President Donald Trump began in April to radically transform how trade is conducted internationally, announcing tariffs on friendly and adversarial nations alike in an effort to settle scores and to exact concessions favorable to the United States, such as those made by Japan and the European Union last month.
"Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore. It's not going to happen," Trump said at the "Liberation Day" ceremony where he announced a sweeping list of tariffs. "This will be, indeed, the golden age of America. It's coming back. And we're going to come back very strongly."
This tariff-driven upheaval has rankled establishmentarians at home and abroad — some of whom have launched legal challenges, issued condemnations, and threatened retaliation. Of course, the media has also worked feverishly to paint the tariffs as reckless and as more grease down the slope to economic ruin.
'Revenue and reciprocity are the twin benefits of the Trump tariffs.'
Nearly four months after the New York Times characterized Trump's approach as a "burn-it-down-first, figure-out-the-consequences-later recklessness," the paper admitted on Sunday that the tariffs are already netting a great deal of money for the government.
The Times' Washington, D.C., tax policy reporter Andrew Duehren confirmed on Sunday that Trump's recent assertion that "Tariffs are bringing Billions of Dollars into the USA!" was correct.
RELATED: Main Street's silent plea: Exempt us from the next tariffs
"Even before the latest tariffs kick in, revenue from taxes collected on imported goods has grown dramatically so far this year," Duehren wrote. "Customs duties, along with some excise taxes, generated $152 billion through July, roughly double the $78 billion netted over the same time period last fiscal year, according to Treasury data."
Citing data from the U.S. Treasury Department, the Times indicated that tariffs brought in over $29 billion in the month of July alone.
Analysts reportedly estimated that the tariffs could be worth well over $2 trillion in additional revenue if left untouched over the next 10 years.
"Tariffs are not going to be a huge source of revenue, couple trillion over a decade, but not trivial at all," Christopher Whalen, chairman of Whalen Global Advisors, told Blaze News in a statement. "But the tariffs are appropriate and are a way to get the world to give at least equal treatment to American goods. Revenue and reciprocity are the twin benefits of the Trump tariffs."
'I do not think this is a true source of revenue, only a substitution and reordering of taxes.'
While the tariffs are bringing in boatloads of cash, some critics have noted that Americans are the ones ultimately paying the price — something that might be more tolerable if Trump's idea to scrap American income tax and lean instead on tariffs as the main source of federal revenue were implemented.
Economic expert and Blaze Media contributor Carol Roth said in a statement to Blaze News, "When you think of the word 'revenue' when it comes to the federal government, you should think taxes because that's the primary source of government revenue. When it comes to revenue from tariffs, it is no different."
"The majority of the tariff burden is coming not from foreign exporters, but rather from U.S. consumers and U.S. businesses," Roth said, alluding to a Goldman Sachs analysis that estimated foreign exporters were only absorbing 20% of the higher costs from tariffs.
RELATED: Tariffs vs. free trade: Which is BETTER for the American auto industry?
Goldman Sachs economists reportedly indicated that eventually, 70% of the direct cost of tariffs would be kicked to consumers through higher prices.
"This means tariffs are mostly revenue that is moving from one pocket to the other, so to speak, as businesses and consumers that pay tariffs then have less money to contribute otherwise to the economy, impacting other tax or government 'revenue' collection," Roth continued. "Unless we fundamentally reorder how taxes are paid (as well as spending) to something that is focused on a consumption tax (which I personally do not think is a good idea given how our economy functions today), I do not think this is a true source of revenue, only a substitution and reordering of taxes."
'I think this is addictive.'
"We all know that making the [Tax Cuts and Jobs Act of 2017] tax cuts permanent through the [One Big Beautiful Bill Act] was important to the economy, so why would anyone think that adding in the equivalent of more taxes through tariffs is a good idea?" Roth added. "Also, given that cost of living remains a top issue for Americans, adding costs — even if it is only in certain areas of the economy — is in conflict with the administration's agenda."
Regardless of where the money is coming from, there are concerns that the U.S. government might become overly reliant on tariffs as a revenue stream.
"I think this is addictive," Joao Gomes, a finance and economics professor at the University of Pennsylvania's Wharton School, told the Times. "I think a source of revenue is very hard to turn away from when the debt and deficit are what they are."
The national deficit is presently $1.33 trillion, and the national debt is $36.91 trillion.
Despite Democratic complaints over the tariffs, Ernie Tedeschi, director of economics at the Yale Budget Lab, suggested that there may be hesitance among both Republicans and Democrats to roll back the tariffs if that would mean a greater federal debt load.
"Congress may not be excited about taking such a politically risky vote when they didn't have to vote on tariffs in the first place," Tedeschi told the Times.
