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Regardless of whether you like Trump and tariffs (mostly yes on the former and absolutely not on the latter, for me), there are some significant problems with the trade deals.
The trade deals are executive agreements, so they can be changed by the next president. Thus, there is only limited stability for business. And executive agreements are of dubious constitutionality, at least they were when Obama was doing them with Iran.
Trump has already changed tariff terms numerous times with some countries. Sometimes on what seems to be a whim and sometimes for good reason, like when he threatened Canada with higher tariffs if they recognize "PLO-Hamastan" as a state. They do seem to be a powerful tool of diplomacy, but that comes at a cost of less stability for business.
They are complicated. There are exceptions for various types of goods. Each country has different rates now. USMCA goods are exempt, etc. Our tariff schedules were not simple before this, but now they are much more complicated. It's often not clear from the press releases what is included in which categories, so it would be hard to know what you're paying when you import, at least until it gets worked out.
The last two items have been argued endlessly on here already, but I'll include them for the sake of completeness.
The rates are going up 20-30X. We had average tariff rates of about 1.5% before this, and many of the latest rates are now 15-35%. Economic growth will take a hit as we become a less efficient and more closed economy.
There is the dubious statutory and constitutional authority for the president to lay and collect duties. The courts could (and should) find all these schemes unconstitutional. I wouldn't have wanted President Obama or Biden to have this power, and I wouldn't want President Newsom or AOC to have this power in 2029.
Discussion (98)
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On the plus side, at least we're not Ukraine giving up nukes for an "executive agreement."
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The Trump Administration is the first Republican Administration in history to brag about how high they are raising taxes.
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This is not going to end well. When the Democrats regain the levels of power watch out; this time they will play for keeps. I was hoping the second Trump administration would end this but nope….they want to keep playing the game with the addition that President Trump is really a 5 year old who throws a fit when he gets any news he doesn’t like and you get the continued cycle….the Democrats will end it and all that will be left will be either a Socialist Democracy (see the left populist AOC) or a civil war. The Trump administration could really have ended this but they took the same road. There is no winning….just a few nice pass completions that will do nothing to advance a true winning coalition that could restore the color/ideologically blind constitution. Very disappointing.
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The operant theory was that these were bargaining measures that could be formally ratified later as needed. As for economic harm, if our tariffs go up in proportion to theirs going down, why wouldn't the total volume of trade remain the same but with a higher volume of outflow rather than inflow?
If Trump were inserting tariffs in a world where they did not exist before, then the harm is obvious. But if significant tariffs do exist and ours are low to nonexistent, while it would be bad to simply match theirs and thus discourage trade but maybe not bad to make them reduce theirs and marginally increase ours.
All of the above is fluff in light of the reality that the nitty gritty is about specific industries, specific comparative advantages and the political ramifications of protecting vulnerable sectors and promoting others. In a completely free market, for example, American farmers could wipe out almost any competitors and the world will not let that happen.
I am not inclined to believe that Trump is playing 4-D chess but his apparent perception that the USA has bent over backwards and made many concessions to foster global trade and that maybe those arrangement should be re-examined is probably a good thing.
I would be happier if Congress were more involved, requesting details, doing hearings, asking trade reps for details and then giving informal indications as to what will or will not fly if and when reduced to legislative action. That could be a check on proposed actions that could make some domestic players take an unnecessary hit but also additional pressure on trade partners to come to terms. But Congress no longer functions as it should so I guess that is a pipe dream.
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They were doing that anyway, they don't need permission or precedent.
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