“If the White House’s preliminary assessment is accurate, it would be the largest tax increase on Americans since World War II—and one that Trump would apparently seek to implement without congressional approval.
The specifics of Trump’s reciprocal tariffs plan remain sparse. The executive order Trump signed Thursday instructed the Department of Commerce and the U.S. Trade Representative to develop new proposed tariff levels that take into account the tariffs charged by other countries to import American goods, as well as industrial subsidies, value-added taxes, and other economic policies that Trump views as unfair. It will take weeks (and perhaps longer) for the new tariffs to be calculated and rolled out, and the changes may be implemented on a country-by-country basis, according to Megan Cassella, a reporter for CNBC.”
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“The direct costs of taxes on so many imports would be only part of the problem. Trump’s idea of charging different tariffs on every country’s exports means the same product could be charged wildly different tax rates depending on where it was sourced. Those tariff rates would also be subject to constant fluctuation, as other countries shift their policies—as many will likely do in response to Trump’s new tariffs. That’s a recipe for not only higher taxes on American businesses that rely upon imports but also a constant state of uncertainty.”
“President Donald Trump on Thursday signed his plan for reciprocal tariffs but delayed their implementation as his administration launches negotiations on a one-by-one basis with nations that could be impacted.
“The Plan shall ensure comprehensive fairness and balance across the international trading system,” read the memorandum signed by Trump.
The studies of each country could be completed by April 1, incoming Commerce Secretary Howard Lutnick said Thursday while standing at Trump’s side, adding that then “we’ll hand the president the opportunity” to start implementing them as soon as on April 2.”
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“Nations from India to Brazil to South Korea have long charged higher average duties on various goods and will clearly be in the middle of coming talks.
Trump’s memo Thursday outlined how non-tariff barriers, such as the VAT, would also be subject to reciprocity.
“For purposes of this United States Policy, we will consider Countries that use the VAT System, which is far more punitive than a Tariff, to be similar to that of a Tariff,” Trump posted to Truth Social on Thursday.
That issue is likely to be a sizable stumbling block in relations with the European Union.”
LC: VATs are applied to domestic products and imports, so treating a VAT like an import tariff that is just applied to the import, makes no sense.
“None of this will do much to stop “dangerous narcotics” from entering the United States, which is Trump’s avowed goal. Interdiction efforts are doomed by the economics of drug prohibition, a challenge that is compounded by fentanyl’s potency, which allows traffickers to distribute large numbers of doses in small packages by land or mail. And Mexican cartels are already working on domestic production of fentanyl precursors in case shipments from China are curtailed. Despite those realities, Trump can still falsely claim he is winning the war on drugs by citing misleading metrics.
Trump said the tariffs would remain in place until the targeted countries took “adequate steps to alleviate the opioid crisis.” Since that criterion is deliberately vague, Trump can simply declare that whatever Mexico, Canada, and China agree to do is “adequate.”
In case that seems too slippery, Trump could cite drug seizure numbers as proof of his success. The beauty of this approach is that Trump can claim victory no matter which way the numbers go.
Given Trump’s promise to “seal the border,” you might expect U.S. drug seizures to go up. But he has previously argued that increased seizures are a sign of failure rather than success.”
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“Unlike “adequate steps” and drug seizure numbers, overdose deaths are a clear measure of whether the “opioid crisis” is getting better or worse. The good news is that drug-related deaths fell precipitously last year after climbing nearly every year for more than two decades. According to preliminary CDC estimates, the death toll during the year ending last August was about 22 percent lower than the total for the previous year—by far the biggest such drop ever recorded.
Inconveniently for Trump, that dramatic decrease happened on Biden’s watch, and there is little reason to think interdiction had anything to do with it. So even if the apparent turnaround continues this year, attributing it to Trump’s tariff-assisted war on drugs would be highly implausible. We can nevertheless expect that Trump will do just that.”
“The annual number of drug-related deaths in the United States rose by 44 percent between 2016 and the last year of his first term. Now Trump blames foreign officials for his failure”
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“As The New York Times reported in December, Mexican cartels already have a backup plan. They are recruiting “chemistry students studying at Mexican universities” to synthesize fentanyl precursors, “freeing them from having to import those raw materials from China.”
