Trump’s Renewed Trade War Risks Dealing a Fresh Economic Blow

Andrew here. Tariffs are back. The Trump administration put new levies into effect around midnight in Washington. But unlike last time, businesses saw these coming, so don’t expect the same frantic scramble to shore up global trade and supply chains.

While these new measures appear more legally defensible, court challenges are still inevitable. More important, let’s be honest about what the tariffs are: the administration’s primary tool for negotiating leverage — even as the levies raise fresh questions about the future of U.S. relationships with trade partners.

One-two punch

Markets are rebounding on Friday, despite growing worries that a new front in the Middle East war could drag down the global economy. Now, President Trump has added to the turmoil by stepping up his trade war.

New U.S. tariffs of at least 10 percent went into effect overnight for over 80 countries. Trading partners, including Japan, Australia and Brazil, have criticized the levies. The duties have been issued under Section 301 of the Trade Act of 1974 and are meant to target allegations of lax enforcement of forced labor bans. They appear more durable than previous ones, experts say.

(A reminder: The Supreme Court in February struck down Trump’s most bruising tariffs, justified under a 1977 law called the International Emergency Economic Powers Act. The administration responded with temporary 10 percent levies, under a different trade law, that expired at midnight.)

Tariffs could exacerbate the affordability crunch, a chief concern for voters heading into the midterm elections. The Section 301 duties, which cover 99.4 percent of U.S. imports, are expected to raise the effective tariff rate paid by U.S. importers, according to the Yale Budget Lab, and sap the spending power of households and companies.