As the much-anticipated deadline for the implementation of a range of punitive tariffs by the U.S. administration came and went July 9 with only continued threats, delays and uncertainty on offer, businesses around the world struggled to determine what President Donald Trump was seeking to achieve. 

But one firm of experts has put its stake in the ground: High and broad-based tariffs on imports to the U.S. are likely to continue. That's because, of all the purported goals of U.S. trade policy, they're proving most successful at raising revenue, concludes a July 2 report from Oxford Economics, the independent economic advisory firm. “Given the fiscal challenges that lie ahead, those revenues will be hard for future administrations to replace,” argued Michael Pearce, deputy chief U.S. economist at Oxford Economics, in the research briefing, titled “What is the Endgame for Tariffs?” 

“Tariffs may generate leverage to use in negotiations, but they failed in opening foreign markets,” said Pearce. “If anything, U.S. exporters face higher trade barriers today because of retaliation.”

Oxford Economics reckons tariffs in place over the spring have generated a jump in U.S. customs revenues, roughly quadrupling to $320 billion annualized in June, up from $79 billion raised in 2024. Revenues are now running at 1.1% of GDP, up from 0.3% last year. Further the firm predicts the 10% universal tariff and other measures will contribute $2.5 trillion to U.S. coffers in additional tariff revenues over the next decade, helping to offset a large part of the deficit impact from tax cuts in the One Big Beautiful Bill Act (OBBBA), which President Donald Trump signed into law July 4. 

But whether tariffs will have the effect of bringing manufacturing (and jobs) back within the United States is doubtful, Pearce argues. “It's unclear if tariffs will succeed in contributing to national security by bolstering the industrial base. Uncertainty and added capital costs from tariffs on investment goods will limit the degree of reshoring in many industries,” Pearce said. “Assuming the administration doubles down on what's working, we expect the lasting focus of tariff policy to be on the 10% universal tariff as a revenue measure, together with a patchwork of country and industry tariffs.”

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Trump announced use of emergency powers to justify his sweeping "Liberation Day" tariffs, announced on April 2, which heralded a fresh trade war with China, in particular. In the ensuing months, the U.S. administration has offered multiple, often conflicting, explanations for reversing decades of largely free-trade policies — raising revenues, reducing the trade deficit, using tariffs as a negotiation tool to open foreign markets, and contributing to reshoring America's industrial production for national security and economic reasons. 

After markets wobbled, and there was a massive pushback from multiple industries, including automotive, Trump delayed most of the country-by-country tariffs for 90 days, making July 9 the “deadline” for implementation, in order to try and win concessions (with the temporary truce between China and the U.S. set to expire August 12). However, at present, his administration has reached only two preliminary trade deals, with the U.K. and Vietnam, which are scant on details and leave much to be worked out.

On July 7, Trump further muddied the waters by announcing that he would delay tariffs hikes on goods from key economies until August 1, with countries including Japan, South Korea and South Africa to face tariffs of up to 40% as part of a fresh wave of levies to kick in on that date. On the same day, according to the Guardian, White House officials also signaled that new blanket rates – charged on all goods imported from certain markets – would incorporate, rather than be imposed on top of, existing duties charged on certain sectors, such as cars.

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Meanwhile, a fundamental legal challenge to all the tariff hikes remains in action. Although 1977's International Emergency Economic Powers Act (IEEPA) allows the President to regulate trade in response to a national emergency, a lawsuit filed with the U.S. Court of International Trade (USCIT) asserts that the IEEPA actually exists to restrain the executive branch's ability to unilaterally enact tariffs.

One May 28, the three-member USCIT unanimously agreed with that assertion, ordering a halt to Trump's 10% blanket tariffs, as well as his levies against China. But, less than 24 hours later, a federal appeals court ruled that the tariffs could stay in place while the case plays out.

Even without the constant flip-flopping on tariff rates and implementation, it’s a tough call for tariffs to achieve both renewed U.S. manufacturing activity and help offset the costs of the recent giant OBBBA, Oxford Economics’ Pearce observed. “Tariffs cannot be a stable source of revenue, or an enduring incentive for firms to reshore production, if the intent is to remove them as part of negotiations with another country.”

The firm offered varying predictions about the real impact of the tariffs going forward, incorporating other factors into the outlook, including fiscal policy, immigration, and international shocks.

It also pointed to the “lessons” from the less aggressive trade war waged by Trump during his first term as president, which are that the U.S. was able to extract few lasting promises from other countries. “The Phase One trade deal reached with China in late 2019 set ambitious purchase targets for China in return for tariff relief, but the signs were that these were not close to being hit, even before the pandemic hit,” Pearce said.

“In short, we expect the 10% universal tariff to stay,” said Pearce. “Additional 20% duties on China are set to remain in place, as well as the 25% tariffs on non-USMCA compliant goods from Mexico and Canada. A 50% tariff on steel and aluminum sticks in our baseline forecast. We still expect a renegotiation of the USMCA to lead to a removal of most tariffs with Canada and Mexico by mid-2026.”