The Tariff Madness Isn't Over

Even after Trump paused some of his new tariffs for 90 days, we still have the highest average tariffs in over a century and the biggest trade war since the Great Depression. Real relief will only come if Congress or the courts deny Trump the power to do this.

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When Donald Trump paused many of his awful "Liberation Day" tariffs yesterday, there was some understandable relief. Some even seem to assume the tariff crisis is over. For example, Democratic Senate Leader Charles Schumer, posted on Bluesky that "History will remember April 9, 2025 as America's actual liberation day—the day that President Trump backed down from his ridiculous tariff fiasco."

But any celebration is premature. The truth is Trump has not fully backed down. A whopping 10% tariff on nearly every nation in the world is still going into effect immediately, along with a huge increase on tariffs for Chinese goods (up to 145%).  It's enough to impose a huge tax increase on Americans (an average of  $4700 per household). And the additional "reciprocity" tariffs are only paused for 90 days, not cancelled.

Even with the pause, we now have the highest overall average effective tariff rate since 1909 - higher even than the infamous Smoot-Hawley tariff of 1930 that played a major role in deepening the Great Depression.  And that includes high tariffs on nations like Switzerland and Israel, which don't impose any tariffs on  US goods - thereby giving the lie to the notion that Trump's trade war is about breaking down "unfair" trade practices by other nations.

Moreover, so long as Trump seemingly has the power to impose massive tariffs at will, the crisis will not be over, even if he suspends all of them. Investors and producers will still face a climate of uncertainty, destroying incentives to make any kind of long-term commitments. Why build a factory, invest in one, or commit to a long-term contract, if your business could be wiped out any time the man in the White House wakes up on the wrong side of his bed, and decides to trash the world economy again?

The only way to truly end this crisis is to curb the power of the president to set tariffs. That could be done by Congress passing a law constraining the executive. There is in fact bipartisan legislation before the Senate and the House that would do exactly that, by voiding any tariffs imposed by the executive unless Congress passes a law approving them within 60 days. But even if it passes (which is far from guaranteed), Trump would veto it, and there is little or no chance that supporters can muster the two-thirds supermajorities in each house needed to override.

That leaves the second path to restoring stability: courts should strike down Trump's tariffs because they are illegal. In a previous post, I detailed multiple reasons why this is the right conclusion. They include the statutory text of the International Emergency Economic Powers Act of 1977 (IEEPA) (which, among other things, does not authorize tariffs), the major questions doctrine, nondelegation, and more.

The Liberty Justice Center and I are  proceeding with our planned lawsuit challenging the "Liberation Day" tariffs on behalf of US firms that import goods from the many countries targeted with tariffs. Other groups are also likely to file cases.  If we prevail, there may be true liberation from this insanity.

UPDATE: The original version of this post said the China tariff was set at %125. But it is actually now at %145. I apologize for the mistake, which has now been corrected.

 

Comments

[A Woman of No Importance]

The country is getting what it voted for. No matter how much some people hate woke, DEI, and immigrants, I wonder how many of them would gladly take all of them back once the coming recession hits.

[ah....Clem]

The thing is, most people are incapable of changing their minds when confronted with new information. When the recession hits and we have both inflation and negative growth, the people who "hate woke, DEI, and immigrants" will blame wokeness, DEI, and immigrants not Trump's disastrous mis-handling of the economy.

I'm still flabbergasted that the "conservative" contingent of the US electorate is cheering on the largest federal tax increase in my lifetime. But here we are.

[SRG2]

giving the lie to the notion that Trump's trade war is about breaking down "unfair" trade practices by other nations.

Because the economic illiterate Trump thinks that a trade deficit means that something unfair is going on.

[Stephen Lathrop]

Trump is angling for a, "sovereign wealth fund," which only he controls. Maybe put about $1 trillion of tariff proceeds in for starters. Then use that money to buy private militia backing as needed, to suppress demonstrators with gunfire.

The moment has already arrived. Trump is playing the totalitarian dictator game for keeps. To keep it up, Trump needs absolute assurance that the midterm election will consolidate Congress on his side. A free and fair election seems unlikely to provide that assurance. To understand that is to understand how short is the time remaining to prevent it. Only about 12 months remain—if that—before the election machinery will begin to be challenged.

[Thought about __ all my life]

Just want to state that I totally disagree with you
You often ignore the status quo when you argue for or against something. We are headed for disaster, if you don't have a real idea please be quiet

[Suudy]

"Real relief will only come if Congress or the courts deny Trump the power to do this."

You mean Congress should do it's job and quit delegating and deferring to the executive branch? Shocking.

If Congress weren't such pansies, we wouldn't have to worry about aggressive, overbearing presidents. Nobody would care if Trump was in office if Congress grew a backbone, passed some legislation to take back its power, and then override any vetos.

So instead, we have to rely upon lawfare and the courts. Which is still ceding power to whims of another branch. Grow up Congress and do your job.

[thesafesurfer]

The usual demagoguery from Professor Somin. Tariff policies differing from his are "madness" and "insanity."