The Trump Administration just imposed new taxes on imports from 60 U.S. trading partners that provide 99.4% of U.S. imports.
1. The big tax increase, imposed under Section 301 of the Trade Act of 1974, does not require congressional approval and is now in effect.
2. The Penn Wharton Budget Model calculates the Section 301 taxes will cost $1.052 trillion over the next decade. Adding the cost of Section 232 “national security” on existing taxes on imports from our allies brings the total to $2.2 trillion.
3. Based on a 90% passthrough to taxpayers, that translates to $198 billion per year in taxes imposed by President Trump. For comparison purposes, that’s 2.4 times bigger than the $82 billion in individual tax relief provided in the Working Families Tax Cut enacted last year. While the cost is not equally distributed among households, for visualization purposes it is equivalent to $118 in monthly taxes for each U.S. household.
4. The tariffs penalize countries for doing the right thing. Despite the Office of the U.S. Trade Representative (USTR) advertising the taxes as a tool to combat forced labor, the government is taxing countries that prohibit forced labor. The new 10% Section 301 tax applies to countries that “impose a forced labor import prohibition; have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade; or have imposed a partial regime with the effect of preventing the importation of certain forced labor goods.”
5. The Section 301 forced labor investigation was a thinly disguised ploy to rubber-stamp new import taxes. According to USTR Jamieson Greer in February, “Our goal with all of this is to have continuity.” According to Treasury Secretary Scott Bessent five months ago, “It’s my strong belief that the tariff rates will be back to their old rate within five months.”
6. Prior to this action, the biggest Section 301 tariffs in history were imposed on goods from China under Trump and continued under Biden. The Section 301 tariffs were a costly failure. According to the 2019 Economic Report of the President, “Rather than changing its practices, China announced retaliatory tariffs on U.S. goods.” According to the Biden Administration’s four-year review of the tariffs, “China has not eliminated many of its technology transfer-related acts, policies, and practices . . . China has persisted and even become more aggressive, particularly through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology, which further burden or restrict U.S. commerce.”
7. The new import taxes will reduce U.S. exports. People in other countries need to be able to sell to Americans to earn dollars to buy from Americans. Tariffs reduce their ability to earn those dollars.
8. The new taxes come just days after the Trump Administration imposed retaliatory tariffs on Canada for retaliating against U.S. tariffs and then promised future tariffs of 100% on generic drugs, escalating to 200%.
9. President Trump has repeatedly stressed his belief in tariff reciprocity and the importance of affordability. The new tariffs are not reciprocal and they will make things more expensive, not more affordable.
There’s a risk that we have gone from the shining city on a hill to the bully on the block, with costly economic ramifications. While the new tariffs will likely face a legal challenge, this week’s actions illustrate the urgent need for Congress to pass legislation prohibiting tax increases without congressional approval, as intended under Article I, Section 8 of the Constitution, and to refrain from enacting new legislation that would give presidents even more authority to unilaterally impose taxes on Americans.