Trump thinks the Mexican and Canadian governments could do more to shut down fentanyl manufacturing within their countries. But to the extent they succeeded in doing that, production would simply shift elsewhere, as has happened repeatedly with drugs such as cocaine, heroin, and methamphetamine.”
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“Mexican drug cartels “move illicit fentanyl into the United States, primarily across the southwestern border, often in passenger vehicles,” the CRS noted. “The U.S.
Department of Homeland Security asserts that 90% of [seized] fentanyl is interdicted at ports of entry, often in vehicles driven by U.S. citizens. A primary challenge for both
Mexican and U.S. officials charged with stopping the fentanyl flow is that [the cartels] can meet U.S. demand with a relatively small amount.””
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“Fentanyl also enters the United States by mail, and it is not feasible to intercept all of those shipments, especially given their small size and the enormous volume of packages.”
“The International Emergency Economic Powers Act, passed in 1977, grants the president broad authority over economic transactions, and a wide range of abilities to deal with “any unusual and extraordinary threat,” stemming in whole or in part from foreign sources.
Presidents, including Trump’s predecessor Joe Biden, have used the law to impose economic sanctions on other countries, including on Russia after it launched its 2022 war on Ukraine.
But the closest a president has come to citing a national emergency to impose tariffs was when President Richard Nixon used a different law — the Trading with the Enemy Act of 1917 — to levy a temporary universal tariff on all imports in 1971.
Trump justified his new tariffs Saturday by pointing to “the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl,” which he claims Mexico, Canada and China are not doing enough to keep from coming into the United States.
But Bill Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, said Trump’s use of IEEPA to justify his trade actions “doesn’t really pass the red-face test,” setting the stage for a company or trade association whose members have been harmed by the action to sue.
“The question will be, can you find a judge who will write an injunction to stay the tariffs from going into effect,” Reinsch said. “And my prediction is that will be hard, because you’re asking a federal judge to essentially say, ‘I know more than the President does about what an emergency is.’ And I think judges are going to be reluctant to do that.”
That won’t stop a lawsuit from proceeding, most likely all the way to the Supreme Court, Reinsch said, but it could be years before there is a conclusion to the legal battle.
“The courts have historically upheld the president’s power to take emergency actions, especially when they are related to national security. But one important question is whether they will uphold the use of tariffs. In the past, [IEEPA] has only been used to impose sanctions,” said Tim Brightbill, a trade attorney at the law firm Wiley Rein in Washington, DC.
“While it is possible that companies or industry groups would seek an injunction, they probably face an uphill battle blocking the new tariffs,” Brightbill said.”
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“the U.S. effectively killed the WTO Appellate Body during Trump’s first term by blocking the appointment of new judges, leaving it without the ability to adjudicate disputes. And there’s little to suggest the Trump administration would abide by a WTO ruling even if the organization were able to issue one.”
Despite producing tons of oil, the U.S. still imports a lot of oil. The stuff we produce can’t be refined by our refineries, so we ship it out to be refined and import foreign oil to refine here.
“”Contrary to conventional wisdom, imports are not a drag on the U.S. economy or the price we pay to sell goods and services abroad. In fact, rising imports coincide with stronger economic growth,” Scott Lincicome and Alfredo Carrillo Obregon write in The (Updated) Case for Free Trade, a Cato Institute study published in May. “The payoff to the United States from expanded trade between 1950 and 2016 was $2.1 trillion, increasing GDP per capita by around $7,000 and GDP per household by around $18,000.”
“Higher imports are also correlated with higher private‐sector employment in the United States, as numerous industries and workers depend on trade,” they add.”
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“Could high tariffs and “buy American” policies compel firms to find domestic suppliers? Well, maybe. But foreign sources were chosen for a reason; replacing them with domestic suppliers will require compromises. “Subsidising electric cars assembled in North America will make them more expensive and lower-quality,” The Economist cautioned of protectionist policies. And since politicized policy tends to breed yet more politicization, tariffs and subsidies will inevitably be further burdened with conditions. “The red tape will raise costs to consumers and taxpayers still further.””
