Trump is as ready to set new tariffs as he would be to roll back old tariffs

Tariff revenues are now rapidly flowing out of the US Treasury’s coffers, having reimbursed importers in May for nearly $22 billion in duties collected illegally.

However, American consumers should not heave a sigh of relief from this unusual form of tax return. Even after the Supreme Court struck down President Donald Trump’s “emergency” tariffs in February, businesses have continued to pay tariffs on goods from nearly every country.

While the temporary 10% global rate imposed by Trump shortly after the decision expired at the end of July, White House officials have promised to restore revenue with more sustainable import tariffs. A proposal issued earlier this month, which resulted from a forced labor investigation into dozens of U.S. trading partners, is being seen as a first step.

According to Nicole Gorton-Caratelli and Chris Kennedy of Bloomberg Economics, “If implemented as expected, these new levies would raise the average U.S. tariff rate by 0.6 percentage points from the current level, to about 11%.” That’s down from the 13.5% rate that prevailed when Trump’s so-called reciprocating tariffs were still in place, but several other investigations are in the works that are expected to arm the president with new tariff powers.

The US Trade Representative has proposed tariffs on goods from Brazil, citing Section 301 of the Trade Act of 1974, a provision meant to combat unfair trade practices by other countries. Another Section 301 investigation is underway into dozens of US trading partners linked to excess capacity and production.

‘not over’

It’s unclear how quickly or how much consumers will get refunds, and the latest charges are sure to hit as the U.S. economy absorbs higher costs for everything from oil to plastics linked to the Iran war. an interim peace agreement was signed This week.

The warning is on a dashboard of economic indicators: The University of Michigan’s consumer sentiment index is hovering near a record low, while US inflation rose at the fastest pace in more than three years in May. Additionally, the uncertain business landscape has led businesses to put off additional investment or expansion during the past year.

“We believe that pricing pressures have not yet abated, nor will abate any time soon,” said Joe Brusuelas, chief economist at RSM, pointing to higher energy prices and higher costs related to building out AI infrastructure.

The new duties are being rolled out on a more solid legal basis than the duties imposed by Trump under the International Emergency Economic Powers Act, or IEEPA, which the U.S. Customs Agency and the Treasury Department are currently scaling back.

Former President Joe Biden not only dropped tariffs on goods from China imposed during Trump’s first term, he also expanded them.

Still, temporary tariffs imposed under Section 122 of a 1974 trade law are already subject to legal challenge, although an appeals court recently ruled that they can be implemented for now.

“Going forward, new universal tariffs imposed under the guise of 122 tariffs and 301 forced labor investigations are also at risk of litigation,” said Shai Acabas, vice president for economic policy at the Bipartisan Policy Center.

“It is very unclear whether the Administration has found a new durable means of imposing the ‘universal’ tariffs that the President is seeking as part of his broader re-industrialization strategy,” Akabas said.

There are already a number of industry-specific tariffs in place, affecting sectors ranging from steel and copper to lumber, and there are more in the pipeline. Section 232 of the Trade Expansion Act of 1962 gives the President the authority to impose tariffs and other trade measures on national security grounds, but requires investigation by the Commerce Department first. Several ongoing investigations, including robotics and medical devices, could conclude at any time with tariffs recommended as the solution.

Still, there are intentional holes in Trump’s tariff wall — the administration has largely imposed no or low tariffs on the fastest-growing parts of the economy, such as data centers and AI infrastructure. It remains to be seen how many more products will be exempted from import duty as price pressure increases.

The White House recently reduced tariffs on imported tractors and farm machinery, as well as tariffs on Taiwan and some metal products. The administration also exempted most goods imported into the US from Brazil, despite higher overhead tariffs resulting from investigations into various trade practices.

The cost-of-living crisis has emerged as one of the most pressing issues ahead of the November midterm elections, with Republicans struggling to maintain their majority. Democrats have attacked tariffs as one of the leading causes of higher prices for working-class families, and a February survey from the Pew Research Center found that six in 10 Americans disapprove of the administration’s increased tariffs.

The president and his top officials are pursuing protectionist policies to bring manufacturing back to the US and reduce reliance on rivals including China.

“America’s economic and national security depend on our ability to produce next-generation technologies at scale on American soil,” Trade Representative Jameson Greer said in a statement June 15. “President Trump will continue to use tariffs and trade deals to open markets abroad and create new opportunities for workers and businesses at home.”