When Donald Trump returned to the White House last year, he had little patience for long and slow trade investigations. He wanted quick results and wanted other countries to feel the pressure immediately. Executive orders and sweeping curbs against nearly all the countries in the world followed. And the Trump administration had soon imposed broad tariffs on trading partners.
The strategy worked for some time. But earlier this year, the US Supreme Court dealt it a major blow and struck down the tariffs.
Now, Trump’s team is relying on older trade laws that have already been tested in courts, instead of the emergency powers law that was used for the earlier tariffs and later rejected by the Supreme Court.
The latest move has placed tariffs of 10% to 12.5% on goods from 60 countries. The US says the countries have not done enough to enforce bans on products linked to forced labour.
But this is only the start. More tariff actions are expected in the coming months, Reuters reported.
Same goal, different legal route
The administration is currently looking into excess industrial capacity around the world. It is investigating alleged intellectual property theft by Vietnam and examining national security issues involving key industries such as semiconductors, robotics and industrial machinery.
Speaking to Reuters, Dan Ujczo, associate general counsel at Canadian oil producer Cenovus Energy and an expert on US-Canada trade, said Trump’s wider trade policy could soon become much clearer. “We’re at the end of the beginning of the Trump tariff agenda,” Ujczo said.
“Within the next few weeks, and certainly by the end of the summer, we will see large parts of President Trump‘s trade policy fully in effect.”
For businesses, a clearer tariff structure could make it easier to plan ahead. Companies would no longer have to keep guessing about what tariffs might come next.
But foreign governments could face a tougher situation. To protect their access to the huge US import market, worth about $3.4 trillion, they may have to offer more concessions to Washington.
More tariffs could be on the way
US Trade Representative Jamieson Greer made it clear this week that Trump plans to use every tool available to impose tariffs, bring manufacturing back to the US and reduce the country’s trade deficit.
“The specific authorities this administration is using have changed, but the trade strategy has not,” Greer told the US Senate Finance Committee.
Greer has not given a timeline for the investigations into excess industrial capacity. However, he has said that the different layers of tariffs being rebuilt will not go beyond the limits included in trade agreements that the Trump administration has been negotiating.
That would mean a tariff cap of 15% for the European Union, Japan and South Korea, with higher rates for some Southeast Asian countries.
China is considered the world’s biggest source of excess manufacturing. However, administration officials say its tariff rate will not go above the roughly 20% cap agreed by Trump and Chinese President Xi Jinping last November.
That rate would come on top of the 25% tariffs Trump imposed on China during his first term.
Trump brings back an old trade law
Trump’s latest anti-forced-labour tariffs were imposed under Section 301 of the Trade Act of 1974. This law deals with unfair trade practices and was also used against China during Trump’s first term.
The new duties almost directly replace a temporary global tariff of 10% that expired on Friday. According to the US Trade Representative’s office, they cover 99.4% of US imports. The move rebuilds part of Trump’s “Liberation Day” tariffs, which ranged from 10% to 50% and were imposed on almost every country.
The US Supreme Court later ruled those tariffs illegal. Trump had imposed them using an untested national emergency law, but the court rejected that approach.
Another part of Trump’s earlier baseline tariffs could be brought back through a separate Section 301 investigation into excess industrial capacity.
That investigation is already looking at 16 major trading partners, including China, the European Union, Japan, South Korea, Mexico and Vietnam. It focuses on industrial subsidies and other policies that encourage countries to increase exports.
Tariffs brought in billions, but also raised costs
Trump’s decision to move quickly with tariffs had few major effects.
It increased costs for retailers and other businesses that depend heavily on imports. It also pushed dozens of trading partners to the negotiating table, helping the US secure concessions in exchange for lower tariff rates.
At the same time, China responded with its own tariffs, leading to a rapid escalation in the trade war before the two sides reached a fragile truce. The tariffs also brought hundreds of billions of dollars into the US government’s coffers.
Trump’s “Liberation Day” tariffs alone generated $166 billion in revenue. The money provided a major boost at a time when the US federal deficit was growing. However, refunds to importers have now pushed the collections from those tariffs into negative territory.
The temporary tariffs, which were set to last for 150 days and were based on a law designed to deal with balance-of-payments crises, had generated $31 billion in assessed revenue through July 5.
But that money could also have to be refunded if a federal court ruling against the tariffs is allowed to stand.
New legal challenges are likely
Trump’s decision to use Section 301 for the forced-labour tariffs has already led to an immediate legal challenge from small businesses.
However, trade and legal experts say the case could take time to resolve. Section 301 has a strong record in US courts, and judges may be less likely to block measures that are aimed at fighting forced labour and reducing barriers to US exports.
