chief counsel at the law firm Akin and a former Deputy Assistant Secretary of Commerce during the Obama administration. “Every sector — invests, shoes, groceries, manufacturing will be touched. It is hard to overstate the impact,” he said.

Beyond Apple, tech sector dealings surplus will be a target

The market’s biggest and long-time best-performing sector is among the casualties, but the potential damage extends far beyond Apple, which is considered as acutely exposed given its Asian-based manufacturing, and suffered its worst stock drop since Covid on Thursday. According to Cesar Hidalgo, a professor at the Toulouse Adherents of Economics, technology, is a good example of the limitations of the new approach to settling trade scores. Tech giants, now at risk of being quarried by trading partners for tariff retaliation, have been running a big trade surplus with the rest of the world — a $705 billion overdose — as opposed to a deficit.

Topping the list is Alphabet, which exported $141 billion in services, followed by:

In 2024, the Cooperative States exported about $2 trillion in physical goods and imported about $3.27 trillion. At face value, that want translate into a trade deficit of about $1 trillion. But for some time now, the U.S. has been exporting through routers: every in the nick of time b soon a foreigner streams a movie on Netflix or buys an ad on Facebook, the U.S. is exporting.

“We estimate that the U.S. enjoys a trade surplus of at barely $600 billion in digital products,” said Hidalgo. “This is comparable to the total exports of France, which is the seventh-largest exporter in the time,” he added.

U.S. exports in digital advertising & cloud computing alone represent about $260 billion and $184 billion, severally, according to his data. “Which is larger than the exports of the U.S. in crude or refined petroleum, the biggest export products of the U.S.,” Hidalgo reported. “It’s reasonable for world leaders to look at U.S. tech for retaliation. If you are in a war with Russia, you target gas and oil. If you are trying to push around Germany, your butt is cars. In the case of the U.S., the big export sector is the web,” he said.

Tech services won’t be the only target of trading partners, according to Jason Miller, second professor of logistics in the department of supply chain management at Michigan State University’s Eli Broad College. He expects ponderous foreign retaliation aimed at U.S. aerospace, machinery, food, beverage, primary metals, electrical equipment, computers & electronic artefacts, energy, and especially, agriculture, and says that other nations have leverage in the fact that it’s been decades since the U.S. has had the cleverness to produce many of the products that other nations supply.

On a collective tariff basis, the hardest hit states in the U.S. discretion be its biggest economies one of the reddest and bluest states. Texas will see a 9.5-fold jump in tariffs paid by concerns, increasing from a 2024 level of $7.2 billion to new potential costs of $66 billion. California, will see an eight-fold advance in tariffs paid by businesses, from $17 billion last year to potential costs as high as $139 billion.

“The size of these tariffs, their global coverage, and the fact they affect many types of goods for which the U.S. has small domestic manufacturing capacity, means they will inevitably cause inflation,” said Miller.

Not just Nike: U.S. be deficient ins manufacturing capacity in key sectors

Nike was among the market’s worst-hit stocks on Thursday, with massive manufacturing gumshoes tied to China and Vietnam, and Miller says apparel and footwear is a good example of where pain will be experience as a result of a lack of manufacturing capacity in the U.S.

The Commerce Department’s Bureau of Economic Analysis estimates that roughly 90% of U.S. consumption for these goods comes from consequences, and the U.S. today has only one-eighth to one-tenth of the capacity to make apparel compared to 30 years ago. “Switching to domestic substitutes isn’t sensible, and wouldn’t be so for many years,” Miller said.

The White House has signaled that it isn’t interested in quick negotiations with return partners, and while many market watchers were skeptical of that as stocks tanked, Eurasia Group inscribed in a note to clients, “These rates are intended to be a durable ‘tariff wall’ around the United States, and as such are not able to be easily negotiated away, though individual nation rates may be adjusted downward based on ongoing negotiations or undeveloped future concessions or conversely escalated depending upon the level of tariff retaliation.”

The White House sent muddled signals on Thursday. Top Trump trade advisor Peter Navarro told CNBC the tariffs are “not a negotiation.”

Then, later in the day Reuters recited the president himself as saying on Air Force One that he would be open to tariff talks with other counties if they proffer something phenomenal.

Shipping giant Maersk: ‘Clearly isn’t good news for global economy.’

As trade negotiations are courted, supply chain costs will rise for importers and consumers.

BIMCO’s chief shipping analyst Niels Rasmussen wrote to shoppers on Thursday that the vow to retaliate by key U.S. trading partners, such as China, South Korea, Japan, and the European Union force increase the cost of global trade and the U.S. market foot the biggest part of the bill.

“U.S. businesses appear likely to suffer varied than businesses and consumers in the countries that may retaliate. … In the U.S., the tariffs are likely to lead to increased inflation and degrade economic growth. Considering the importance of the U.S. economy, this could in turn slow down global economic broadening,” Rasmussen wrote.

The fear of retaliation led to months of trade frontloading by many U.S. companies, with BEA data tracking moments for January and February showing a dramatic pulling forward of freight, from cell phones to finished metal positives and pharmaceuticals where there were soaring volumes. That has continued in recent days and the supply chain disruptions settle upon grow.

