Trump’s Trade War: Protecting America or Undermining It?

“I have instructed my Secretary of Commerce to add an ADDITIONAL 25% tariff, bringing the total to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA [...] This measure will take effect TOMORROW MORNING.”¹

Since returning to the White House, Donald Trump has made tariffs one of his preferred political tools. Through a steady stream of social media posts, he has rolled out targeted tariff escalations that repeatedly catch America’s trading partners off guard. During his inauguration speech on January 20, 2025, the U.S. president famously declared that “tariff” was “the most beautiful word in the dictionary.” Since then, he has multiplied announcements and reversals alike. The result has been sharp tariff volatility – that is, major fluctuations around the average level of duties imposed.

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Economic Dialogues is a digital journal for the dissemination of knowledge published by the Aix-Marseille School of Economics (AMU, CNRS, EHESS, Centrale Méditerranée). Serving as a bridge between academic research and society, Economic Dialogues provides all citizens with the keys to understanding economic reasoning. Articles are published every two weeks.

“Total chaos”

In February 2026, Bernd Lange, Chair of the European Parliament’s Committee on International Trade, summed up the situation bluntly on X: it was “total chaos on the customs front [...]. Nobody understands anything anymore.”

Yet Donald Trump continues to defend this policy as a key instrument for securing prosperity for American citizens. Those who oppose tariffs, he insists, “are IDIOTS! We are now the richest and most respected country in the world”².

But sudden and repeated changes in import duties create uncertainty for both businesses and households, making it difficult to plan spending, investment, or hiring decisions. This raises a central question: does Donald Trump’s tariff policy truly protect the U.S. economy, or is it ultimately undermining it instead?

Measuring Uncertainty

Economists’ interest in uncertainty is not new. In fact, this field of research has expanded considerably over the past decade, particularly after the unexpected Brexit vote in 2016. Measuring uncertainty, however, remains difficult3. Three main approaches have emerged.

In 2016, three economists developed an “Economic Policy Uncertainty” index (EPU) using textual analysis of hundreds of newspaper headlines. That index has risen sharply since 2025. Uncertainty can also be measured through market volatility, as with the VIX, created by the Chicago Board Options Exchange and sometimes nicknamed the “fear index”⁴. The VIX shows that periods of high volatility have coincided with several major economic crises, including the 2008 financial crisis and the 2020 pandemic. Finally, a third way of measuring uncertainty relies on surveys conducted among businesses, particularly regarding their expectations for future activity.