Rather than scrap the tariffs, Democrats are apparently thinking about ways in which they can blow the money.
Democratic strategist Tyson Brody noted, "The way that Democrats are starting to think about it is not that 'these will be impossible to withdraw.' It's: 'Oh look, there's now going to be a large pot of money to use and reprogram.'"
Some Republicans also have a mind to redistribute the funds.
Sen. Josh Hawley (R-Mo.) introduced legislation last week that would send tariff rebate checks to Americans. The amount of the rebate would be at least $600 per adult and dependent child, or more if tariff revenue exceeds current projections for 2025.
Like Blaze News? Bypass the censors, sign up for our newsletters, and get stories like this direct to your inbox. Sign up here!The “C” grade FedEx founder Fred Smith received from a Yale professor on a paper outlining his vision for an overnight delivery service is much less remarkable than is often assumed. Naturally, Smith got a C. Rest assured that most investors gave him an F, assuming they bothered to hear Smith’s pitch in the first place.
Evidence supporting the above claim can be found in the billions Smith left behind, along with the market cap ($54 billion) of FedEx itself. Smith’s wealth and FedEx’s valuation are evidence of Smith’s entrepreneurial genius — his ability to see what others couldn’t, to act decisively, and to execute brilliantly on a vision that defied conventional wisdom.
At least rhetorically, Donald Trump sees interconnectivity as impoverishing. That’s too bad.
Stop and contemplate the miraculous nature of Smith’s innovation. No doubt many wished they could have next-day or two-day delivery. But as Smith’s billions yet again indicate, his greatest insight was in figuring out how to solve a problem that appeared insolvable: how to profitably move documents around the U.S. and around the world overnight. Investors didn’t believe it could be done, which is why opposite-thinking, passionate people like Smith are so crucial to progress.
Which brings us to economist Joseph Schumpeter’s notion of “creative destruction.” It was his way of saying that great business ideas are routinely replaced by even better ones. Stasis is death in business.
Smith knew this well. Miraculous as overnight delivery was, the proliferation of fax machines in the 1970s and '80s could have been an existential threat to FedEx. Same with email, PDF attachments, hyperlinks, and eventually DocuSign in the 1990s and beyond.
The easy move would have been to sell or shut down what technology was rapidly rendering dated — but that wasn’t Smith. A free thinker to the core, according to people like Cato Institute co-founder Ed Crane (Smith served on Cato’s board), who knew him well, Smith no doubt grasped that a world increasingly connected by split-second technology would be a prosperous one. And prosperous people don’t just want market goods — they want them quickly.
RELATED: The tax trick pitting old-guard Republicans against the populist new right
While many entrepreneurs might have sold in the face of a technological onslaught, Smith kept on building. He pivoted his business to become more valuable — ironically, the more free-market forces rendered FedEx’s initial purpose dated and obsolete. Documents were to FedEx what books were to Amazon: just the test case for a business concept that would have even greater purpose the more the world thrived based on the connectivity that had, in so many ways, vitiated FedEx’s original business.
The free, rapid movement of people and communications was only existential for Smith and FedEx insofar as he was unwilling to pivot. In other words, the free trade that Smith venerated didn’t victimize him or, for that matter, any entrepreneur capable of seeing that prosperity born out of open trade frequently creates even better lines for businesses to expand into. That’s why FedEx didn’t die long ago. Smith was too smart — not just for Schumpeter, but also for President Donald Trump.
At least rhetorically, Trump sees interconnectivity as impoverishing. That’s too bad. As Smith’s towering achievements indicate, the only true barriers to prosperity are those that separate producers from one another.
It’s a long way of saying Trump could learn from Smith’s constant evasion of creative destruction. The latter isn’t just an understatement — it’s also urgent.
Editor’s note: This article was originally published by RealClearMarkets and made available via RealClearWire.
A New York-based federal court has temporarily handicapped the Trump administration, removing some of its leverage in trade wars with foreign powers.
A three-judge panel at the U.S. Court of International Trade on Wednesday voided and permanently blocked President Donald Trump's "Liberation Day" 10% baseline tariff on goods imported from most countries as well as his reciprocal tariffs on scores of individual nations.
The court unanimously held that while the president has authority to respond to national emergencies with tariffs, embargoes, and sanctions, the International Emergency Economic Powers Act he invoked "does not authorize the President to impose unbounded tariffs."
'The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law.'
The court suggested that letting Trump impose unbounded tariffs might run afoul of the Constitution's separation of powers, as the Constitution assigns Congress the power to regulate foreign commerce and impose tariffs. Critics have stressed, however, that Congress has over the years delegated much of this authority to the president and the executive branch — authority largely unchallenged until now.
