Donald Trump
Trump started a trade war with the world a little over a year ago, as soon as he returned to the White House for his second term as president. However, he was soon forced to retreat because both America’s main rival – China – and its allies – Canada, Europe and Mexico – have found trumps in response, writes postimees.ee with reference to the BBC.
And in February, Trump suffered a final and crushing defeat from his own associates. The U.S. Supreme Court recognized most of his tariffs, imposed under the pretext of an “emergency”, as an illegal attempt to usurp power, since the right to impose taxes on Americans is granted by the U.S. Constitution exclusively to Congress, not the president.
That didn’t stop Trump
After losing in court, he immediately imposed a 10% duty on all imports under the pretext of a balance of payments emergency. Since there has been no particular change in the US balance of payments in recent years, economists immediately called the new pretext far-fetched, and businesses sued.
The outcome of the lawsuit is irrelevant, as the new tariffs themselves will be canceled in a month and a half, on July 24. Trump could only impose them for 150 days – no longer allowed by a forgotten 1974 law that was dusted off in favor of Trump’s trade vendetta.
So Trump instructed his ministers to find a new pretext by the end of July to impose taxes on American consumers and businesses that buy imported goods and components. The first set of duties was announced this week. The next one is on the way. What is the nature of them?
Trump as defender of the proletarians of all countries
The White House has accused the rest of the world of not doing enough to fight the exploitation of workers, which under U.S. law allows the president to impose an additional duty on imports.
For countries with no laws against forced labor at all, White House officials suggested the president impose duties of 12.5 percent. The rest, including the European Union, Canada and Mexico, would face a 10% penalty simply because they are not “rigorous enough” in checking compliance with their bans.
“Imposing duties under this pretext is a ridiculous legal fiction in the style of dictatorial regimes and the former Soviet Union,” said David Henig, an expert at the ECIPE research center, who represented Britain in trade negotiations with the United States during Trump’s first term.
No one doubts that the duties will be introduced in July after a mandatory consultation period, since no country in today’s globalized world can prove to Trump that all its goods are made of raw materials and components guaranteed to be produced without the use of forced or slave labor.
The only judge here is Trump, and he wants to impose tariffs with the stroke of a pen. Trump was extremely unhappy that the Supreme Court denied him that opportunity, saying that without it, America “will become a third-world country, and it is possible that it will eventually be destroyed.”
New investigations by the U.S. Department of Commerce will give Trump back the power to impose tariffs. The first is the already mentioned slave labor. The second, on the way, is about excess capacity. This is when China, for example, strains the whole country and helps manufacturers of electric cars or solar panels to flood the whole world with them in order to displace competitors and then become a monopoly.
“All of this is another step toward restoring Trump’s 2025 tariff system that was destroyed by the Supreme Court,” believes Chad Brown of the Peterson Institute for International Economics (PIIE), author of “How to Win a Trade War.”
Trump as a usurper of power in America
Tariffs – a across-the-board tax on the consumption of imported goods – allow Trump to raise additional revenue for the budget, finance gigantic deficits and strengthen the power vertical through the distribution of subsidies and tax breaks in exchange for loyalty and political support.
U.S. trading partners have no recourse against the new trade scrap, but once again Americans themselves can stop Trump – through the courts.
“It will be obvious to any court that this is another attempt by the president to usurp the power of Congress to impose duties. This is contrary to the U.S. Constitution,” says Alan Wolf of PIIE, who served as deputy head of the World Trade Organization (WTO) until 2021.
In America, Trump’s tariffs are viewed with as much animosity as in other countries. Businesses are dissatisfied with the increased tax burden and the loss of the ability to plan for the future with Trump constantly changing the rules of the game. And citizens are dissatisfied with the concentration of all power in the hands of the president.
In just one year in power, Trump has increased the average import duty from 2-3% to 13-16%, according to various estimates. After the landmark Supreme Court decision, some new tariffs remained in place (special Chinese and general sectoral tariffs on steel and automobiles, for example), but overall the average bar has fallen to 8-10%. That’s why Trump is trying to rebuild the tariff barrier anew under new pretexts.
How Trump is losing the trade war
Trump argues that tariffs revitalize American industry, and that the burden of duties falls entirely on the shoulders of foreign producers of goods because they fear the loss of the American market and lower prices.
In practice, however, this is not the case. The growth of production in industry and construction since Trump came to power has turned into a recession. And more than 90% of duties were paid by Americans, according to the results of a study by the Federal Reserve Bank of New York.
The tariff wars have also divided America from its allies. Trump tried to threaten them with duties to force them to sign new trade agreements favorable to the US. Some even agreed and made deals.
However, no sooner had the ink dried than it became clear that, on the one hand, Trump’s tariff threats were empty, since the court ruled them illegal. And on the other hand, that Trump has seven Fridays in a week, and he readily renegotiates the terms of the just concluded agreements and threatens new duties under any pretext – even if it is to fight slave labor in Norway and Luxembourg.
As a result, Trump’s new round of trade war calls into question both the ratification of a trade deal with the United States’ largest partner, the European Union, and the success of negotiations with its closest neighbors Canada and Mexico on the terms of renegotiating the North American Free Trade Agreement.
At the same time, it promises another round of retaliatory measures from China and most other US trading partners.
