After a federal appeals court declared the Trump Administration’s $330-billion-a-year tariffs illegal, administration officials struck back.
According to President Trump, “Without Tariffs, and all of the TRILLIONS OF DOLLARS we have already taken in, our Country would be completely destroyed, and our military power would be instantly obliterated.” Peter Navarro, Trump’s senior counselor for trade and manufacturing, added: “If we lose the case, President Trump is right, it will be the end of the United States.”
Later comments from the administration were only slightly less misguided.
Trump said, “The stock market is down because of that [the appeals court ruling] because the stock market needs the tariffs and wants them.”
Here’s a quick reminder: After Liberation Day tariffs were announced on April 2, the Total Stock Market Index plunged 12.4%.
By comparison, from August 28, the day before the court ruling, to September 2, the Dow Jones U.S. Total Stock Market Index was down about 1.3%.
Trump also said, “If you took away tariffs, we could end up being a third world country.”
Actually, adding tariffs would make us more like a third world country.
As of 2022, the only countries in the world with average tariff rates above 10% were Bermuda, the Solomon Islands, the Republic of Congo, Equatorial Guinea, Cameroon, Belize, Chad, Gabon, The Gambia, The Bahamas, Barbados, Central African Republic, Sierra Leone, Togo, Grenada, Venezuela, Guinea, Cabo Verde, Ghana, Guinea-Bissau, Kenya, Vanuatu, Nepal, Maldives, Rwanda, Bangladesh, and Benin. We should not aspire to join the ranks of these high-tariff countries.
According to Navarro, “The fentanyl trafficking tariffs likewise target a foreign-sourced crisis.
Canada and Mexico quickly took corrective steps, prompting Mr. Trump to pause enforcement. China refused to cooperate, and the duties went up.This is how emergency powers are supposed to work: targeted leverage until the threat is addressed.”
This is not how emergency powers are supposed to work. They are supposed to end the emergency, not provide an excuse for a permanent increase in U.S. tariffs.
In the meantime, administration officials continued to peddle the lie that the trade deficit is a national emergency.
Navarro says that “the trade deficit is absolutely devastating to this country.” And U.S. Trade Representative Jamieson Greer says that “The imbalance is just unsustainable.”
Wrong on all counts.
Trade deficits have been fairly level for the last 15 years, and there is no reason to think we can’t sustain them into the future if we maintain sound economic policies. We have trade deficits because the United States is the most attractive country in the world to international investors—and that’s a reflection of our strength.
If investors in another country buy 100 shares of Apple instead of buying 100 iPhones, they cause our trade deficit to increase while simultaneously increasing our investment surplus. Either way, Americans benefit. It is false for Trump officials to suggest that the $1.9 trillion in international investment the U.S. economy received last year is a national emergency instead of a sign of our economic dominance.
In its petition asking the Supreme Court to reverse the Appeals Court’s tariff decision, the Trump Administration writes: “To the President and his most senior advisors, these tariffs thus present a stark choice: With tariffs, we are a rich nation; without tariffs, we are a poor nation.”
That is mistaken. Nothing in economic theory or history suggests that tariffs would enrich the United States. Instead, if they are allowed to remain in place, tariffs will undermine U.S. economic growth and cancel out the tax relief contained in the One Big Beautiful Bill Act that Congress and the President just enacted into law. Nothing would serve the country better than a swift Supreme Court ruling that crushes these self-destructive tariffs once and for all.