During his so-called Liberation Day speech back in April, President Donald Trump unveiled his expansive new tariff policy \u2014 including reciprocal tariffs on some 90 countries \u2014 and declared it the rebirth of American industry.<\/p>\n
Yet, just seven days and a global market crash later, Trump paused his reciprocal tariffs.<\/p>\n
So there is historical precedent for what the Wall Street Journal recently called the Trump administration\u2019s \u201ctiptoeing away\u201d from its tariff strategy. (1) This follows an executive order in September that exempts \u201cproducts that cannot be grown, mined, or naturally produced in the United States or grown, mined, or naturally produced in sufficient quantities in the United States to satisfy domestic demand.\u201d<\/p>\n
The exemptions, which are subject to inking new trade deals with the exporting countries, include \u201ccertain agricultural products; aircraft and aircraft parts; and non-patented articles for use in pharmaceutical applications.\u201d The WSJ adds that the decision \u201creflects a growing sentiment\u201d within the administration \u201cthat the U.S. should lower levies on goods that it doesn\u2019t domestically produce.\u201d<\/p>\n
Ron Insana, a CNBC senior analyst, told The 11th Hour that he\u2019s \u201ca little surprised\u201d that Trump is backing off some tariffs, but added that \u201cit recognizes the fact that we don\u2019t grow vanilla in the United States, or bananas, or coffee beans \u2026 I don\u2019t think this was ever thought through.\u201d (2)<\/p>\n
So is Trump actually quietly quitting tariffs, or is there another reason for the recent walking back of one of his signature policies?<\/p>\n
If Trump is indeed slowly retreating from his tariff strategy, it\u2019s easy to see why.<\/p>\n
An S&P Global Marketplace study, released earlier this month, shows companies took an additional $1.2 trillion hit to revenue beyond what they anticipated at the beginning of the year, (3) while ABC News reported that Goldman Sachs recently told clients that American consumers will pay 55% of the cost of tariffs \u2014 a number that, they warn, could jump to 70% in a year\u2019s time. (4)<\/p>\n
As well, the erratic tariff strategy and other prohibitive White House policies are stalling the potential reshoring of manufacturing \u2014 precisely the issue it was meant to resolve \u2014 with \u201cseveral U.S. business leaders\u201d telling Politico that it\u2019s all had \u201ca paralytic effect, with companies unable to greenlight reshoring projects without more certainty.\u201d (5) Meanwhile, a dozen American small businesses recently told CNBC that they are barely treading water. (6)<\/p>\n
All of which explains why Trump\u2019s tariffs consistently poll terribly, not to mention his handling of the economy \u2014 supposedly his strong suit \u2014 which now sits at only 36% approval. (7)<\/p>\n
And yet, some say that Trump\u2019s perceived tariff retreat isn\u2019t likely out of concern for the impact on businesses or American pocketbooks but, rather, tied to a looming U.S. Supreme Court battle due to start Nov. 5.<\/p>\n
That battle concerns whether Trump\u2019s reciprocal tariffs are legal under the International Emergency Economic Powers Act (IEEPA). Essentially, as Robert Goulder, contributing editor for Tax Notes Today International, told Forbes, these are Trump\u2019s country-specific tariffs being challenged, as opposed to tariffs on specific items or products. (8)<\/p>\n
Which is probably why Trump\u2019s most recent tariffs \u2014 on everything from trucks and buses to lumber and \u201cwood products\u201d \u2014 lean on Section 232 of the Trade Expansion Act of 1962 for justification.<\/p>\n
Goulder explained that Section 232 is based on the idea \u201cthat there is in fact a national security threat as to certain categories of imports.\u201d He used steel and aluminum as an example of tariffs that could stay in place under Section 232 because \u201cif there were to be a war, you’d need metal to make battleships and guns and whatnot.\u201d<\/p>\n
This is a major reason that some, including WSJ trade and economic reporter Gavin Bade, believe that Trump is not necessarily folding on tariffs, but rather \u201cshifting the emphasis away from the reciprocal tariffs somewhat and toward the Section 232 national security tariffs.\u201d (9)<\/p>\n
That way, even if the Supreme Court upholds the verdicts of lower courts that found Trump\u2019s reciprocal tariffs to be illegal \u2014 and thus force him to pay back the billions of dollars he raked in with them \u2014 Section 232-based tariffs are more likely to stand up to legal scrutiny going forward.<\/p>\n
Still, Trump warned that overturning his tariffs would bring the U.S. to \u201cthe brink of economic catastrophe.\u201d (10)<\/p>\n
Others aren\u2019t quite as dramatic, though Goulder did say that long-term, based on 10-year tariff revenue projections, \u201cthere’s a $2 trillion revenue hole in the federal budget if the Supreme Court upholds the lower courts here.\u201d<\/p>\n
Read more: Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US \u2014 with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in \u2018great wealth\u2019<\/a>. How to get in now<\/p>\n Politico reports that Trump\u2019s tariffs have so far netted about $200 billion. (11) A chunk of that tariff profit comes from reciprocal tariffs, and we already know that the bulk of the cost of tariffs is being passed onto the American consumer. So it should stand to reason that, if the Supreme Court overturns Trump\u2019s reciprocal tariffs, the American consumer should be in line for a piece of the billion-dollar refund. Right?<\/p>\n Sadly, that\u2019s unlikely.<\/p>\n Goulder explained to Forbes that despite the cost of tariffs being passed onto consumers, \u201cthere’s no recovery for that \u2026 Consumers don’t have a cause of action.\u201d<\/p>\n Instead, he noted, \u201cthe only people who are entitled to a tariff refund is the importer who actually paid the tariff up front,\u201d while \u201cprices are just higher, and that’s how it is.\u201d<\/p>\n Other experts agree that it\u2019s unlikely, even if the reciprocal tariffs are overturned, consumers will see retailers lower prices in the short term.<\/p>\n Instead, Rohit Tripathi, a vice-president at supply chain and retail strategies company Relex Solutions, told USA Today that the costs of tariffs have already been absorbed and passed along, and that it could be more than a year after a Supreme Court overturning before prices begin to come down. (12) It\u2019s widely expected that the Supreme Court will make its ruling in early 2026.<\/p>\n That said, there could be some good news on the horizon.<\/p>\n According to a recent Tax Foundation analysis, Trump\u2019s reciprocal tariffs would increase taxes on U.S. households by $1,300 in 2025 and $1,600 in 2026. (13) But if they\u2019re overturned, those amounts drop to $300 this year and $400 next year.<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Wall Street Journal (1<\/a>); CNBC (2<\/a>); S&P Global Marketplace (3<\/a>); ABC News (4<\/a>); Politico (5<\/a>); CNBC (6<\/a>); Newsweek (7<\/a>); Forbes (8<\/a>); Wall Street Journal (9<\/a>); The Associated Press (10<\/a>); Politico (11<\/a>); USA Today (12<\/a>); Tax Foundation (13<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"During his so-called Liberation Day speech back in April, President Donald Trump unveiled his expansive new tariff policy…\n","protected":false},"author":2,"featured_media":243875,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,155,12,101,133779,35364,15304,54374,759,17012],"class_list":["post-243874","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-dave-ramsey","tag-donald-trump","tag-economy","tag-robert-goulder","tag-robert-kiyosaki","tag-supreme-court","tag-tariff-policy","tag-tariffs","tag-wall-street-journal"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/243874","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=243874"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/243874\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/243875"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=243874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=243874"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=243874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}