Trump's Trade Deals Won't End the Harm Caused by His Tariffs
In each case, tariffs remain much higher than they were before the deals.
Trump has reached a trade deal with the European Union, which follows previous deals with the UK, Japan, Vietnam, and the Philippines. Some might view these deals as vindication of Trump's "Liberation Day" tariffs, and other tariff hikes. But the truth is that these deals leave us worse off than before. In each case, tariff rates under the deals are vastly higher than they were before Trump started his trade war. For example, the new tariff on most EU goods will be 15%, compared to an average rate of 1.47% before Trump's second term (the EU imposed an average %1.35 rate on US imports). It's a similar story with Japan (15% vs. 2%), Britain (10% vs. 3.3%), and the others. Moreover, under the Administration's interpretation of the International Emergency Economic Powers Act (IEEPA), Trump would retain unfettered discretion to raise tariffs further any time he wants for any reason.
As a result, Americans will face much higher prices than before on many goods, and there will be other severe economic damage, as well. All told Trump's IEEPA tariffs are expected to impose some $1.9 trillion in tax increases on Americans over the next decade, costing the average household some $1000 per year, while also raising prices and greatly diminishing economic growth. In addition, giving one man total control over tariffs undermines the rule of law and the stable expectations on which the international economy depends. There is also the damage the tariffs do to relations with US allies, thereby weakening the Western alliance relative to rivals like China and Russia.
The relatively modest reductions in tariffs against US exports these deals include (e.g. Britain reduced its tariffs from an average of 3.8% to 1.8%) don't even begin to offset the enormous harm - even if we (wrongly) discount all harm done to foreign trading partners, and only consider effects on the US.
Obviously, the trade deals also don't change the fact that Trump's IEEPA tariffs are illegal for a wide range of reasons. The Liberty Justice Center and I secured a ruling against the "Liberation Day" tariffs in the US Court of International Trade, and our case (together with one filed by 12 state governments) is now on appeal in the Federal Circuit. We hope to continue to prevail, now aided by big-name legal scholars and appellate litigators Michael McConnell and Neal Katyal. We also have the support of amicus briefs from a wide range of group across the political spectrum.