'Holy tariff mess, Batman!' Nobel-winner Paul Krugman 'shocked' by​ Trump's tariff blow

Daniel Hampton
August 29, 2025

RAW STORY

President Donald Trump's tariff battle suffered a major defeat Friday when a federal appeals court ruled that his most extensive tariffs were illegal, saying he overstepped his authority. And Nobel Prize-winning economist Paul Krugman expressed "shock."

The court found that the law Trump used to hand down steep tariffs did not grant him the power to enforce them. The ruling's implementation was suspended until Oct. 14, however, to allow the administration to appeal to the Supreme Court.

The ruling challenged Trump's use of emergency powers for trade deficit and other economic concerns.

Writing on his blog, Krugman reacted to the ruling writing, "Holy tariff mess, Batman."

"Wow. An appeals court, backing up the Court of International Trade, has just ruled the majority of Trump’s tariffs illegal. We kind of knew this was coming, but the reality still comes as a shock," he said.

Krugman emphasized that the court didn't find the tariffs were unlawful; rather, the way Trump went about implementing them was, specifically, by claiming an economic emergency.

"But just saying 'I am the Tariff Man, and here are my tariffs' isn’t OK," remarked Krugman.

The former New York Times columnist pointed out that the president is declaring an economic emergency while simultaneously proclaiming the economy has never been stronger.

"So how can things both be terrific and an emergency calling for drastic action?" he asked.

Krugman then mocked the president over his furious reaction on Truth Social, in which he declared the ruling, if upheld, would "literally destroy" America.

"Take away these tariffs, and the county will revert to the blasted wasteland it was on … April 1, just before Trump made his big tariff announcement," he wrote.

Krugman conceded that an "utterly craven" Supreme Court could hand Trump an eventual win — or they could "balk." Either way, Krugman called it a "self-inflicted disaster," since Trump could have just had Republican lawmakers vote on the tariffs.


He concluded that if the tariffs are ultimately declared illegal, it won't embarrass America, as Treasury Secretary Scott Bessent has claimed.

"It will embarrass Trump and Bessent. If anything, it might reassure the rest of the world that some vestige of rule of law yet remains in this nation," he said.

'Boom!' Critics rejoice as court deals 'big blow' to Trump’s tariffs

Daniel Hampton
August 29, 2025 

RAW STORY

A demonstrator holds a placard depicting U.S. President Donald Trump during a protest against tariffs on Brazilian products imposed by U.S. President Donald Trump, outside the U.S. Consulate in Sao Paulo, Brazil August 1, 2025. REUTERS/Amanda Perobelli

President Donald Trump's tariffs suffered a "big blow" in court on Friday, and critics could not hide their satisfaction.

A federal appeals court ruled Trump had no legal right to impose sweeping global tariffs using emergency authority, finding those tariffs unconstitutional. However, the court left the tariffs in place temporarily while the matter is appealed further, likely to the Supreme Court.

The ruling largely upheld a May decision by a specialized federal trade court in New York. It comes as experts warn of "staggering" price hikes that could hit Americans.

CNN's Jake Tapper called it a "big blow" on air to Trump's agenda. New York Times reporter Maggie Haberman told Tapper the same during a brief interview after the ruling dropped.

Reaction was swift across the internet.


Frank Amari‪, a former public defender, joked on Bluesky, "So much winning!!"


Historian and writer Trent Nelson wrote on Bluesky, "Yea. Obviously."

Economist Justin Wolfers‪ cheered the ruling on Bluesky, but warned the fight isn't over.

"BOOM. The federal appeals court rules Trump's tariffs illegal, because they are. There's no national emergency, and so the power to tariff a country rests with Congress. Trump admin has lost at every stage of the process, but stay tuned for the Supremes to chime in."


He noted, "This won't end all tariffs. This ruling applies to tariffs applied to entire countries (which is most of the tariff agenda). The industry-specific tariffs use a different legal authority, and will remain. The White House has other (more limited) tariff powers it'll dust off."

Dmitry Grozoubinski‪, author of "Why Politicians Lie About Trade," wrote on Bluesky, "Appeals court says Trump's fentanyl and reciprocal tariffs are unlawful. Looking forward to the 6-3 SCOTUS decision which upholds them anyway because the Constitution clearly states Trump is an omnipotent God-Emperor destined to reign upon the Golden Throne until all is returned to dust."

Analyst and writer Christian Roselund‪ wrote on Bluesky, "This is the second court ruling to affirm that #Trump 's use of the International Emergency Economic Powers Act (IEEPA) to set sweeping, economy-wide tariffs is illegal. The Trump Admin will almost certainly appeal. Not sure what the next stop is."

 'Our country would be destroyed': Trump continues attack on judges who blocked his tariffs

Robert Davis
August 31, 2025 
RAW STORY


A court ruling that blocked the president's signature tariff agenda seemed to stick under his skin over the weekend.

In a Truth Social post on Sunday, President Donald Trump raged against the seven appellate judges who ruled on Friday that his tariff policy was illegal. The 7-4 opinion states that Trump's reasoning for the tariffs did not constitute an emergency; therefore, any tariffs that were implemented under the auspices of an emergency were declared null.

Trump responded to the court's decision in a Truth Social post on Sunday.

"Without Tariffs, and all of the TRILLIONS OF DOLLARS we have already taken in, our Country would be completely destroyed, and our military power would be instantly obliterated," Trump wrote on Truth Social.

The president also seemed to congratulate one of the judges who voted to leave the tariffs in place.

" In a 7 to 4 Opinion, a Radical Left group of judges didn’t care, but one Democrat, Obama appointed, actually voted to save our Country," Trump wrote. "I would like to thank him for his Courage! He loves and respects the U.S.A."

Read the entire post below.

Trump rampages that tariff blow will ‘literally destroy’ America if upheld

Matthew Chapman
August 29, 2025 

RAW STORY


President Donald Trump released a furious rant on his Truth Social platform after the U.S. Court of Appeals for the Federal Circuit upheld a lower court ruling that his tariff policies are illegal.

The ruling held that the president does not have authority under the International Emergency Economic Powers Act to enact the type of global tariffs he has claimed authority for.

Trump particularly drew attention to the fact that the ruling is delayed from taking effect until October, and vowed to fight the decision at the Supreme Court.

"ALL TARIFFS ARE STILL IN EFFECT!" wrote Trump. "Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong."

"The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else," he continued. "If allowed to stand, this Decision would literally destroy the United States of America. At the start of this Labor Day weekend, we should all remember that TARIFFS are the best tool to help our Workers, and support Companies that produce great MADE IN AMERICA products. For many years, Tariffs were allowed to be used against us by our uncaring and unwise Politicians."

"Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again!" wrote Trump. "Thank you for your attention to this matter."

Trump Tariffs Bound for Supreme Court After Another Legal Loss

If the president's policies are struck down, the administration may have to repay billions of dollars in duties, which customs and trade experts warn "would be a logistical nightmare."