“Sen. Marco Rubio (R–Fla.) led a bipartisan group of lawmakers—all of them from Florida—in submitting a petition to U.S. Trade Representative Katherine Tai seeking “an investigation” into what the lawmakers call “the flood of imported seasonal and perishable agricultural products from Mexico.” They ask Tai to invoke Section 301 of the Trade Act of 1974 to impose “trade remedies” that will protect American growers from the scourge of…low-priced produce.
While they don’t come out and say it directly, it’s obvious from the letter that Rubio and his colleagues are seeking tariffs on Mexican produce. Section 301 is the same mechanism the Trump administration used to impose wide-ranging tariffs on goods imported from China. It’s a law that grants the executive branch broad, unilateral power over trade.
Rubio and the other lawmakers say the Mexican government is subsidizing its domestic agricultural infrastructure as part of a scheme to undercut the prices charged by U.S. growers. “Mexico poses a direct threat to Florida’s seasonal and perishable agricultural industry,” they conclude.”
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“Anyone who has taken a basic economics class should be able to explain what’s happening there. A high level of supply tends to push prices downward. Whether grown in Mexico or Florida, it makes sense that cucumber prices would be at their lowest when there are a lot of cucumbers in the market.
But that’s not how Rubio and his colleagues see it. Instead, the petition describes this minor pricing difference as “a clear attempt to displace Florida cucumbers from the U.S. market.”
Take a moment to enjoy the fact that some of the most powerful men and women in the U.S. government are freaking out over the idea that American consumers might get to save a few cents on their next cucumber purchase. Then amuse yourself with the optics of American agricultural special interests—which are, of course, pulling Rubio’s strings here—complaining about subsidies, as if “direct government aid” doesn’t account for nearly 40 percent of American farmers’ annual income.
“These Florida politicians are following a time-honored tradition of trying to help their local constituents at the expense of Americans in other states, who benefit from low-priced fruits and vegetables regardless of where they are grown,” says Bryan Riley, director of the free trade initiative at the National Taxpayers Union Foundation. “
“it’s the FDA’s unnecessary and protectionist rules that effectively ban foreign-made baby formula from being imported into the United States. On Wednesday, the agency announced plans to tweak those rules so foreign formula manufacturers can permanently import their goods into the U.S., giving American consumers greater choice in the marketplace and ensuring more robust supply chains.”
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” When the Abbott Nutrition plant in Michigan was forced to close temporarily due to an FDA investigation into possible contamination, it created a supply shock that left store shelves empty and parents scrambling to find formula. Because of the FDA’s protectionist rules (and high tariffs levied on foreign-made formula), markets could not adapt quickly to the shortage here in America”
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“In testimony to Congress, FDA officials admitted to botching the response to the contamination at the Abbott plant. But the real culprit of the recent shortage was a deeper and more pervasive one. No matter what nationalists like Sen. Josh Hawley (R–Mo.) might suggest, closing off the country to international trade is not a recipe for resilience. The baby formula crisis demonstrated that it is quite the opposite.
So it’s good to see the FDA admit those mistakes and crack open the door to allowing foreign formula into the U.S. on a permanent basis.
Unfortunately, the list of policy changes the FDA announced..mostly amounts to providing technical assistance to foreign firms that want to sell formula here. That is, offering help in navigating the complex approval process, rather than sweeping aside those regulations entirely. If a formula maker has passed muster under E.U. regulations, that should be good enough for the FDA.
There’s also the matter of tariffs on imported formula, which are so high that they effectively make any imported formula uncompetitive in the American market. Why would a foreign manufacturer like Holle or HiPP go through the complicated FDA approval process (even after the announced changes) if it knows in advance that its goods won’t be able to compete on a level playing field in America?”
“Even on the day two years ago that the trade deal was inked, there was skepticism that China would live up to its pledge to spend $200 billion more on U.S. goods and services.
But a new study finds China didn’t even spend an additional dime on U.S. products.”
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“China agreed to buy at least $227.9 billion of U.S. exports in 2020 and $274.5 billion in 2021, for a total of $502.4 billion over the pact’s two years, he noted. In reality: U.S. exports of covered goods and services to China over the two years totaled $288.8 billion.”