Upon returning to office in January 2025, President Donald J. Trump swiftly reignited his signature “America First” trade agenda. Central to this strategy was a sweeping overhaul of U.S. tariff policy, aimed at curbing imports, revitalizing domestic manufacturing, and reasserting American dominance in global trade. The new tariff regime has reshaped international trade dynamics, triggered diplomatic tensions, and sparked intense debate over its economic consequences.
The objectives pursued through the initial threat and subsequent imposition of heavy tariffs are multifaceted and strategic in nature:
- Generate Revenue for the U.S. Government: Tariffs are intended to raise substantial revenue—up to $600 billion per year—to fund tax cuts and reduce the national debt.
- Protect and Revive U.S. Manufacturing: by making imports more expensive, Trump aims to encourage domestic production and reindustrialize the U.S. economy, especially in sectors like steel, semiconductors, and pharmaceuticals.
- Reduce Bilateral Trade Deficits, particularly with China: the goal is to narrow the trade imbalance by discouraging imports and boosting exports.
- Address Unfair Trade Practices: tariffs are used to counter forced technology transfers, intellectual property theft, and subsidized exports.
- Enhance National Security Under Section 232 of the Trade Expansion Act: tariffs are justified to protect critical industries (e.g., steel, aluminum) deemed vital to national defense.
- Leverage in Global Negotiations: tariffs serve as a bargaining chip to pressure other countries into lowering their own trade barriers and adopting U.S. standards in areas like technology and energy.
- Reshape Global Power Dynamics: the policy aims to reassert U.S. dominance in global trade and reduce reliance on multilateral institutions, favoring a more transactional, bilateral approach.
- Combat Drug Trafficking: Trump claims tariffs could pressure countries like Mexico and Canada to curb fentanyl trafficking into the U.S..
- Address Currency Overvaluation: tariffs are also seen as a tool to counter the overvaluation of the U.S. dollar, making exports more competitive globally.
To implement his tariff policy, Trump’s actions in 2025 have been grounded in three key legal authorities:
- International Emergency Economic Powers Act (IEEPA) – Used to justify tariffs in response to national emergencies, including the flow of fentanyl and migration issues. Trump is the first president to use IEEPA to impose tariffs.
- Section 232 of the Trade Expansion Act of 1962 – Invoked to protect national security by imposing tariffs on imports deemed harmful to domestic industries. Critics say the definition of “national security” has been stretched to include products like autos, copper, and pharmaceuticals, which may not pose genuine threats. While courts and Congress tend to defer to executive claims of national security, this has raised concerns about unchecked presidential power.
- Section 301 of the Trade Act of 1974 – Applied to address unfair trade practices, particularly targeting China’s semiconductor and shipping industries. Critics argue that unilateral Section 301 actions undermine WTO mechanisms and global trade norms disrupting global supply chains and increasing uncertainty for businesses.
To date, only the International Emergency Economic Powers Act (IEEPA) has been seriously challenged in U.S. courts. Although a U.S. appeals court ruled on August 29 that most of Trump’s tariffs are unlawful—stating that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to impose them—the tariffs will remain in place until October 14 to allow time for a possible appeal to the Supreme Court. The High Court, the final arbiter of constitutional and federal law, is expected to consider the case during its “long conference” on September 29, and may take it up soon after.
Given that the current Supreme Court holds a 6–3 conservative majority, with six justices appointed by Republican presidents—including three by Donald Trump—it seems rather unlikely that the Court would rule against the president. However, this cannot be ruled out entirely, as it has already happened in cases involving agency powers and immigration.
This has been a challenging year. In February–April president Trump issued executive orders for a 10% baseline tariffs on most imports with higher tariffs (up to 50%) on countries with large trade surpluses. He also launched investigations into sectors like semiconductors, pharmaceuticals, and drones.
His tariff strategy was finally made public on April 2, a date he designated as ‘Liberation Day: a sweeping set of “reciprocal” tariffs aimed at reshaping U.S. trade relationships and asserting economic independence.
A broad-based tariff package was announced, including a baseline 10% tariff on all imports from EU and a 20% country-specific tariff on EU goods
Just days later, on April 9, a temporary 90-day suspension reduced the EU rate to the baseline 10%. However, tariffs of 25% on steel, aluminium, and automobiles remained in place and were subsequently increased to 50% in June.
In May, a temporary truce with China and a framework agreement with the UK were reached and the administration began negotiations with Japan, the EU, Indonesia, Vietnam, and the Philippines. Between June and July, tensions escalated following the announcement of tariffs of 35%, 25%, and 40% on Canada, India, and Brazil, respectively.
On July 12, President Trump declared a new 30% tariff on EU goods, set to take effect on August 1. Yet, within weeks, a last-minute agreement capped most tariffs at 15%, with notable exemptions for pharmaceuticals and semiconductors.
As previously mentioned, however, a recent ruling by federal courts declared Trump’s tariffs unlawful, asserting that the IEEPA does not grant authority for such sweeping trade measures.
It is worth noting that Donald Trump’s trade negotiation and tariff strategy reflects at least seven of the 11 principles he outlined in his 1987 book The Art of the Deal, (co-authored with journalist Tony Schwartz).
- Think Big: “If you’re going to be thinking anyway, you might as well think big.”
Trump’s widespread tariffs—including a 145% tariff on Chinese goods—demonstrate his bold, high-stakes approach. He consistently aimed for maximum impact, even when it risked economic backlash.
- Use Your Leverage: “The worst thing you can do in a deal is seem desperate.”
Trump used the U.S. trade deficit and economic power as leverage to pressure countries into renegotiating trade terms. Tariffs were not just economic tools—they were strategic weapons to force concessions.
- Maximize the Options: “I keep a lot of balls in the air.”
His administration opened multiple trade fronts simultaneously—China, EU, Canada, Mexico, India—keeping negotiations fluid and unpredictable. This created pressure points across the global trade landscape.
- Know Your Market: “I do my own surveys and draw my own conclusions.”
Trump often ignored traditional economic advice, relying on instinct and personal judgment. His tariff decisions frequently went against mainstream economic consensus, reflecting his individualistic approach.
- Fight Back: “When people treat me unfairly, I fight back very hard.”
His retaliatory tariffs, especially against China, were framed as responses to unfair trade practices. He escalated trade tensions rather than backing down, reinforcing his combative negotiation style.
- Get the Word Out: “The press is always hungry for a good story.”
Trump used media theatrics to amplify his trade moves—branding April 2 as “Liberation Day”, making bold public statements, and framing tariffs as patriotic acts. This helped shape public perception and rally support.
- Aim High: “I aim very high, and then I just keep pushing.”
His negotiation style was aggressive and relentless, often starting with extreme demands and adjusting only under pressure. This was evident in his initial tariff levels and refusal to compromise easily.
That doesn’t mean, however, that Trump consistently followed all the core principles of his own deal-making philosophy. In fact, he often ignored downside risks, despite his stated commitment to “protect the downside.” He also showed limited flexibility, even though he advocated for keeping multiple options open. And while he claimed to “know the market,” many of his decisions appeared to disregard their broader economic consequences.
To summarize, it is evident that The Donald, through his tariff strategy, aims to pursue a diverse set of objectives aligned with his MAGA agenda.
His approach has largely followed the principles he outlined in his 1987 book The Art of the Deal, though not without notable contradictions and frequent reversals that have cast doubt on his true intentions.
While financial markets appear cautiously optimistic about his ability to achieve these goals, the jury—both in the Supreme Court and beyond—is still out.
Picture generated with ChatGPT