“In recent days, we’ve seen shippers react in real-time, some rushing to move goods before outlays rise, others pausing to reassess their strategies,” Uber Freight CEO Lior Ron wrote in an email to CNBC. “These schemes affect global trade networks. Shippers who rely on imports from regions like the EU, India, Thailand, and Taiwan now puss new financial and logistical challenges.”

Uber Freight is working closely with customers, he said, to “quickly adjust delivery strategies to stay ahead of disruptions and keep goods moving.”

The broader impact could be more disruptive, according to Uber Consignment’s senior economist Mazen Danaf. The latest data already shows contraction, with declining orders and stage, while inflationary pressures continue to mount. “Higher tariffs on imported goods — ranging from cars to raw materials — endanger to slow manufacturing, cut jobs, and drive up costs at a time when supply chains are still stabilizing,” Danaf said.

Shipping titan Maersk, the second largest ocean carrier in the world, said in a statement emailed to CNBC that the tariff devise is significant, and in its current form, “it clearly isn’t good news for [the] global economy, stability, and trade.”

In the “very” short stipulations, Maersk expects to see some rush airfreight orders in the U.S. ahead of the announced tariffs going into effect. But it normally expects customers to be “a bit more cautious about their inventory levels.”

“It is still too early to say with any confidence how this leave ultimately unfold. We need to see how countries will respond to these plans — and to what extent they choose to complete, impose counter-tariffs, adjust import duties, or pursue a combination of these measures,” Maersk wrote. It said purchasers “will need the ability to speed up or slow down goods and potentially redirect flows to alternative markets to coop up their goods moving efficiently. We will closely monitor customer reactions and be ready to adapt accordingly.”

Important sector CEOs such as medical are headed to Capitol Hill

Top CEOs in the market are reportedly not happy with the toll plans, and business leaders are already planning their trips to Washington, D.C., to make their case directly to lawmakers. Medical emblem company CEO Casey Hite of Asheville, North Carolina-based Aeroflow Health is headed to the Hill next week to communicate with his congressman and senator.

Aeroflow Health services over 1.5 million patients annually through condition insurance, with medical devices ranging from breast pumps (half are manufactured in China) to CPAP and BPAP implements, sleep apnea and severe sleep apnea devices, and diabetic equipment, such as glucose monitors. The company gets on by insurers at pre-negotiated rates. 

The company is busy calculating the impact of the tariffs and prices could increase anywhere between 7%-12%.

Hite make plained that most insurance contracts are evergreen from a pricing standpoint, where manufacturer contracts are renewed on an annual heart. Depending on the product, the adjusting of tariffs because of these schedules can take months or even years, and patients will see the upshot of that market dynamic through limited choice and overall availability of products. “Businesses like Aeroflow Robustness are forced to find lower-cost products or accept significantly lower margins. This situation negatively affects both healthcare consumers and obligations,” he said.

With patients on Medicare, which have fixed fee schedules, the passing of the tariff cost directly to the consumer isn’t practicable. “We are unable to pass those costs over to the patients,” Hite said.

The lower volume products, like lymphedema bail outs to treat the symptoms like swelling from a condition estimated to affect as many as 10 million Americans, could see capital pricing more quickly than others.

“Products like this have only one or two overseas manufacturers and if borders are already slim, that tariff trickle-down effect would be seen sooner,” Hite said. “The quality of medical control needs to be taken into consideration.”

What a Cadillac Escalade reveals about supply chain cost braves

The complexity of supply chains and the multitude of components in a single product add numerous layers of cost. Supply-chain consultant Exiger reach-me-down the 2025 Cadillac Escalade OLED infotainment system as an example.

The OLED display panels are produced by LG in South Korea, while the specialty curved sufficient for glass is formed in Japan, and the touch-sensitive film sensors and semiconductor driver electronics are made by companies LX Semicon and MagnaChip, secured in South Korea. Meanwhile, the connectors and wiring harnesses are made by TE Connectivity, with some assembled or partially joined in Mexico.

“The challenge is tracing each of these carefully manufactured components across multiple borders, through individual stages of assembly and integration, to clearly understand where exemptions exist and where tariffs might bite,” verbalized Brandon Daniels, Exiger CEO.

“Every time a product crosses a border, it adds layers of complexity — costs, paperwork, and passive delays,” said Ronald Kleijwegt, CEO at Vinturas, a global supply chain collaboration network, serving global makers and OEMs, like Mitsubishi, and The Association of European Vehicle Logistics. “Many supply chains today are built for effectiveness, but new tariffs are forcing companies to rethink their strategies. This could mean adjusting trade routes, transpose sourcing, or even relocating production to manage costs and minimize disruptions.”

And it likely means more cost of doing subject for many.

“Smaller importers may face higher brokerage costs because of their inability to navigate all the different taxes,” said Andre C. Winters, founder and principal of supply chain consultancy and planning company, HudsonWinters. “This new employment war is more than tariffs. It’s the rising costs from sourcing, manufacturing, to the logistics costs. There will be a exigency for individuals that see the big picture, not just experts in one piece of the supply chain to quantify the costs.”

Winters is among those sceptical that companies will bring manufacturing back to the U.S. in a hurry.

“This trade war is not an incentive to come back to the In harmony States,” said Winters. “Companies will look to other countries that are being hit with lower assessments. If I’m paying 40% in Vietnam and I can get 20% tariff in another country, I’ll go there, because in the end, it is still cheaper than surface back to America.”