US President Donald Trump delivers remarks on what he claimed are reciprocal tariffs during an event at the White House in Washington, DC, on April 2, 2025.
(Photo by Brendan Smialowski/AFP via Getty Images)

Jessica Corbett
Aug 29, 2025
COMMON DREAMS

As working-class Americans endure the pain from US President Donald Trump's tariff war, the Republican signaled that he plans to keep fighting for the levies after a loss at the US Court of Appeals for the Federal Circuit.

Trump is the first president to impose tariffs by citing the International Emergency Economic Powers Act (IEEPA) of 1977. In a 7-4 ruling, the appellate court's majority found that most of his tariffs are illegal.




Grocery Chains Are Passing Trump Tariff Costs on to US Consumers With Higher Prices: Report

The court said that "tariffs are a core congressional power" and "we discern no clear congressional authorization by IEEPA for tariffs of the magnitude of the reciprocal tariffs and trafficking tariffs."

The decision affirms a May ruling from the US Court of International Trade, which also found that Trump exceeded his authority.

Friday's ruling is paused until October 14, to give the White House time to appeal to the nation's highest court. Trump suggested he would do so in a post on his Truth Social platform, writing:

ALL TARIFFS ARE STILL IN EFFECT! Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong. The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. If allowed to stand, this Decision would literally destroy the United States of America. At the start of this Labor Day weekend, we should all remember that TARIFFS are the best tool to help our Workers, and support Companies that produce great MADE IN AMERICA products. For many years, Tariffs were allowed to be used against us by our uncaring and unwise Politicians. Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again! Thank you for your attention to this matter.

Politico noted that the Friday decision opens the door "for the administration to potentially have to repay billions worth of duties," and pointed to recent warnings from customs and trade experts "that repayments would be a logistical nightmare, and would likely trigger a wave of legal challenges from other businesses and industry groups seeking reimbursement."

Trump's latest legal loss on the tariff front follows various analyses and polling that show the harm his policies are causing. One Accountable.US report from this month highlights comments from grocery executives about passing costs on to consumers, and a recent survey found that 90% of Americans consider the price of groceries a source of stress.

Democrats on the Joint Economic Committee also released a related report earlier this month. As JEC Ranking Member Maggie Hassan (D-N.H.) said at the time, "While President Trump promised that he would expand our manufacturing sector, this report shows that, instead, the chaos and uncertainty created by his tariffs has placed a burden on American manufacturers that could weigh our country down for years to come."

Another mid-August analysis from the Century Foundation and Groundwork Collaborative details the surging cost of school supplies as American families prepared for the 2025-26 academic year. TCF senior fellow Rachel West said that "from his reckless tariffs to his budget law slashing food assistance and federal student loans, Trump's back-to-school message to America's families is crystal clear: Don't expect help, just expect less."

'Big blow to the president's agenda': NYT's Haberman details major Trump setback in court

CNN host Jake Tapper and New York Times White House correspondent Maggie Haberman on CNN on August 29, 2025 (Image: Screengrab via CNN / YouTube)

Carl Gibson

August 29, 2025  

ALTERNET

On Friday, the U.S. Court of Appeals for the Federal Circuit upheld a previous decision by a lower court that the vast bulk of President Donald Trump's tariffs — which he imposed by claiming emergency powers — were unconstitutional. And according to New York Times White House correspondent Maggie Haberman, it's one of the biggest legal setbacks yet for Trump's second administration.

During a segment with CNN host Jake Tapper, Haberman said that the decision was highly anticipated by everyone in the administration who works on trade issues. She added that administration officials had been fearing that it would be "difficult" to defend Trump's assumed emergency powers before the federal judiciary.

"The U.S. is going to end up in a position, if the Supreme Court upholds this ruling, and it's almost certainly going to go to the Supreme Court, the U.S. is now going to be in a position to pay people — countries, excuse me — back, for tariffs. That gets very complicated," she said. "So this is a big blow to the president's agenda. He has sometimes ignored courts. We'll see what this looks like."

Haberman's point that tariffs could have to be paid back to countries affected by them could prove expensive for taxpayers. The Associated Press reported that as of July, total year-over-year tariff revenue exceeded $159 billion. Trump imposed the tariffs by invoking the International Emergency Economic Powers Act (IEEPA) of 1977, which allows a president to assume certain new powers under an economic emergency. But during oral arguments, one of the judges hearing the case pointed out that the IEEPA statute doesn't even mention tariffs.

Moreover, Article I, Section 8 of the U.S. Constitution stipulates that only Congress has the power to levy tariffs, stating that the legislative branch "shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."

Shortly after the decision was announced, Trump took to his Truth Social platform to blast the judges (who he deemed "Highly Partisan" in his signature style of oddly-placed capital letters) that struck down his tariffs. He also insisted that "ALL TARIFFS ARE STILL IN EFFECT!"

"If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong. The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else," he wrote. "If allowed to stand, this Decision would literally destroy the United States of America."

Watch Haberman's segment below, or by clicking this link.

 

Op-Ed: Trump tariffs illegal but SCOTUS will probably support them. There’s a problem with that.

By Paul Wallis

EDITOR AT LARGE

DIGITAL JOURNAL
August 29, 2025


On April 2, US President Donald Trump, with Commerce Secretary Howard Lutnick beside him, unveiled sweeping tariffs on almost all trading partners - Copyright AFP/File Brendan SMIALOWSKI

The Trump administration’s tariffs are universally unpopular worldwide. American importers have to pay the extra costs, which are passed on to consumers. The increased costs inevitably mean fewer goods are sold. Countries are targeted individually with weaponized tariffs. Global trade is an appalling mess.

These tariffs are raised under the International Emergency Economic Powers Act (IEEPA). The US Court of Appeals for the Federal Circuit in Washington, DC, held in a 7-4 ruling that the statute does not empower the imposition of tariffs. In fact, the Act makes no mention of tariffs.

Meaning that many of the controversial tariffs now imposed also exceed the authority granted by the Act. Therefore, they’re illegal. It’s expected that the administration will appeal to the Supreme Court, and that the Supreme Court will uphold the tariffs.

In the meantime, the administration maintains that the tariffs are legal. It’s a Yes or No situation. If only it were that simple.

But –

The problem with these tariffs and their legalities or lack of legalities is that the US isn’t the only party involved. US importers can fairly say that if the statutory basis of the tariffs is illegal, they shouldn’t have to pay those billions in extra costs. Industry lobbies are likely to put a lot of pressure on the administration as the effects of tariffs become clearer.

That issue’s not likely to go away. The administration has nailed itself to tariffs as an instrument of international economic policy. There’s even a level of “prestige” in sticking to tariffs as the only way to do business. If the tariffs go, the whole house of cards goes with them.

The Supreme Court is in a particularly thankless position. If the Appeals Court is correct in that tariffs are not specifically empowered by the Act, any and all tariffs could be challenged in individual court actions.

Here’s the twist. The Supreme Court would have to make a blanket ruling that all tariffs stand to support the administration. That would lock in added costs for importers and consumers. There would be a lot of pushbacks from the various economic sectors and other countries. Any negotiation with any other country would have to start with trade.

