It’s no bluff: The tariff rate is soaring under Trump
- The San Juan Daily Star
- 2 days ago
- 5 min read
By Ana Swanson
President Donald Trump’s on-again, off-again tariffs have prompted investors to bet that he will “always chicken out” and given businesses and foreign leaders hope that the leader of the world’s largest economy will ultimately back down from his threats if they prove too economically disruptive.
Events of the past week have cast serious doubt on that bet. As Trump renews trade threats against more than two dozen trading partners, he is once again proving his fondness for tariffs and embracing import taxes in a way that no other president has since the Great Depression.
A self-described “tariff man,” Trump has continually extolled the virtues of heavily taxing imports as a way to raise revenue and cajole factories to relocate to the United States. While the president may ultimately give way on some of his most recent threats, he has still steadily and dramatically raised tariffs to levels not seen in a century.
Over the past week, Trump has threatened 25 trading partners with punishing levies Aug. 1 unless they sign trade deals that Trump finds acceptable. The list of countries he plans to raise tariffs on include some of America’s biggest sources of imports, including the European Union, Japan, Mexico, Brazil, South Korea and Thailand. Those countries had been in active talks with the United States about resolving Trump’s concerns in an effort to avoid tariffs.
Several may still reach deals to avert some of the levies, including India, the European Union, Taiwan and Japan.
But even if some deals are reached, American tariffs on trading partners are still likely to rise significantly. That was the case with the two trade agreement frameworks that the Trump administration has so far announced, with Britain and Vietnam, both of which leave double-digit tariffs in place.
On social media Monday morning, the president wrote that the United States “has been ripped off on TRADE (and MILITARY!), by friend and foe, alike, for DECADES.”
Since Trump came into office in January, the average effective U.S. tariff rate has soared to 16.6% from 2.5%, according to tracking by the Budget Lab at Yale University, a nonpartisan research center. That’s a dramatic increase compared with the president’s first term, when it rose to 2.5% from 1.5%, primarily as a result of Trump’s trade war with China.
If all the tariffs that the president is now threatening on trading partners go into effect Aug. 1, that average tariff rate would rise to 20.6%, the highest since 1910. According to the Yale Budget Lab’s calculations, that would also top the level of the Smoot-Hawley tariffs, which worsened the Great Depression.
“What happened in his first term is not nearly in the ballpark of what is happening now,” said Ernie Tedeschi, the lab’s director of economics.
Some Trump advisers had projected a flurry of deals by July 9, after Trump imposed steep global tariffs in April but then quickly paused them for 90 days to carry out trade talks. Despite the efforts of foreign countries and his trade advisers to negotiate deals, few have emerged.
Trump’s advisers have portrayed the lack of agreements as a negotiating tactic. Speaking on ABC on Sunday morning, Kevin Hassett, director of the U.S. National Economic Council, said that the president had seen “some sketches of deals” negotiated by his advisers but that he thinks they “need to be better.”
“These tariffs are real if the president doesn’t get a deal that he thinks is good enough,” Hassett said. “But, you know, conversations are ongoing, and we’ll see where the dust settles.”
But foreign governments are puzzled about what exactly Trump wants, given that the negotiations have not produced the kind of deal he finds acceptable. The administration also appears to lack the time or bandwidth to make deals with more than a handful of the trading partners Trump is now threatening. As a result, there is a growing sense that what the president actually wants are tariffs that would block foreign products from the United States, rather than deals that could boost trade and open markets.
Besides the tariffs it is threatening on foreign nations, the administration appears set to roll out a variety of levies on critical sectors like semiconductors, pharmaceuticals, airplanes, lumber and other products, with some tariffs potentially coming later this month.
Mark Diplacido, who served at the Office of the United States Trade Representative during the first Trump administration, said that the current administration’s posture was that “they are fully comfortable letting these rates and these letters kick in.”
“The implication at this point is it’s time to make your final pitch, and if we’re not happy with this, we’re ready to let these go into effect,” said Diplacido, now a policy adviser at American Compass, a conservative think tank.
One remaining factor that could significantly lower Trump’s tariffs are the challenges that are now proceeding through the legal system. Federal courts have called into question the legal authority that Trump has used to threaten his global tariffs, and they are expected to rule on that question this fall.
Trump’s advisers have said that they have other legal channels to impose tariffs if the courts rule against them, but those methods were not likely to give the Trump administration as much scope and flexibility as it currently has asserted.
The president and many on his team argue that low tariffs have left the country at a disadvantage in past decades, allowing Americans to import cheap products that put U.S. factories out of business and left the country dependent on foreign suppliers. While some open-market Republicans and business owners privately oppose tariffs, they have been reluctant to speak out publicly against a president who often seeks retribution for his critics.
A White House official, who declined to be named because he was not authorized to speak publicly, said that the administration did not view high tariffs and trade deals as mutually exclusive, and that it had purposely crafted trade deals, for example with Britain, that had left high tariffs in place.
Diplacido said that one reason the administration had put high tariffs on many trading partners globally was related to China. In the first term, the Trump administration imposed hefty tariffs on Chinese exports. But while the U.S. trade deficit with China fell, trade deficits with many other partners started to grow. The United States began importing more products from factories in Mexico, Vietnam and elsewhere that were either run by Chinese companies or used lots of Chinese inputs and raw materials.
Diplacido said that China was “the biggest offender” but that “targeting them directly wasn’t enough to bring down the overall U.S. trade deficit, so this wider global approach has been necessary to address that problem.”
“Until third markets are willing to coordinate to rebalance trade globally,” he added, “I think that additional pressure and the higher tariffs are going to be necessary to get the overall U.S. trade deficit down, which I think is the principal goal.”
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