Trump's Global Tariffs: Policy, Impact, and Controversy

I. Background and Objectives of Trump's Global Tariff Policy

The Trump administration made tariffs one of its core economic policies, with multiple objectives. On one hand, it aimed to increase fiscal revenue by imposing tariffs on imported goods, thus providing the government with additional funding. On the other hand, tariffs were used as a tool of pressure; the Trump administration attempted to force other countries to make concessions in trade negotiations by raising tariffs, thereby securing a dominant position for the United States in trade. Furthermore, promoting the repatriation of industries was also a key objective, hoping to increase the cost of imported goods and encourage American companies to relocate their production bases back to the United States, thereby creating more domestic jobs.

Historically, the U.S. government has repeatedly attempted to alleviate economic difficulties by raising tariffs. For example, in 1897, after Republican William McKinley entered the White House, he signed the Dingley Tariff Act, significantly increasing tariffs on goods such as wool, cotton textiles, silk, and sugar, raising the average tariff rate on U.S. imports to 52%. In 1930, then-President Hoover signed the Smoot-Hawley Tariff Act, imposing high tariffs on more than 20,000 imported goods. In 1971, then-President Nixon announced a 10% surcharge on all U.S. imports. In the early 21st century, the Bush administration announced tariffs of up to 30% on 10 categories of imported steel products. These historical events demonstrate that the United States has a tradition of using tariff policies to address economic problems at different times, and Trump's global tariff policy is a continuation of this tradition.

II. Specific details of Trump's global tariff policy

Tariff Adjustment

A report from the Federal Reserve Bank of New York shows that the average U.S. tariff level will rise from 2.6% to 13% by 2025. The proportion of the tariff impact borne by the U.S. varies across different periods: 94% from January to August; 92% from September to October; and 86% in November. The study indicates that during Trump's first term, foreign exporters did not significantly lower prices, and tariff costs were almost "100% passed on to U.S. import prices."

New tariff measures are in the works.

Following the U.S. Supreme Court's ruling that the Trump administration's massive tariffs under the International Emergency Economic Powers Act were illegal, the administration is preparing to invoke other national security-related legal provisions to impose tariffs on six categories of products. The U.S. Department of Commerce is initiating new investigations ("Section 232 investigations") under Section 232 of the Trade Expansion Act of 1962 on products such as large batteries, cast iron and iron fittings, plastic pipes, industrial chemicals, and power grid and telecommunications equipment. This section allows the U.S. government to impose tariffs based on so-called "national security risks." The Office of the U.S. Trade Representative is also initiating a new trade investigation ("Section 301 investigation") under Section 301 of the Trade Act of 1974, which may lead to subsequent tariff measures. This section allows the U.S. government to impose tariffs on so-called "unfair trade practices." In addition, the Trump administration had previously invoked Section 232 to investigate nine categories of products, including semiconductors, pharmaceuticals, drones, industrial robots, and polysilicon solar panels. Many of these investigations have been underway for nearly a year, and these efforts may be accelerated following the Supreme Court's ruling. The Trump administration also intends to revise the calculation method for the steel and aluminum tariffs imposed under the pretext of "national security." This could lower the nominal tariff rates for many products, but at the same time, the tariffs would be calculated based on the total value of the products rather than the value of their steel and aluminum components. This means that many companies may end up paying more tariffs.

Temporary tariff measures

On February 20, after the U.S. Supreme Court ruled that most of the tariffs imposed by Trump under the International Emergency Economic Powers Act were unconstitutional, Trump quickly turned to Section 122 of the Trade Act of 1974. That evening, he announced a temporary tariff of 10% on all imported goods worldwide, effective February 24, for 150 days, with the exception of some exempted goods. This section allows the president to impose tariffs of up to 15% on imported goods in cases of balance of payments imbalance or emergency, but the tariffs are only valid for 150 days, after which Congress must decide whether to extend them.

III. The Impact of Trump's Global Tariff Policy on the US Economy

Cost burden on consumers and businesses

A report released by the Federal Reserve Bank of New York stated that American consumers and businesses have borne the majority of the costs of the tariffs imposed by the Trump administration, approximately 90%, contrasting with the government's previous claim that "foreign countries would bear the burden of tariffs." The Congressional Budget Office estimates that foreign exporters bear about 5% of the costs, American businesses absorb about 30% in the short term, and the remaining 70% is passed on to consumers through price increases. The Yale Budget Lab estimates that of the additional tariffs imposed by the US in 2025, 31% to 63% will ultimately be borne by American consumers. If the new 10% tariff continues, its costs will likely still be primarily absorbed by the US. Experts estimate that in Oregon, the new tariffs will increase the annual cost of living for the average family by more than $1,200.

Impact on market and economic stability

The repeated adjustments to tariff policy have exacerbated market volatility and economic uncertainty. Deutsche Welle reported that these adjustments have intensified market uncertainty, leading to declines in both US and European stock markets. Lori Wallerich, director of the "Rethinking Trade" project at the American Economic Freedom Initiative, anticipates that the Supreme Court ruling will not result in "significant changes" to US tariff rates, but it will limit Trump's ability to use tariffs as a "punitive" tool on non-trade issues. The New York Times argues that the Trump administration has introduced a series of "unpredictable trade policies" over the past year, and new tariff measures will bring even more uncertainty to the economy. Greta Pasch, a US lawyer who served as a trade official under former Democratic President Biden, said, "We are more uncertain about what tariffs will look like in the next month, two months, or six months than we were last week. The complexity and uncertainty are increasing."