Alternatively, any decision that the tariffs are not empowered by the Act effectively demolishes the entire tariff structure. That means that tariffs as a nominal source of revenue to pay for the ideologically sacred tax cuts would also be scuttled as a budgetary option.

In practice, of course, it’s much worse. A brief overview of the last 200 years of tariffs is hardly encouraging. Tariffs just don’t work. The current range of tariffs are already seen as a major threat to prices. Tariffs are the antithesis of free trade, the supposed basis of modern capitalism.

Nothing can move fast on this subject. As expected by just about everyone, the inherent constipation of the tariffs dogma will prevent movement.

“Sic transit ingloria.” So goes the inglorious.

___________________________________________________________

Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.

A timeline of Canada-U.S. tariffs on steel and aluminum

By The Canadian Press

February 10, 2025 

Rolls of coiled coated steel are shown at Stelco in Hamilton 

 THE CANADIAN PRESS/Peter Power

U.S. President Donald Trump says he will impose 25 per cent tariffs on all steel and aluminum imports, including products from Canada — a threat causing economic uncertainty across the country.

Here’s a look back at the impacts of Trump’s previous steel and aluminum tariffs on Canadians.

March 2018

Trump announces his intent to impose 25 per cent tariff on steel imports and a 10 per cent tariff on aluminum imports. They come into force June 1.

May 31, 2018


Canada announces its intent to impose retaliatory tariffs on the United States.

July 1, 2018

Canada’s retaliatory tariffs take effect on $16.6 billion in U.S. exports to Canada, including steel, aluminum and other products from the U.S. like Florida orange juice and ketchup. The government deliberately targets products with large manufacturing bases in the states of key Republicans.

Steel pipe maker Tenaris SA temporarily lays off 40 workers and reorganizes its production in Sault Ste. Marie, Ont., the first publicly-disclosed job losses in Canada resulting from the U.S. steel tariffs.

May 17, 2019

The United States and Canada announce an agreement to lift tariffs on Canadian steel and aluminum, as well as Canada’s retaliatory tariffs. Both governments lift their respective tariffs three days later.

August 2019

Statistics Canada releases data on the impacts of tariffs on trade showing exports of both steel and aluminum to the United States falling sharply after May 2018. Steel exports fell 38 per cent in June 2018 and by May 2019 were at their lowest level in almost 10 years. Aluminum exports were on average 19 per cent lower during the year the tariffs were in place, compared to 2017.

Canada’s import of U.S. steel products also fell, with the monthly average value between July 2018 and May 2019 being 30.5 per cent lower than during 2017.

In June 2019, after the tariffs were lifted, Canadian exports of steel products to the U.S. grew almost 16 per cent and the export of aluminum products grew 47 per cent.

Aug. 6, 2020


Trump announced a plan to impose a new 10 per cent tariff on Canadian aluminum imports, taking effect on Aug. 16, 2020.

Sept. 15, 2020

The United States calls off the tariffs, agreeing to withdraw current penalties before Canada’s retaliatory measures take effect.

May 2024

The Tax Foundation releases a report saying section 232 tariffs on steel and aluminum started by Trump in his first term — including the ones on Canada — had a negative impact on the U.S. economy, causing an estimated 75,000 job losses.

November 2024

Trump threatens to impose 25 per cent tariffs on Canadian and Mexican products on Jan. 20, 2025, his inauguration day, due to border security issues around fentanyl and illegal immigration. He later adds the trade imbalance between Canada and the U.S. to his list of reasons for imposing tariffs.

December 2024

Canada announces a $1.3-billion border security plan to “bolster border security” and disrupt the flow of fentanyl.

Feb. 1, 2025

Trump signs an executive order to hit Canada with 25 per cent tariffs — with a lower 10 per cent duty for energy.

Prime Minister Justin Trudeau holds a news conference in the evening to announce that Canada will respond with an immediate $30-billion retaliation package, which will be followed by $125 billion in duties on American products in 21 days to give companies and supply chains time to find alternatives.

Feb. 3, 2025

U.S. tariffs against Canada and Mexico are delayed for 30 days. Canada and the provinces also halt their moves to retaliate, including with tariffs and bans on U.S. alcohol sales north of the border.

Feb. 9, 2025

Trump says he will formally announce 25 per cent tariffs on all steel and aluminum imports, including from Canada and Mexico, on Monday.

Feb. 10, 2025

Trump has signed executive orders to slap 25 per cent tariffs on all steel and aluminum imports into the United States, including Canadian products, starting March 4.

Bea Bruske, president of the Canadian Labour Congress, says Trump’s previous steel and aluminum tariffs had a “devastating impact” on Canadian workers.

“Thousands of workers faced layoffs and uncertainty, and the effects rippled across manufacturing, construction and supply chains,” Bruske says, adding that 2,000 workers and 500 employers relied on emergency government support.

With files from Kelly Geraldine Malone and The Associated Press.

This report by The Canadian Press was first published Feb. 11, 2025.



Trump steps up his 2018 tariffs on steel and aluminum, risking inflation on promise of more jobs

By The Associated Press
February 10, 2025 

U.S. President Donald Trump listens to a question from a reporter as he signs executive orders in the Oval Office at the White House, Monday, Feb. 10, 2025, in Washington. (Photo/Alex Brandon) (Alex Brandon/AP)

U.S. President Donald Trump on Monday removed the exceptions and exemptions from his 2018 tariffs on steel, meaning that all steel imports will be taxed at a minimum of 25%. Trump also hiked his 2018 aluminum tariffs to 25% from 10%.

“We were being pummeled by both friend and foe alike,” Trump said as he signed two proclamations changing his orders during his first term that go into effect on March 4. “It’s time for our great industries to come back to America.”

The moves are part of an aggressive push by the president to reset global trade, with Trump saying that tax hikes on the people and companies buying foreign-made products will ultimately strengthen domestic manufacturing. But the tariffs would hit allies as the four biggest sources of steel imports are Canada, Brazil, Mexico and South Korea, according to the American Iron and Steel Institute.

Trump also intends this week to reset U.S. taxes on all imports to match the same levels charged by other countries. All of that comes on top of the 10% tariffs he already put on China, China’s retaliatory tariffs that started Monday and the U.S. tariffs planned for Canada and Mexico that have been suspended until March 1.

Monday’s tariffs almost immediately drew criticism from Canada, the largest source of steel imports. Candace Laing, president and CEO of the Canadian Chamber of Commerce, said that Trump was a destabilizing force in the global economy.


“Today’s news makes it clear that perpetual uncertainty is here to stay,” said Laing.

The tariffs carry inflation risks at a moment when voters are already weary of high prices and fearful that price increases will eclipse any income gains. Trump maintains that the tariffs will level the playing field in international trade and make U.S. factories more competitive, such that any pain felt by consumers and businesses would eventually be worthwhile.

“‘Fairness’ is in the eye of the beholder, but the more fundamental question is whether the U.S. actually benefits from such new tariffs,” Benn Steil, director of international economics at the Council on Foreign Relations, a New York-based nonpartisan think tank, said in an email. “The costs to the U.S. will include higher prices to U.S. consumers, retaliatory tariffs abroad, and the loss of U.S. jobs and competitiveness in firms hit by higher input costs.”

