Tariffs Got You In A Tailspin?
To President Trump, “tariff” is the most beautiful word in the dictionary, but global markets feel differently.
Trump’s on-again, off-again relationship with tariffs has led to a tumultuous few weeks for Americans and our trade partners. So much so that other words, like “recession” and “trade war,” are bubbling up to describe the potential impact of this radical policy change.
There’s a new bipartisan bill in the Senate that seeks to push back on the president’s ability to impose tariffs, and we’re here to break it down.
HEREBY HIGHLIGHTED
The Trade Review Act
Introduced last week, the Trade Review Act is bipartisan legislation that aims to restore Congress’s Constitutional authority over tariffs by placing limits on the president’s power to impose them.
So, What Are Tariffs?
Tariffs are federal taxes set by Congress and applied to goods at the border. These tariffs vary by product and originating country, and up until recently, most imports to the U.S. had low or no tariffs.
Ideally, the use of tariffs should have three goals:
- Raise funds for the U.S. government.
- Redistribute money from consumers towards domestic producers.
- Affect markets by shifting global prices or as a sanction against foreign firms or countries.
Technically, tariffs are a legislative power. But in 1934, Congress granted the president broad authority to use the tool as a way to protect national security. The Trade Review Act is an attempt to rein in that power.
The Debate Floor
We often use this space to discuss the merits of the specific policy, but let’s take a step back and outline the arguments around Trump’s recent use of tariffs.
Supporters believe tariffs will:
- Increase government revenue.
- Protect American jobs by incentivizing consumers and businesses to “Buy American.”
- Act as a powerful negotiation tool by forcing countries like China to play fair on trade, intellectual property, and labor standards.
Naysayers argue, however, that the tariffs:
- Are essentially taxes on consumers, as increased prices on imported goods are passed down to Americans.
- Can backfire fast, as evidenced by past and present examples of retaliatory trade wars and supply chain disruptions.
- Slow the economy, as higher costs can lead to reduced hiring, lower wages, and the ever-looming threat of a recession.
ZINGER
A Taxing TikTok Trend
What happens when TikTok hustle culture collides with U.S.–China trade policy? An abrupt reality check.
Resellers using platforms like Temu and Alibaba to bulk-buy trendy items for their side hustles are now encountering unexpected customs fees and delays.
This shift comes in the wake of recent changes to the "de minimis" rule, which previously allowed packages valued under $800 to enter the U.S. duty-free. Now, with this exemption gone, small parcels are subject to tariffs.
While this shift is causing major headaches for small business owners, there are some who are seeing this as a bit of a silver lining. Is this a chance for us to slow down fast fashion?
