Donald Trump’s most consequential construction project may not be a ballroom or an arch, but his tariff wall.
His latest threat to raise tariffs to 50 percent on some Canadian goods, as drastic as it is, is not nearly as significant as what’s coming next. By the end of this month, the administration is expected to introduce major tariffs on dozens of countries intended to ensure what once was a temporary regime lasts well beyond this presidency. Unlike most previous rounds of tariffs, including the ones just threatened on Canada, the new ones are backed by monthslong investigations into alleged unfair trade practices by other countries. No court has ever overturned this kind of tariff.
But the biggest obstacle to undoing Mr. Trump’s tariffs after 2028 won’t be legal. It will be financial. With the national debt clocking in at a staggering $39.6 trillion, the market responsible for selling this debt has quickly grown addicted to the money coming into the government every day thanks to tariffs. Few politicians are willing to upset the bond market given that it dictates the cost of borrowing money for some of the most important purchases Americans make including their cars and their homes. Rather than be constrained by these forces, the next president can find a way to use them to the country’s advantage.
It’s a situation almost no one saw coming. It was the bond market that originally thwarted Mr. Trump’s tariffs only 15 months ago.
In April 2025, on the so-called Liberation Day, the president threatened to raise tariffs on nearly everything America imports to their highest level in nearly a century. Bond markets panicked, fearing that a global trade war could bring higher prices and slow growth, and they went into a nosedive, leading Mr. Trump to pause his plans a week later. “I was watching the bond market. The bond market is very tricky,” he admitted at the time.
But Mr. Trump, still convinced that tariffs are the best economic weapon he has available to fix what he believes is an unfair trading system, never abandoned the strategy. In the months following, he relentlessly added tariffs on countries including America’s major trading partners. This time, the bond market shrugged. It certainly helped that the risk of a global trade war faded as Europe, India and Japan all declined to retaliate. At the same time, the United States was adding an estimated $40 billion a week to the national debt. Wall Street found that number much easier to swallow thanks to the new tariff money flowing into the Treasury.
Three months after Liberation Day, the Trump administration used the funds it had raised from tariffs to convince Congress that it had a way to pay for the sweeping tax cuts in the One Big Beautiful Bill. “The Congressional Budget Office put out a 10-year estimate that says that the tariff revenue that’s already in place right now is going to raise $2.8 trillion over the next 10 years,” noted Kevin Hassett, director of the National Economic Council. That, he said, was “deficit reduction right there.” By the end of 2025, the government had taken in a record $264 billion in net tariff revenue — more than triple the receipts from the previous year.
In less than a year, America’s financial markets went from hating tariffs, to being able to live with them, to needing them to help cope with the country’s deficit.
The latest evidence came this winter. In February, the Supreme Court struck down the president’s authority to use the International Emergency Economic Powers Act to levy tariffs. Investors rapidly sold off bonds over worries about the cost of refunds and the end of a revenue stream. Instead of panicking about the introduction of tariffs, the bond market was fretting over the possibility of losing them.
Mr. Trump had a plan ready. Within hours, the administration introduced backup tariffs, and by the end of the day, the market had settled down. When those backup tariffs expire this week, the administration will step in again with new tariffs, ones the courts have consistently said that presidents have the authority to impose. Those could generate nearly $ 1 trillion over the next 10 years.
Over that period, our increasingly untenable national debt is likely to put even more fiscal pressure on future presidents. Regardless of who wins in 2028, the desire to avoid the wrath of the bond market may be at a high.
Mr. Trump’s successor will have options. The next president could keep some tariffs while rebalancing where the revenue comes from — and they should.
Mr. Trump’s recent trade strategy has been to put tariffs on everyone, whether friend or foe. What about a more targeted approach? The logical place to focus is China. Considering that it is now running the largest trade surplus in history, the case against China is stronger than at any point in the past decade.
The smart move would be to cut our allies a deal. The United States could partly lower tariffs on its partners in return for their help raising tariffs on key sectors in China. European leaders, feeling pressure from a crushing wave of Chinese exports on everything from cars to chemicals to steel to solar panels, are likely to be much more receptive to this arrangement than in years past.
A coordinated approach on tariffs and trade restrictions that makes clear where a product originally came from would make a real difference in protecting jobs at home in the United States and help mitigate President Xi Jinping’s all-but-certain retaliation. That’s how we keep substantial tariff revenue while creating a stable policy directed at our biggest trading rival.
Of course, many companies will still choose to pay a tariff rather than uproot their entire manufacturing footprint. That’s understandable. But the tariffs those businesses pay should then be used to help ensure the next generation of advanced technology is made at home.
The shock waves from Mr. Trump’s decisions on trade will last well beyond his presidency. The world’s largest economy is set to be more protectionist for the foreseeable future. Financial markets have found their silver lining in this new reality. If the rest of us are going to be paying the costs, we should all get something lasting in return.
Josh Lipsky is vice president and chair of international economics at the Atlantic Council.
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