Steil noted that other countries are already adopting Trump’s approach from his first term as the president imposes tariffs on the premise that the imports create national security risks. That’s because national security-related tariffs are legally unchallengeable at the World Trade Organization, meaning that so far Trump’s approach has encouraged other countries to increase trade barriers.

“Not surprisingly, everything from ‘door frames’ to ‘alcoholic beverages’ have of late been subject to new import barriers in the developing world on the grounds of national security,” Steil said.

Of the roughly 29 million net tons of steel imported into the United States last year, a little under 2% came from China. But the White House maintains that exemptions to the tariffs provided over the previous four years by the Biden administration enabled steel and aluminum from China and Russia to go through other nations to reach the United States.

While the tariffs could help the finances of steel mills and aluminum smelters, they could also increase costs for the manufacturers that use the metals as raw materials to make autos, appliances and other products.

Glenn Stevens Jr., executive director of MichAuto, said that the auto industry would likely need to raise prices in response to the tariffs. In turn, higher prices would decrease sales and hurt company’s bottom lines, leading to fewer factory jobs.

“If you look at sudden tariffs to a system, there isn’t a lot of good that comes out of that,”said Stevens, his remarks challenging Trump’s own statements that his policies would stimulate massive gains in auto industry jobs.

The White House has yet to fully counter economic analyses showing that tariffs would hurt growth and intensify inflation, only saying that such analyses are incomplete without including the full extent of Trump’s planned income tax cuts and regulatory curbs. But Trump has yet to propose a budget plan that would flesh out his policies so that economists can judge them.

Consumers already appear to be anticipating that inflation will become a bigger problem. On Friday, the preliminary February results from the University of Michigan Survey of Consumers found that year-ahead inflation expectations jumped to 4.3% from 3.3% a month prior.


The government inflation report scheduled to be released on Wednesday is expected by economists to show consumer prices rising at 2.8%, which would suggest that the public sees tariffs as a major risk to their financial wellbeing.

The stock prices of steel companies climbed sharply on Monday as investors assumed the tariffs would increase their profits. Cleveland-Cliffs, which wants to buy Pittsburgh’s U.S. Steel, surged upward by nearly 18%. U.S. Steel rose almost 5%. Nucor increased almost 6%, and Steel Dynamics rose about 5%.

But some companies that could pay more for steel and aluminum saw their share prices decrease. For example, shares in automaker General Motors sold off, which could ultimately signal trouble for a manufacturing sector that Trump has promised to revive.

“We have far more steel and aluminum-consuming businesses, think construction, machinery and equipment manufacturing, auto manufacturing, than we do steel and aluminum producers, so the advantage created for the producers comes at a much greater cost to downstream users,” said Erica York, vice president of federal tax policy at the right-leaning Tax Foundation.

Trump reiterated as he signed the proclamations that more tariffs would be coming on computer chips, autos and pharmaceutical drugs. But the president said that the import taxes would eventually enable more steel mills and aluminum plants to open in the U.S. to avoid the tariffs.

“You’re ultimately going to have a price reduction because they’re going to make their steel here,” said Trump, adding that there would also be more jobs.

Howard Lutnick, Trump’s pick to be commerce secretary, said that the strengthened tariffs would bring 120,000 jobs back to the United States. It wasn’t clear how he reached that number. The primary metals industry added roughly 14,000 jobs during the first 12 months the steel and aluminum tariffs were originally imposed, though gains were quickly erased by the coronavirus pandemic in 2020.

Panos Kouvelis, a professor specializing in supply chains at Washington University in St. Louis, co-wrote a research paper last year finding that the 2018 tariffs did not deliver a stronger manufacturing sector as Trump had promised.

“Simple economics will tell you if prices go up then demand will go down,” Kouvelis said, stressing that what was needed instead were incentives that were specific to advanced technologies, national security needs and pharmaceutical needs.

“It requires smart, targeted industrial policies,” he said, “instead of general tariffs on everything.”

'Brink of recession': This 'ominous' MAGA proposal could 'devastate the country’s economy'

President Donald Trump with Commerce Secretary Howard Lutnick on February 21, 2025 (Wikimedia Commons)

Alex Henderson

March 20, 2025
ALTERNET

Liberal economists Paul Krugman and Robert Reich and other critics of President Donald Trump are warning that a variety of his policies — including steep new tariffs, mass deportations and deep cuts to the federal workforce — could push the United States into a full-fledged recession.

One MAGA proposal that isn't being talked about as much is repealing or gutting the Inflation Reduction Act. But according to The New Republic's Malcolm Ferguson, that is yet another thing that could help tank the economy.

"Repealing the Inflation Reduction Act — something President Trump is currently trying very hard to do — could result in a $160 billion hit to the gross domestic product, according to Semafor," Ferguson explains. "A complete IRA repeal would devastate the country's economy. It could lead to 790,000 lost job losses by 2030, while household energy bills would reach $370 per year, on average, by 2035."

Ferguson adds, "This is ominous news for an economy already on the brink of recession."

Ferguson warns that economic damage from tariffs and economic damage from a repeal of the Inflation Reduction Act could be a painful combination.

"That recession is being driven by Trump's ongoing trade war with America's closest allies — 25 percent levies are currently being placed on many imports from Mexico and Canada — which Fed Chair Jerome Powell just admitted was making inflation worse," Ferguson notes. "Cuts to the IRA would have a massive negative impact on American manufacturing, delivering a devastating blow to a sector that those tariffs are theoretically intended to boost. Slashing the IRA would also particularly harm red states, which have received a whopping 77 percent of clean energy manufacturing and deployment investment since the third quarter of 2022."

Ferguson continues, "A full repeal of the IRA is not expected, of course, but Speaker Mike Johnson did describe his vision for the cuts as 'somewhere between a scalpel and a sledgehammer.' Even if the bill is not repealed — or curtailed — by Congress, agency cuts made by Elon Musk’s Department of Government Efficiency have likely already affected its implementation."

READ MORE: Busted: Report exposes Musk operatives who infiltrated Social Security Agency

According to Semafor's Mizy Clifton, red states and swing states could suffer the most damage from a repeal of the Inflation Reduction Act.

Clifton, in an article also published on March 20, reports, "With the exception of California, Republican-controlled states — Texas, Georgia, Florida, and Pennsylvania — stand out as the biggest losers, according to projections by think tank Energy Innovation: Annual household energy bills in Texas, for example, could increase $370 per year on average in 2035 as reduced investment in renewables drives up the share of electricity coming from fossil fuels and utilities pass on their higher costs to consumers, according to Energy Innovation projections."

Read The New Republic's full article at this link and Semafor's reporting here.

Inside Trump's economic plan: A massive transfer of wealth

Robert Reich

March 20, 2025
ALTERNET

Donald Trump believes his tariffs will bring so much money to the U.S. treasury that the U.S. will be able to afford another giant Trump tax cut.

But Trump’s tariffs — and the retaliatory tariffs already being imposed on American exports by the nation’s trading partners — will be paid largely by the American working class and poor.

And the people who will benefit most from another giant Trump tax cut are America’s wealthy.