"The Worldwide and Retaliatory Tariffs do not comply with the limitations Congress imposed upon the President's power to respond to balance-of-payments deficits," the court said in its opinion. "The President's assertion of tariff-making authority in the instant case, unbounded as it is by any limitation in duration or scope, exceeds any tariff authority delegated to the President under IEEPA. The Worldwide and Retaliatory tariffs are thus ultra vires and contrary to law."
RELATED: Trump's reciprocal tariffs — and decades of devastating fees the world pushed on America
The decision halts Trump's existing IEEPA tariffs and prevents him from increasing tariffs, including the paused 145% tariff on imports from China and the recently threatened 50% tariffs on imports from the European Union. It also scraps Trump's orders applying 25% duties on Canadian and Mexican products.
The Trump administration immediately appealed the decision.
'The judicial coup is out of control.'
Since the Court of International Trade had effectively resolved two lawsuits before it in a single opinion — a lawsuit brought by the Liberty Justice Center on behalf of several businesses and a lawsuit filed by a gang of blue-state state attorneys general — the government asked the U.S. Court of Appeals for the Federal Circuit to consolidate its appeals.
Jeffrey Schwab, director of litigation at the Liberty Justice Center, said in a statement, "This ruling reaffirms that the president must act within the bounds of the law, and it protects American businesses and consumers from the destabilizing effects of volatile, unilaterally imposed tariffs."
Oregon Attorney General Dan Rayfield, one of the Democrats who fought to axe the tariffs, celebrated the ruling, stating, "President Trump's sweeping tariffs were unlawful, reckless, and economically devastating."
White House deputy chief of staff Stephen Miller noted on X, "The judicial coup is out of control."
Miller added Thursday, "We are living under a judicial tyranny."
RELATED: Why voters are done compromising with the 'America Last' elite
Regardless of whether the government is successful in its appeal, the Trump administration has other ways of pursuing its desired tariffs, including under Section 122 of the Trade Act of 1974, Section 232 of Trade Expansion Act of 1962, Sections 301 of the 1974 Trade Act, and Section 338 of the Trade Act of 1930.
Alec Phillips, managing director at Goldman Sachs, indicated that the president is authorized under Section 122 to tackle a balance-of-deficit, reported MarketWatch. Since that particular law does not demand a formal investigation or process, Trump could use it to immediately impose tariffs of up to 15%. The downside is that Section 122 tariffs are only good for 150 days.
Alternatively, the administration could apply tariffs under Section 301, although doing so would require investigations to set the stage.
"This would take longer, likely several weeks at a minimum and probably a few months to complete several investigations," said Phillips. "There is no limit on the level or duration of tariffs under Sec. 301."
'We already expect additional sectoral tariffs.'
Michelle Schulz, managing partner at Schulz Trade Law PLLC, told CNBC's "Squawk Box Europe" on Thursday, "We have had section 301 tariffs on Chinese goods even under the previous administration, which were pretty harsh. So I can imagine that the administration will look at these provisions again and see if they can use 232, or 301, or some other mechanism whereby they can enforce the tariffs."
According to Phillips, Section 338 enables Trump to impose tariffs of up to 50% on imports from nations that discriminate against the United States. While an available tool in the president's kit, it has reportedly never been used before.
Finally, Section 232 tariffs — which Trump has used for steel, aluminum, and automobiles and which were unaffected by the court's ruling — can be expanded to cover other sectors.
"We already expect additional sectoral tariffs — pharmaceuticals, semiconductors/electronics, etc. — and uncertainty regarding the IEEPA-based tariffs could lead the White House to put more emphasis on sectoral tariffs, where there is much less legal uncertainty," said Phillips.
Blaze News reached out to the Department of Commerce for comment but did not receive a response by publication.
Like Blaze News? Bypass the censors, sign up for our newsletters, and get stories like this direct to your inbox. Sign up here!
Despite these troubling economic conditions and many businesses leaving, it seems unlikely that Gov. Newsom and the Democrat majority in the legislature will change their ineffective policies.
This year’s total cookout cost is down 30 cents from the record high $71.22 bill calculated in 2024 under Biden.
Lawmakers of all parties keep thinking that some magic bullet will solve all of the country’s fiscal problems. It won’t.
While liberals hide indoors in fear of the falling sky, the rest of us recognize it’s actually beautiful outside in a new day brought by the Trump administration.
There should be more to economic and trade policy than merely the price of goods.
Government-mandated minimum wage laws have regularly proven to be a disastrous economic policy. But apparently, Sen. Josh Hawley, R-Mo., didn’t get the memo. On Tuesday, Missouri’s senior senator introduced legislation called the “Higher Wages for American Workers Act,” which reportedly seeks to raise the federal minimum wage to $15 per hour and “call for an […]
www.theblaze.com
thefederalist.com