You. Cannot. Escape. The. Trump. Tariffs.
With the Supreme Court poised to overturn Trump's favorite type of tariff, he's testing different methods more likely to survive legal challenges.
The Supreme Court might strike down three-quarters of the tariffs President Trump has imposed so far in his second term. Yet here comes another batch of import taxes, and these are meant to survive legal scrutiny.
Trump now says new import taxes will go into effect on October 1 on pharmaceuticals, heavy and large trucks, kitchen cabinets and upholstered furniture. The taxes range from 25% to 100%, with exemptions and carve-outs that seem designed to keep everybody guessing and give Trump administration officials unusual leeway to decide who has to pay the tariffs and who doesn’t.
Imported drugs, for instance, will face a 100% tariff that effectively doubles their price. But there are two exemptions. First, the tariff doesn’t cover generics. And second, there’s no new tariff on imported drugs made by firms that are building factories in the United States. That second condition leaves room for subjective assessments of what constitutes current construction by a pharmaceutical firm.
The heavy truck tariff is 25%. But it’s not clear if that applies to vehicles or components made in Mexico and shipped to the United States under an existing trade deal with our southern neighbor, which might leave them exempt from the new tariffs. So Mexican importers and their American customers might have a mess on their hands, or might not.
Trump imposed the new tranche of tariffs by citing a national security justification. Eh. There’s probably a case that the United States is too dependent on pharmaceuticals from China, a potential adversary that supplies around 25% of the drugs Americans buy. But cabinets and furniture? Unless they’re installing Chinese couches at the Pentagon, it’s hard to see the problem.
At any rate, the national security justification is quite different from the emergency justification Trump has used for most of his tariffs so far. That’s probably because Trump sees the risk that the Supreme Court will soon upend his trade war, forcing a reboot. The reboot now seems to be underway.
Trump’s tariffs so far come in two buckets. The emergency tariffs generally align with the so-called “reciprocal” tariffs that apply to all imports from a given country. They apply to most countries and generally range from 10% to 50%. The rate is up to Trump. Most of the time he says the emergency is a trade deficit with a given country, but sometimes he doesn’t even say what the emergency is. Trump put a 50% tariff on imports from Brazil, one country the United States has a trade surplus with.
Two groups have challenged the emergency tariffs in court, and two federal courts have ruled them illegal. The Supreme Court will hear the case on November 5. Legal analysts seem to think the outcome is a coin toss.
Trump is hedging his bets with the other bucket of tariffs, the ones imposed for national-security reasons. Those tend to apply to specific products rather than countries, and so far they cover goods including steel, aluminum, cars, car parts, and now drugs, furniture and trucks. Trump has hinted that semiconductor tariffs are coming, too.
All told, Trump has raised the average tax on some $3 trillion of imported goods each year from 2.5% to at least 18%. Importers are paying about $20 billion in additional taxes each month, and passing as much of it along to their own customers as they can. Price hikes on tariffed goods are gradually showing up in retail price hikes, with the inflation rate rising for four months in a row, to 2.9%. Hiring has stalled as many companies wait to see how much added cost the Trump tariffs will force them to bear.
Stock-market investors are less concerned, for now, because corporate profits have held up and the prospects of the artificial intelligence boom are swamping even Trump’s trade war. But Trump is sending a message everybody needs to hear, which is that aggressive tariffs are here to stay, one way or another. Uncertainty IS the end state, and Trump will always find another tariff to shake things up.



Good insight Fred. Maybe a future story....
He’s a CRE developer. EVERY CRE developer supports inflation as a way to cancel debt. Among governments, the Weimar Republic could be excused for using inflation to unwind Versailles Treaty retribution. That, however, cannot excuse the U.S. today. Our debt is our fault and our duty to pay. Even Reagan raised taxes (1986) when he’s first term cuts nearly destroyed Us financial stability. That’s what we need now.