It will be a giant upward transfer of wealth.

Trump has made astronomical estimates about how much money tariffs can raise.

“We will take in trillions and trillions of dollars and create jobs like we have never seen before,” he said during his recent joint address to Congress. “Tariffs are about making America rich again and making America great again.”

Last Sunday on Air Force One, Trump was even more ebullient. “We’re going to become so rich, you’re not going to know where to spend all that money,” he said.

The Committee for a Responsible Federal Budget estimates that if Trump’s already-announced tariffs on China, Mexico, and Canada went into effect, they’d bring about $120 billion a year into the U.S. treasury, and $1.3 trillion over the course of 10 years.
by Taboola

Among Trump’s first actions at the outset of his second term was to order the treasury to establish an “External Revenue Service” to collect tariff revenue that would enable the U.S. to pay down its debt and reduce taxes.

Howard Lutnick, Trump’s secretary of commerce, said on Fox News in late February that the goal of the External Revenue Service “is very simple: to abolish the Internal Revenue Service and let all the outsiders pay.”

In other words: The U.S. will raise so much money from Trump’s tariffs that Americans will no longer need to pay income taxes.

The first problem with this is mathematical. America raises about $3 trillion each year from income taxes. The nation also imports about $3 trillion worth of goods each year.

So to replace income taxes, tariffs would have to be at least 100 percent on all imported goods. Also, Americans would have to continue to import $3 trillion worth of goods every year. Neither of these is remotely plausible.

The second problem is who pays.

Trump keeps saying other countries pay for tariffs. That’s not how they work.


Tariffs are effectively taxes on imported products. They’re paid by Americans.

Say there’s a 60 percent tariff on Chinese imports. When Walmart imports “Mr. Coffee” machines from China (where they’re made), China doesn’t pay the 60 percent tariff to the U.S. government. Walmart does.

If Walmart had bought the coffee machine for $20 before the tariff, the 60 percent tariff requires Walmart to pay an extra $12 — bringing the total cost of each coffee machine to $32.

Walmart doesn’t want that extra $12 to cut into its profit margin, so it will try not to absorb that cost. Instead, it will pass the extra $12 on to its customers.


Walmart’s CEO has already said it expects to raise prices in response to Trump’s tariffs in order to protect its profits.

Targeted tariffscan be used to protect industries critical to national security.

This is what the Biden administration did when it levied tariffs on Chinese electric vehicles, solar panels, computer chips, and batteries after making massive domestic investments in these technologies.

But Trump has proposed across-the-board tariffs on almost all imports — particularly from America’s largest trading partners.


While Americans will pay more for imported goods due to tariffs, countries that export the products to America are also harmed. American consumers presumably will buy fewer of their products, since they cost more. These countries are retaliating by raising tariffs on American exports.

On Monday, China began imposing tariffs on a range of American farm products, including a 15 percent levy on chicken, wheat, and corn.

These retaliatory tariffs will hurt America’s Farm Belt — mostly Republican states and Trump voters.

On Wednesday, after Trump imposed a 25 percent tariff on all aluminum and steel imports coming into the United States from the rest of the world, the European Union announced retaliatory tariffs on about $28 billion worth of American exports, including beef and whiskey.

Not incidentally, Europe’s retaliatory tariffs are on goods mostly produced by Republican states (think Kentucky bourbon). Europe is also slapping tariffs on Harley-Davidson motorcycles, made in America’s Rust Belt.

On Thursday, in response to Europe’s tariffs, Trump threatened a 200 percent tariff on all alcoholic products from European Union member states. If he follows through, Trump voters will be paying more for much of the alcohol they consume.

Canada also announced new tariffs on about $21 billion worth of U.S. products.

This is called a trade war. There are no winners in such a war.

One of the biggest global trade wars started with the Smoot-Hawley Tariff in 1930. After the 1929 stock market crash, President Herbert Hoover and Republicans thought sweeping tariffs would help the economy.

They didn’t. Import prices surged, and exports plummeted because of other nations’ retaliatory tariffs. Global trade fell by 66 percent, worsening the Great Depression.

Smoot-Hawley seemed to prove that across-the-board tariffs don’t work. Then came Trump’s first term and his sweeping tariffs, largely on China.

Higher prices from Trump’s first-term tariffs on thousands of Chinese imports are estimated to have cost American families close to $80 billion.

This cost took a larger chunk out of the incomes of poorer families than richer ones.

If you make $50,000 a year, the cost of a coffee maker that rises due to tariffs affects you more than it does someone making $1 million a year who can better afford the price increase.

To put it another way, tariffs are a highly regressive tax.

Following Trump’s first-term tariffs on China, China retaliated with its own tariffs on American exports. This led China to import less from America.

In the U.S. agriculture industry alone, the result was a $27 billion loss in exports from mid-2018 to the end of 2019. Even though the government increased aid to affected farmers, farm bankruptcies shot up 20 percent.

Another consequence of Trump’s first-term trade war was that American manufacturing shrank, as demand for exports slumped and raw materials used in manufacturing became more expensive.

One study estimates that Trump’s first-term trade war cost nearly 300,000 American jobs.

Instead of learning a lesson from this fiasco, Trump is now promising even bigger tariffs — more tariff hikes on China and, starting on April 2, 25 percent tariffs on imports from Canada and Mexico.

These new tariffs would cost the typical American household an additional $1,200 this year. If Trump makes good on previous pledges to slap more tariffs on imports from around the world in addition to aluminum and steel, American families can expect to spend as much as $4,000 more.

Trump says he’ll use the revenue from tariffs to “offset” more of his big pending tax cut.

That tax cut will disproportionately benefit wealthy Americans and big corporations, as did Trump’s first-term tax cut. But revenue raised from such tariffs will be coming disproportionately from average working people and the poor.

Hence, it will be a massive transfer of wealth from most Americans to the super wealthy and giant corporations.

Will most Americans know that the higher prices they’ll pay for groceries, gas, housing, and all sorts of other things will be going into the pockets of the wealthy? Will they know whom to blame?

Trump was able to fool most Americans during his first term into believing he had created a marvelous economy for them and that they benefited from his tariffs and tax cuts.

It was a lie, of course. But he tells lots of lies that many Americans believe. Will he be able to do it again, on a much larger scale?

Robert Reich is a professor of public policy at Berkeley and former secretary of labor. His writings can be found at https://robertreich.substack.com/

Trump says dairy, lumber tariffs on Canada may come soon

By AFP
March 7, 2025

Beiyi SEOW

US President Donald Trump said Friday that he could impose reciprocal tariffs on Canadian dairy and lumber within days — a move set to fuel tensions with Ottawa just days after an earlier wave of levies.

Since taking office in January, Trump has unleashed a series of tariffs and threats targeting US allies and adversaries, including duties of up to 25 percent on imports from Canada and Mexico.

On Thursday, he provided the vital trading partners temporary reprieve, exempting goods coming in from both countries under a North American trade pact.

But he has vowed broader “reciprocal tariffs” as soon as April 2, aimed at remedying practices that Washington deems unfair.