Impact on employment

Lawrence Summers, a Harvard University economics professor and former U.S. Treasury Secretary, said that Trump's tariff policy is "the biggest economic self-inflicted wound" in U.S. history, potentially leading to approximately 2 million job losses and at least $5,000 income loss for each family. In 2002, the Bush administration imposed tariffs on imported steel products. While this created thousands of jobs in the U.S. steel industry, it also caused steel prices to soar, leading to increased costs for downstream industries such as automobiles and home appliances. Related companies suffered greatly, and the U.S. lost approximately 200,000 jobs that year due to steel tariffs, far exceeding the total number of jobs employed in the entire U.S. steel industry at the time. Therefore, the impact of Trump's tariff policy on employment also carries considerable uncertainty and negative consequences.

IV. The Impact of Trump's Global Tariff Policy on the Global Economy

Impact on international trade

Media outlets and experts from multiple countries have criticized the US's so-called "reciprocal tariffs" as a retrograde move that will impact international trade and the global economy. Ian Berg, a professor at the London School of Economics, stated, "This tariff war will drag down global economic growth, especially if it triggers a chain reaction and retaliatory measures from various countries; the consequences should not be underestimated." Thomas Meissner, head of financial markets research at Baden-Württemberg Bank in Germany, said that the US's "reciprocal tariffs" amount to "declaring war on global free trade," and that global trade is facing a severe situation. The Argentine mainstream newspaper Clarín published an article stating that the so-called "reciprocal tariffs" will not bring the US back to the "golden age" claimed by Trump, but instead place it on the opposite side of the global community.

Impact on major trading partners

The British Chambers of Commerce estimates that the 15% tariff increase will raise tariff costs for British exports to the US by $2.7 billion to $4 billion. William Bain, Head of Trade Policy at the British Chambers of Commerce, stated that frequent policy changes make it difficult for businesses to formulate pricing and investment plans. "People are tired of constantly changing tariff policies that lack any clarity and certainty, and businesses are frustrated by the lack of a certainty in the tariff environment." The EU is also on high alert. The European Parliament's International Trade Committee postponed its scheduled vote on approval. Committee Chairman Bernd Lange pointed out that if the new tariffs are implemented in combination, they will exceed the previously agreed tariff ceiling. European Central Bank President Christine Lagarde warned that this move could disrupt the "balance" previously achieved in negotiations between the US and Europe and create new chaos in the business environment. However, the US has already reached phased arrangements with some major trading partners on basic tariffs, mostly maintaining them in the 10% to 15% range. Therefore, the short-term impact is limited. These countries are unwilling to anger Trump and hope to use the window of opportunity presented by the limited tariff tools to adjust their export pace.

Impact on global industrial chains

Trump's global tariff policies have disrupted the normal structure of global supply chains. Many multinational corporations, whose supply chains were originally built based on factors such as cost, resources, and markets, are now facing pressure to readjust due to tariff changes. Some companies may be forced to relocate their production bases to regions with lower tariffs, which not only increases their costs but also affects the stability and efficiency of global supply chains. For example, some manufacturing companies reliant on the US market may reduce their exports to the US due to increased tariffs, instead exploring other markets or shifting production to other countries to reduce costs and mitigate tariff risks.

V. Legal Challenges Facing Trump's Global Tariff Policy

Supreme Court ruling

On February 20, the U.S. Supreme Court ruled 6-3 that most of the tariffs implemented by President Trump under the International Emergency Economic Powers Act violated the U.S. Constitution and exceeded presidential authority. This ruling represents a significant limitation on presidential power regarding tariffs, but it did not completely block his tariff avenues; it merely narrowed his operational space. Three conservative justices held that, in matters of significant expansion of executive power, the president cannot unilaterally extend his interpretative power unless explicitly authorized by law.

Joint lawsuit filed by various states

According to a statement released on March 5 by the Oregon Department of Justice, Oregon, along with 23 other states, filed a lawsuit in the U.S. Court of International Trade seeking to block the new tariffs recently announced by the Trump administration. The statement points out that for over a year, the Trump administration has been imposing tariffs without legal authorization, causing chaos in the U.S. economy. After the U.S. Supreme Court ruled that the Trump administration's previous imposition of tariffs on products from multiple countries under the International Emergency Economic Powers Act was illegal, Trump then invoked Section 122 of the Trade Act of 1974 to announce a 15% tariff on most products worldwide. However, this section only applies to specific situations such as "large and serious international balance of payments deficits," and a trade deficit is not equivalent to an international balance of payments deficit. This means that Trump has again violated the law, undermining the constitutional principle of separation of powers and violating the Administrative Procedure Act.

VI. Future Direction and Outlook of Trump's Global Tariff Policy

Short-term trend

In the short term, Trump may continue to utilize the temporary tariff policy under Section 122 of the Trade Act of 1974. Within the 150-day window, he is likely to initiate investigations under more substantial Section 301 or Section 232 tariffs to supplement the legal basis for further action. Simultaneously, he may also adjust and optimize the tariff policy based on domestic and international public opinion and economic conditions to mitigate its negative impact.

Long-term effects

In the long run, if Trump's global tariff policies continue, they could further deteriorate trade relations between the US and other countries, triggering more trade disputes and retaliatory measures. This would have a more severe negative impact on US economic growth, employment, and international image. Furthermore, the global economy would face a more complex and uncertain situation, international trade order could be severely disrupted, and the stability of global industrial and supply chains would be threatened. However, if the Trump administration recognizes the drawbacks of its tariff policies, adjusts its policy direction in a timely manner, strengthens cooperation and consultation with other countries, and resolves trade issues through equal and mutually beneficial trade negotiations, then both the US and global economies could potentially achieve more stable and healthy development.

Trump's global tariff policy is a complex and far-reaching economic policy that has not only impacted the US economy and society but also posed significant challenges to the global economic and trade order. Going forward, balancing the interests of all parties and promoting the healthy development of global trade is a crucial issue that the US government and the international community must address together.