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China’s President Xi Jinping shakes hands with US President Donald Trump (Brendan Smialowski/Getty Images)

How Trump 2.0’s trade war is very different compared to his first term

More tariff revenues are coming from the rest of the world than from China.

7/7/25 11:05AM

Brad Setser, senior fellow at the Council on Foreign Relations and one of the, if not the best, sources for information and analysis on trade and capital flows, charted the difference between President Trump’s trade strategy in his first term relative to this one in some short threads on X.

In summary: the data shows that 2018 was a trade war against mostly China, and this edition is not nearly as focused on America’s top geopolitical rival and source of its largest bilateral trade deficit.

Per Setser, the bulk of the $24 billion in revenues the Treasury collected in tariffs in May was not collected from the importers of Chinese goods.

The bulk of the tariff revenue was NOT collected from China (no trade = no tariff revenue ...)

2/ pic.twitter.com/8rOdRet3CE
— Brad Setser (@Brad_Setser) July 3, 2025

The surge in tariff revenue is not just a China story, but also heavily linked to imports from the European Union, Mexico, Japan, Vietnam, and Canada.

Compare that to the period from 2018 up until this more recent multifront trade war, when the lion’s share of tariff revenue was attributable to imported Chinese goods:

I liked Trump's term one trade policy a lot better than Trump's current trade policy.

Back then, the bulk of the tariff increase was on goods from China.

Now, not so much

1/ pic.twitter.com/I1jedV5p7d
— Brad Setser (@Brad_Setser) July 2, 2025

It’s something to keep in mind as the initial 90-day watering down of reciprocal tariffs on most nations is poised to expire on July 9, with the Trump administration simultaneously saying that more trade deals are coming imminently, telling other countries that they’ll receive letters about higher tariff rates today and also indicating the deadline for collecting these levies would be pushed back to August 1.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

Three US airlines have already hiked baggage fees. More are likely on the way.