On Friday, Trump signaled that such levies could come as soon as Friday: “Canada has been ripping us off for years on tariffs for lumber and for dairy products.”

“They’ll be met with the exact same tariff unless they drop it, and that’s what reciprocal means,” the president added.

“We may do it as early as today, or we’ll wait till Monday or Tuesday,” he said of the two sectors which have long been affected by trade disputes between the neighbors.

Economists warn that blanket levies could weigh on US growth and raise inflation, adding that they also weigh on business and consumer sentiment.

But Trump kept the pressure up on Canada on Friday: “It’s not fair. Never has been fair, and they’ve treated our farmers badly.”

– Rising tariffs? –

In an earlier interview with Fox Business, Trump said that tariffs affecting Canada and Mexico could rise in the future.

Asked if companies might get more clarity on his trade policies, Trump said: “I think so. But, you know, the tariffs could go up as time goes by.”

White House senior counselor Peter Navarro told CNBC in a separate interview he rejected the idea that there was uncertainty surrounding Trump’s trade policies.

“The uncertainty is created by the fact that people don’t take President Trump at his word,” he said.

Trump’s move to back off some tariffs on Canada and Mexico came after stock markets tumbled as his levies of up to 25 percent took effect this week.

On Thursday, the White House said adjustments exempting goods under the United States-Mexico-Canada Agreement (USMCA) recognize “the unique impact that these tariffs could have on American automotive manufacturers.”

A White House official told reporters that about 62 percent of Canadian imports will still face the fresh levies, though much of them are energy resources slapped with a lower 10 percent rate.

For Mexico, the proportion of imports affected is around 50 percent, the official added on condition of anonymity.

Trump’s tariff rollback brings limited respite as new levies loom



By AFP
March 8, 2025


Experts have warned it is often Americans who end up paying the cost of tariffs on imports. - © GETTY IMAGES NORTH AMERICA/AFP/File SPENCER PLATT

Beiyi SEOW

US President Donald Trump imposed vast tariffs this week on key partners Canada and Mexico, roiling cross-border ties before offering temporary relief to manufacturers — but with more levies kicking in next week, the respite may be fleeting.

US companies faced a series of duties starting Monday, with Trump doubling an additional levy on Chinese goods before allowing 25 percent tariffs on Canadian and Mexican imports to take effect Tuesday.

The moves rattled markets, sending major Wall Street indexes down, and the president on Thursday announced exemptions for Canadian and Mexican goods entering the United States under a North American trade pact.

But some 62 percent of Canadian imports are still hit by the new levies, even as much of them are energy resources covered by a lower 10 percent tariff.

For Mexican goods, this proportion is around half, the White House estimates.

“It’s surprising because it’s such a self-destructive policy,” said Philip Luck, director of the economics program at the Center for Strategic and International Studies (CSIS).

Referring to the initial imposition of 25 percent Canada and Mexico tariffs, Luck called it “economic kryptonite.”

Although Trump partially rolled back levies — taking into consideration heavily integrated North American auto supply chains — the fact that tariffs came on has lingering effects, Luck said.

“The damage was done for the week they were on, and the damage continues to be done in terms of the fact that we just have a much more uncertain trade environment,” he told AFP.

– Steel, aluminum hit –

Looking ahead, Trump’s 25 percent tariffs across steel and aluminum imports are due to take effect next Wednesday.

US President Donald Trump’s steep tariffs on Canadian and Mexican imports rattled markets – Copyright AFP/File ROBERTO SCHMIDT

Trump has said he would not modify the levies.

These tariffs will also affect Canada and Mexico, both of whom export steel to the United States, alongside other trading partners like Brazil, South Korea and European countries.

But even as Washington seeks to help domestic steel producers, experts warn that targeting the metals harms various other industries.

Steel and aluminum are inputs to construction, data centers and automobiles, said Luck of CSIS.

And it is unclear if such tariffs do more good than harm.

In 2002, the George W. Bush administration placed tariffs on imports of certain steel products to guard the domestic sector.

But Luck noted that more jobs were lost in steel-consuming industries than the total number employed by the American steel industry itself.

Scott Paul, president of the Alliance for American Manufacturing (AAM), estimates that existing steel and aluminum tariffs currently cover less than half of all such US imports.

But Trump’s moves next week are “essentially a reset” of levies to 25 percent.

– Cost concerns –

To guard against volatility from upcoming tariffs, some manufacturers will look to source more products domestically or renegotiate their import contracts, said Paul of AAM.

Businesses may also delay orders, and others are likely stocking up on inventory, he told AFP.

No matter what, there will be an “adjustment period” for firms, he said.

The speed of policy rollout now, Paul added, means a “rapid reset” of trade ties — a sharp contrast to the slow spread of deindustrialization over decades previously.

This week alone, he said, the additional 20 percent tariff targeting China raises the effective average rate on Chinese products to about 30 percent.

“When you look at what’s actually been put into place so far, from a tariff point of view, the focus has certainly been China,” he said.

“I don’t think they’re done yet,” he added, referring to the world’s second biggest economy.

Industries are on edge as they eye the possibility of more levies to come — with Trump promising “reciprocal tariffs” as soon as April 2.

On Friday, trade association the National Association of Home Builders (NAHB) expressed concern that “the continued threat of tariffs will make it harder for builders and their customers to move ahead with new construction projects.”

“With the nation facing a housing affordability crisis, we continue to believe that critical construction materials should be exempt from any future tariffs,” said NAHB chairman Buddy Hughes.

Trump tariffs: What’s been done and what is to come?


By AFP
March 7, 2025


US President Donald Trump has justified the tariffs on vital trade partners as a response to illegal immigration and the deadly drug fentanyl coming into his country - Copyright AFP/File ANGELA WEISS

It was another roller-coaster week in US President Donald Trump’s trade war as tariffs against China came into force while Mexico and Canada were given a temporary reprieve.

Here is what happened this week and what’s looming in the coming weeks:

– North American standoff –

Trump unveiled 25-percent tariffs on Canadian and Mexican goods on February 1, with a lower rate of 10 percent for Canadian oil.

But hours before they were due to take effect on February 4, Trump agreed to delay the move for a month.

Fast-forward to March 4: the tariffs come into force, hitting imports from Mexico such as avocado or tomatoes and Canadian goods such as lumber.

Three days later, Trump gave the two countries another one-month delay, this time on products covered under the United States-Mexico-Canada Agreement (USMCA) — a pact that the US leader signed into law during his first term in office in 2020.

More than 50 percent of Mexican goods and 38 percent of Canadian goods entered the United States under the USMCA last year, according to a White House official.

Trump had already given automakers a similar reprieve, which will last until April 2, following talks with Ford, General Motors and Jeep owner Stellantis.

In response to the pause, Canada delayed its own second wave of retaliatory tariffs on Can$125 billion ($87 billion) worth of US products until April 2.

Trump has justified the tariffs on the United States’ neighbours and vital trade partners, along with China, as a response to illegal immigration and the deadly drug fentanyl coming into his country.

– China –

Trump has not given China such breaks

Ten percent tariffs on goods from the country considered as the world’s factory came into effect on February 4 — and they were increased to 20 percent on March 4.

