Before the Trump trade war, there was the other Trump trade war

Tariffs. So many tariffs. Retaliatory tariffs. Negotiations. Deals. The invoking of obscure trade laws. 2025? Nope. 2018.

In his first term as president, Donald Trump placed tariffs on Chinese goods, steel and aluminum, and washing machines and solar panels. Countries retaliated with tariffs on US imports. Some of the tariffs expired, some were removed or extended through negotiation, and others have stuck around.

CFOs and finance leaders who worked through the first Trump trade war might be experiencing déjà vu. Some of the lessons they learned the first time around still apply today. But there are some key differences between 2018 and the current round of tariffs that can make strategizing for them more of a challenge.

2018’s tariff-palooza: The biggest target of Trump’s first trade war, by far, was China. The US government concluded that China was using unfair trade practices around intellectual property, technology, and innovation. Invoking Section 301 of the Trade Act of 1974, it levied a 25% tariff affecting $50 billion worth of Chinese imports, mostly mechanical parts and equipment, in spring 2018. China retaliated with a 25% tariff on $50 billion in US imports, largely vehicles and agricultural products like soybeans. In September 2018, the US added tariffs on an additional $200 billion worth of Chinese goods. China again followed suit by tariffing an additional $60 billion in US imports.

This particular trade “battle” ended in January 2020 after negotiations between the two countries, in which China agreed to purchase an extra $200 billion in US imports by December 2021. (China did not make good on that promise.)

But that wasn’t all. In February and March 2018, the US invoked a little-used provision of the Trade Expansion Act of 1962 to levy tariffs of 25% on steel imports and 10% on aluminum imports, worth around $48 billion in total. China retaliated, and so did other countries, among them Canada, Turkey, and India. The EU placed 25% tariffs on more than $3 billion worth of US goods, including corn, bourbon, jeans, motorcycles, and suntanning beds. (Can tariffs be passive-aggressive?)

The US levied more targeted tariffs, meant to benefit specific American industries, as well, like on imported solar panels and washing machines.

In some ways, the first trade war hasn’t really ended. In 2022, President Biden chose to extend some of the solar panel tariffs for four more years, and in 2024 he placed new tariffs on Chinese goods including semiconductors, EVs, batteries, minerals, and magnets. Then came 2025, and, well, you know the rest.

Economic effects were muted, and mostly negative: How did the first Trump trade war affect the US economy? Its long-term effects are hard to separate from other factors such as the pandemic and 2018’s interest rate hikes.

The short-term effects were modest. Some US industries and regions “benefited from additional protection from competition,” Kari Heerman, director of trade and economic statecraft at Brookings, told CFO Brew, and saw “some pretty small gains in terms of employment.” But in broader terms, the US experienced “a manufacturing recession in 2019,” Jason Miller, professor of supply chain management at Michigan State University, told us. US manufacturers that imported tariffed inputs, such as parts, materials, and equipment, exported less than those that weren’t exposed to tariffs, because their costs and therefore prices grew, he noted.

And US sectors that China and other countries retaliated against saw employment dip. “China basically stopped buying soybeans from the United States to the point where we had to bail out farmers,” Miller pointed out. China still imports far fewer agricultural products from the US than it did prior to the 2018–19 tariffs, Heerman told us.

“Even after Covid, we lost a lot of our [Chinese] market share to Brazil,” Heerman said. “We were able to find some alternative markets, and that’s fine for some commodities, but the ones that were really China-heavy—pork, soybeans, sorghum, some of the nuts and fruits—never really came back,” Heerman said.

Apples and oranges? The tariffs the Trump administration has levied in 2025 are different from the first round. The 2018–19 tariffs were largely targeted at China, and affected “things that businesses buy rather than what consumers buy,” Heerman said. The new tariffs touch far more countries and sectors.

Consumer demand was also higher, generally speaking, in 2018–19 than it is today. Then, companies “felt more confident that they could pass on” the costs, Miller said. “The importers are absorbing a greater share of the tariffs this time around.” In sectors where demand is high right now, such as electrical equipment, prices are rising, he said.

Business leaders could have a difficult time gauging how much the tariffs should affect their long-term investments. On the one hand, “tariffs tend to be sticky,” Heerman said, because they’re legally and politically difficult to unwind. On the other hand, companies may be reluctant to make large investments in, say, factories, if they think a new presidential administration could undo the tariffs, Miller said.

In fact, both Heerman and Miller argue, tariffs could disadvantage US manufacturers that, like those in many other developed nations, source cheaper parts and labor from abroad. Placing tariffs on these inputs will inflate manufacturers’ cost structure, Miller said. When the US “goes it alone” with tariffs in a world where trade is globalized, Heerman said, US producers will face “a cost increase that their competitors outside the US don’t face.” That could make their exports pricier and thus “less attractive and less competitive on the global market,” Miller said.

Tariffs can work in certain limited cases, Miller and Heerman agreed—for instance, if a country has evidence that a competing nation is “subsidizing an industry and dumping product” in a way that threatens a key sector the first country wants to protect, Miller explained.

But they both caution that, today, broadly applied tariffs make little economic sense. Trade has just become too global.

“Our biggest exporters also tend to be our biggest importers,” Miller said. He likened the current round of tariffs to “fighting a Pickett’s Charge against essentially all the economic theory on trade over the last 40 years.”

As far as tariffs go, history repeating itself might not be a good thing.