Trump's 2025 Tariffs Explained: The Return of Import Substitution?

In this Tutor2u economics video, we unpack one of the most talked-about economic developments of 2025: President Trump’s sweeping new import tariffs. What are the economic consequences of tariffs? How does import substitution affect domestic industries, global supply chains, and consumers?

We kick off by exploring the core economic concept of import substitution — a strategy that aims to boost domestic production by making foreign goods more expensive. With a 25% tariff on all foreign-made automobiles, and steep tariffs on key trading partners like China (54%) and the EU (20%), this is protectionism on a global scale.

Using diagrams and real-world data, we look at:

• How tariffs shift supply and demand
• The impact on prices, imports, and domestic output
• The limitations of protectionism, including retaliation, higher costs, and long-term inefficiencies

Whether you're preparing for your AQA, Edexcel, OCR, WJEC, CCEA, or IB Economics exams, this is essential revision material to understand key concepts like comparative advantage, welfare loss, productive efficiency, and trade wars.