Beijing retaliated, saying it would impose 10- and 15-percent levies on a range of agricultural imports from the United States.

Those come into effect next week and will impact tens of billions of dollars in imports, from US soybeans and corn to chicken and beef.

Beijing had earlier responded to US trade measures with duties of 15 percent on coal and liquefied natural gas, and 10 percent on oil and other goods.

China has pushed back on its alleged role in the deadly fentanyl supply chain, saying Beijing has cooperated with Washington and arguing that tariffs would not solve the drug problem.

– Next target: EU –

Trump has said that products from the 27-nation European Union would be hit with a tariff of 25 percent, adding that the bloc has “taken advantage of us.”

The EU has vowed to retaliate with proportionate countermeasures.

– Steel and aluminium –

Trump signed orders in February to impose 25-percent tariffs on US steel and aluminium imports from March 12.

Canada is the leading supplier of steel to the United States, followed by Brazil.

– Chips, pharmaceuticals –

Trump has said tariffs on automobiles, semiconductors and pharmaceuticals could come as early as April 2, with a rate of around 25 percent.

For computer chips and pharmaceuticals, he said they could “go very substantially higher over (the) course of a year.”

– Reciprocal tariffs –

Trump has also signed plans for sweeping “reciprocal tariffs” that could hit both allies and adversaries by April 2.

The levies would be tailored to each US trading partner and consider the tariffs they impose on American goods, alongside taxes the White House has said are discriminatory, such as value-added taxes.

On Monday, Trump also signalled tariffs on imported agricultural products. A White House official told AFP this came under his plans for reciprocal tariffs.

– Probes on lumber and copper tariffs –

Trump ordered a probe on Saturday into potential tariffs on lumber imports.

The review, due by November, takes aim at exporters like Canada, Germany and Brazil, with White House officials earlier accusing them of “dumping” lumber into the US market.

Last month, Trump also ordered an investigation into possible levies on US copper imports, which could fuel trade tensions with Chile, the biggest US supplier, as well as Canada.

– Chips, pharmaceuticals –

Trump has said tariffs on automobiles, semiconductors and pharmaceuticals could come as early as April 2, with a rate of around 25 percent.

For computer chips and pharmaceuticals, he said they could “go very substantially higher over (the) course of a year.”

The US tried high tariffs and ‘America first’ policies in the 1930s. Here's what happened next.

 U.S. National Archives and Records Administration, Public Domain, https://commons.wikimedia.org/w/index.php?curid=17057587
Unemployed people lined up outside a soup kitchen opened in Chicago by Al Capone during the Great Depression in February 1931

The Conversation

February 09, 2025

Donald Trump has hit the 30-day pause button on imposing 25% tariffs on Canada and Mexico, but is proceeding with slapping 10% tariffs on Chinese imports, and tariffs on the EU are still on his agenda.


Trump has declared that “tariff” is “the most beautiful word in the dictionary”. Yet as the president weighs up the sweeping consequences of his tariff fixation, he may want to throw out the dictionary and pick up a history book.

The magnitude and scale of the proposed tariffs hark back to the US Smoot-Hawley Tariff Act enacted in 1930.

For example, Nobel Laureate economist Paul Krugman told Bloomberg that “we’re really talking about tariffs on a scale that we … have not seen,” adding that “we’re talking about a reversal of really 90 years of US policy”.

The Smoot-Hawley tariffs were initially intended to provide support to the deeply indebted US agricultural sector at the end of the 1920s, and protect them from foreign competition – all familiar themes to the anti-free-trade rhetoric peddled by Trumpists today.

The advent of the Great Depression had generated widespread, albeit not universal, demands for protection from imports, and Smoot-Hawley increased already significant tariffs on overseas goods. Members of Congress were eager to provide protection, trading votes in exchange for support for their constituents’ industries.

Although at the time more than 1,000 economists implored President Herbert Hoover to veto Smoot-Hawley, the bill was signed into law. The resulting tariff act led to taxes averaging nearly 40% on 20,000 or so different types of imported goods.The history of trade tariffs in the US.

The culmination led to a dramatic decline in US trade with other countries, particularly among those that retaliated, and is widely acknowledge as severely worsening the Great Depression. According to one estimate, the sum of US imports plummeted by nearly half.

What’s more, the impacts were felt globally. Protectionist policies are believed to have accounted for about half of the 25% decline in world trade, and indirectly helped create economic factors that led to the second world war.

The blowback against Capitol Hill was immense as well: the optics of vote trading over the tariff act resulted in Congress delegating control over trade policy to the president just four years later because the behaviour was regarded as so reckless.

All of this came against the backdrop of diplomatic American isolationism in the 1930s, which were not unlike many of Trump’s current efforts to retreat from – or even attack – multilateral institutions.

Despite President Woodrow Wilson winning the Nobel Peace Prize in 1919 for his work initiating the League of Nations (a forerunner of the United Nations), for example, the US never became a member. The term “America first” was also used widely in this period to refer to a focus on domestic policy and high tariffs.
Fast forward to present day

Trump has said that his tariffs will cause “some pain” but are “worth the price that must be paid.” Based on recent estimates from the non-partisan Peterson Institute for International Economics, Trump’s tariffs could drive up costs for the average US household more than US$1,200 (£963) per year.

Whether US voters will still stand behind Trump when actual prices begin to rise is still to be determined.

However, many Republicans on Capitol Hill have rushed to Trump’s defence. Congresswoman Claudia Tenney of New York told Fox News that she’s glad the US is “projecting strength for once on the world stage”. Senator Eric Schmitt of Missouri insisted that tariffs were “not a surprise,” emphasising that Trump had relentlessly campaigned on “improving our standing in the world.”

Perhaps the sharpest Republican rebuke came from Sen. Mitch McConnell of Kentucky, who labelled the tariffs simply a “bad idea”.

Public opinion data show that tariffs are hotly contested, with partisanship shaping both general views toward tariffs and views on specific national targets.

According to a January 2025 Harvard CAPS/Harris poll, 52% of Americans overall approve of placing new tariffs on China, with 74% of Republicans in favour, but just 34% of Democrats.

Support is more modest for imposing tariffs on America’s neighbours. Only 40% of voters think tariffs on Canada and Mexico are a good idea, including 59% of Republicans and 24% of Democrats.

Tariffs rank low on a list of national priorities. A mere 3% of Americans think tariffs on Canada and Mexico should be a top priority for Trump in his first 100 days, while just 11% rank tariffs on China as a top priority.
Prospect of a broader trade war

What seems clear is that Trump’s proposed tariffs against Canada, Mexico, and China could be just the opening salvos in a broader tit-for-tat that may extend to Europe, and beyond.

At home, the political challenge for Trump is to keep intact what increasingly looks like a fragile coalition – balancing the interests of hardline Maga supporters who reject free trade and tech titans who see tariffs as disrupting vital supply chains, especially to Asia.

After Trump’s election, former adviser and populist nationalist Steve Bannon warned that America would no longer be “abused” by “unbalanced trade deals.” “Yes, tariffs are coming,” he said. “You will have to pay to have access to the US market. It is no longer free, the free market is over.”

