Trump's latest 10% tariffs reset trade war without reviving factories

The White House replaced expired global duties with 10% to 12.5% Section 301 tariffs on more than 80 countries, preserving a near-10% effective rate that has lifted core goods prices 3.1% without reviving factory employment.

"These latest tariffs may pass muster with the courts but will still fail our country," Justin Wolfers, professor of economics at the University of Michigan, said.

The new levies cover more than 99% of U.S. imports and rely on forced-labor investigations under Section 301, a legal framework viewed as more durable than the emergency powers the Supreme Court struck down in February. Countries deemed compliant face 10% duties; non-compliant ones face 12.5%. The 2.5 percentage-point gap is "not diplomacy, that's a rounding error," Wolfers said. The effective tariff rate has held near 10% since the initial rollout in April 2025, according to Capital Economics.

The tariffs have added $1,600 to $9,000 to new-car prices this year, according to Kelley Blue Book, and represent a tax increase of roughly $1,000 per household in 2025. Yet the trade deficit through May totaled $297.91 billion, down only 10% from the same period in 2024, and manufacturing employment has fallen by 75,000 jobs since January 2025. The S&P 500 has risen about 31% since the first major tariff rollout, though General Motors expects $2.5 billion to $3.5 billion in gross tariff costs this year.

Legal Challenges Resume Hours After Rollout

Two small businesses — Burlap & Barrel, a New York spice retailer, and Collective Horology, a California watch seller — sued the administration hours after the tariffs took effect, arguing the White House misused Section 301 to recreate duties courts had already ruled illegal. The Liberty Justice Center, which successfully challenged Trump's earlier tariffs at the Supreme Court in February, represents the plaintiffs. The lawsuit contends the administration conducted its forced-labor investigations in bulk rather than country by country.

The case returns to the Court of International Trade, which has repeatedly found the administration exceeded its legal authority. The government still owes roughly $166 billion in refunds to importers who paid illegal tariffs under the International Emergency Economic Powers Act, according to the Tax Foundation.

Tariffs Lift Prices, Not Factory Jobs

Tariff costs lifted core goods prices by about 3.1% through February, the Fed estimates, a sharp reversal from the pre-pandemic trend of falling goods prices. Steven Arenzon, owner of Wisconsin Knitwear, said he raised prices on knitted caps and beanies by 35% to 40% over the past 18 months to offset higher costs on yarn from Brazil, now subject to a combined 37.5% tariff rate.

Factory output is up 3.1% since Trump returned to office, but the sector employs 75,000 fewer workers. The Tax Foundation projects the tariffs will lower GDP by 0.6% and cost about 450,000 full-time equivalent jobs in the long run. The administration is exploring additional tariffs on Canada, the European Union and generic drugs in the coming weeks.

This article is for informational purposes only and does not constitute investment advice.