Late Last month, the Trump administration announced a new round of tariffs — replacing 2025 levies that had been invalidated by the U.S. Supreme Court earlier this year.
While targeted tariffs are a good way to protect American workers and industries, that’s not what the administration has decided to put in place. Instead, 2025’s “Liberation Day” adopted a one-size-fits-all approach for economic allies and adversaries alike — raising the import taxes that are ultimately paid by American businesses and consumers to their highest levels in 100 years.
With President Donald Trump now doubling down on this strategy, it is important to understand how these policies have impacted household costs, manufacturing employment, and the economy as a whole — especially in the Midwest, which accounts for one-fifth of our nation’s total agricultural and manufacturing output.
This was the genesis for a new analysis by the nonpartisan Midwest Economic Policy Institute and the University of Illinois’ Project for Middle Class Renewal, which assessed the impact of tariffs on six Midwest states: Minnesota, Wisconsin, Iowa, Illinois, Indiana and Michigan.
Across the region, the report concluded that the new 2025 tariffs raised household costs by an average of $2,000, shrunk manufacturing employment by 41,000 jobs, and reduced the region’s economic output by $18 billion.
In Minnesota, costs increased by nearly $1,000 per household. But those costs did not fall evenly. For the top 10% of earners in the state, the new tariffs consumed 0.7% of annual income. For households in the bottom 10%, the added burden was three times higher. In a state where consumer spending accounts for two-thirds of the economy, that loss of purchasing power matters. Money spent covering tariff-driven price increases is money that cannot be spent at other local businesses.
The damage extended beyond household budgets. In Minnesota’s $60 billion manufacturing sector, higher costs on imported parts, metals, machinery and other supply-chain components drove up the cost of production and weakened hiring. Retaliatory tariffs by overseas trading partners further raised costs.
The result was fewer manufacturing jobs. The report found that the new tariffs imposed in 2025 cost Minnesota 6,100 manufacturing jobs. Over half were lost because of higher supply-chain costs, while the rest were due to foreign retaliation that reduced demand for Minnesota-made exports. This shows that while tariffs can help one protected producer, they harm many other businesses that rely on imported materials or foreign customers. Blanket tariffs do not distinguish between unfairly traded goods and essential inputs used by American workers to make American products.
Minnesota is especially exposed to retaliation because food manufacturing is one of its leading industrial sectors. Farmers depend on global markets for corn, soybeans, meat, dairy products and processed foods. When other countries respond to U.S. tariffs by targeting agriculture, Minnesota producers lose sales. And when American goods become more expensive or less reliable, foreign buyers can turn to Brazil, Canada, Europe or other countries. Once a trade relationship shifts, it can be difficult to recover.
Minnesota should not have to choose between free trade at any cost and broad, across-the-board tariffs that have reduced the state’s annual economic output by $2 billion. Targeted tariffs can be appropriate when foreign competitors dump subsidized products, exploit workers or evade environmental standards. Minnesota workers can compete with anyone when the rules are fair.
But the administration has doubled down on its 2025 strategy, making life more expensive, raising costs for businesses, reducing thousands of good-paying employment opportunities and weakening the economy.
The lesson since the beginning of 2025 is straightforward. Tariffs should be a scalpel, not a sledgehammer. Minnesota pays a steep price when Washington chooses the latter.
Frank Manzo IV, MPP, is an economist at the nonpartisan Illinois Economic Policy Institute and Midwest Economic Policy Institute.