Meanwhile, Silicon Valley has been mostly silent on the tariffs. While tech moguls are doubtlessly trying to curry favour for tariff exemptions or the reduction of tariffs altogether, it’s possible that they have been assured that the tariffs are about leverage and will be gone soon enough.

Regardless, Trump is showing that tariffs are a crucial part of his “America first” foreign policy, a kind of belligerent unilateralism that treats allies and adversaries alike as pieces to be moved around a chessboard.

Under Trump, the “art of the deal” means throwing America’s weight around as the world’s economic superpower, and waiting for the leaders of other nations to fold. Whether American voters will endure the economic costs necessary for his plans could determine his resolve.

Trump may think that tariff is a beautiful word now. But if even a glimmer of the 1930s repeats itself, its economic shadow could soon look grim.

Thomas Gift, Associate Professor and Director of the Centre on US Politics, UCL and Michael Plouffe, Lecturer in International Political Economy, UCL

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Trump wants more tariffs. His earlier trade wars cost Americans $230 billion to date

Katie Lobosco, CNN
Mon, March 18, 2024 

When former President Donald Trump was in the White House, he proudly referred to himself as a “Tariff Man” – and he has no intention of retiring that self-proclaimed title if reelected.

Trump has repeatedly floated the idea of imposing a 10% tariff on every good coming into the US, as well as a tariff upward of 60% on all Chinese imports if he regains the presidency. On Saturday, during a campaign rally, he promised a “100% tariff” on cars made outside the US and warned of a “bloodbath” for the American auto industry if he doesn’t get reelected.

Starting in 2018, Trump put new tariffs of up to 25% on washing machines, solar panels, steel and aluminum, as well as many Chinese-made goods including baseball hats, luggage, bicycles, TVs and sneakers – and President Joe Biden has left most of these tariffs in place.

There could be many different reasons for imposing tariffs. Biden’s top trade official recently called them “a tool for remedying unfair trade.” But tariffs don’t bring in revenue from foreign countries, as Trump often claims. It’s American importers – not China or any other foreign country or company – that pays the tariffs.

“A tariff is just a form of a tax,” said Erica York, a senior economist and research director at the conservative-leaning Tax Foundation.

“It’s the US purchaser, the importer of those goods, that makes the physical payment to the US government,” she added.

Americans have paid more than $230 billion to date for tariffs that Trump imposed on imported solar panels, steel and aluminum and Chinese-made goods, according to US Customs and Border Protection. More than half of the duties have been collected during the Biden administration.

Despite the cost, Trump’s tariffs were a political success, according to one working paper published recently by economic researchers.

“Residents of regions more exposed to import tariffs became less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress,” they wrote.

Many people across the political spectrum agree that China uses unfair trade practices, and they like the idea of trying to get Beijing to change its ways. Plus, Trump gave farmers – who were hit hard by retaliatory tariffs – $23 billion in direct aid payments in 2018 and 2019 to help soften the blow of trade-related losses.

The protection provided by tariffs typically comes with some trade-offs. Here’s how Trump-era trade policies have impacted the economy.

Americans pay the tariffs

When the US puts a tariff on an imported good, the cost of the tariff comes directly out of the bank account of an American importer when the foreign-made product arrives at the port.

It’s possible that some foreign manufacturers lowered their prices to stay competitive in the US market. But several studies have suggested that US companies and consumers are bearing the brunt of the tariff cost.

In a 2023 study, the US International Trade Commission said that “U.S. importers bore nearly the full cost of these tariffs.” The independent federal agency, which provides analysis to the White House and Congress, estimated that prices increased by about 1% for each 1% increase in the tariffs on steel, aluminum and Chinese-made goods.

Once the importing company pays the tariff, it can decide to eat the cost or pass all or some of it along to the buyer of its goods – whether that’s a retailer or a consumer. For that reason, it’s more difficult to determine how much of the tariff cost actually ends up being paid indirectly by American households. But one study, published in 2020, found that tariffs on washing machines raised the median price of one by about $86.

Still, Trump’s tariffs were put on a relatively small share of all the goods consumers purchase. Several studies show they only marginally contributed to US inflation that followed the Covid-19 pandemic.

More jobs were lost than created

Trump’s tariffs helped create some jobs, but even more were lost in the wake of his trade wars.

Overall, the US economy lost jobs due to the tit-for-tat tariffs that took effect during the Trump administration, according to several studies, like one from the Tax Foundation and another from the US-China Business Council, a nonprofit whose goal is trade promotion.

A study from St. Louis Federal Reserve economists provides more evidence that tariffs played a role in job losses. It showed states more exposed to US tariffs on imports from China experienced “lower increases or even decreases” in employment and output between 2018 and 2019.

Tariffs were meant to boost US manufacturers, but they lost jobs too

Trump’s tariffs were imposed, in part, to boost the US manufacturing sector – but that industry suffered a loss of jobs as well, according to at least one study.

Federal Reserve economists found a net decrease in manufacturing employment due to the tariffs in 2019. That’s mostly because goods became more expensive to US businesses and consumers, and retaliatory tariffs put on American-made goods made other US manufacturers less competitive when selling abroad.

Take this hypothetical example: Trump’s tariffs made foreign steel more expensive to US consumers – so much so, that some may switch to an American-supplier of steel. This is good for the US steel producer.

But now, US manufacturers that use steel to make their goods are likely paying a premium for it. This makes it more expensive for some American manufacturers to produce their own goods and hurts their bottom line.

“While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices,” the Federal Reserve economists wrote.

What’s more, the jobs that were created came at a high cost. Each new job in the steel industry was expected to cost steel buyers an extra $650,000, according to an analysis from the Peterson Institute for International Economics.

Getting China to play fair

Trump used tariffs as a negotiating tactic, meant to hurt China’s economy and pressure Beijing to agree to a new deal that addresses unfair trade practices, such as intellectual property theft and forced technology transfers. Business leaders across the country, as well as lawmakers on both sides of the aisle, tend to agree that China’s trade policies need to be addressed.

Trump’s tariffs helped bring Chinese President Xi Jinping to the negotiating table. The two came to a truce in January 2020, signing what’s known as the Phase One agreement. It reduced the rate of some of the tariffs, and China agreed to increase its purchases of US goods and agricultural products – setting a target of buying $200 billion more than it did before the trade war began.

But China fell well short of that commitment – which the Biden administration has suggested is one of the reasons it has kept tariffs on Chinese-made goods in place.

While the text of the agreement included paragraphs that addressed Chinese intellectual property theft, it ultimately had no meaningful effect, said Derek Scissors, an economist and senior fellow at the American Enterprise Institute, a right-leaning think tank.

“They did not have a monitoring mechanism, which is the absolutely critical part of IP if you want to have a deal with the Chinese. They didn’t even try,” Scissors said.

A phase two agreement was never reached between the US and China under either the Trump or Biden administrations. In September, the two countries launched an Economic Working Group and a Financial Working Group that bring Washington and Beijing officials together for regularly scheduled meetings to discuss their economies.