Trump’s tariffs are slowing down the US economy – and could soon be history

Although Trump points out that the state was able to record a massive increase in revenue through its tariffs, Washington cashed in by the end of June 163 billion dollars, says the latest congressional report. But here too there is a downer. Because the Supreme Court has classified some of the tariffs as inadmissible, the US has to compensate foreign companies – so far 70 billion have been paid for this.

Promising lawsuit

Now we also have each other 25 Democratic states teamed up to slow down Trump with his latest tariff club. Since July 24th, new tariffs of between ten and 12.5 percent have been in effect for countries that, in the eyes of the USA, are not doing enough to combat forced labor. The EU is affected by it in the same way China, the tariffs affect a total of 99.4 percent of all US imports.

The states are now challenging this measure because it is “arbitrary, capricious and unlawful,” according to a joint statement. Trump should not “use forced labor as an excuse to continue his illegal customs system.”

The White House, of course, strongly disagrees with this, saying they are simply exercising their “lawful powers”. Specifically, Trump once again used a passage of the trade law for the forced labor tariffs, which he had already used to argue for trade barriers for China during his time in office. Section 301 of the Trade Act of 1974. At that time, all attempts to overturn the tariffs in court failed.

But now, according to experts, things look different. Experts argue that the passage is suitable for punishing a trading partner directly, not many countries across the board. In addition, the Commerce Department’s investigation before imposing the tariffs did not gather much evidence that the affected countries had actually harmed U.S. companies through violations of forced labor regulations.

Long processes

Before the financially strong Democrats, smaller entrepreneurs had already banded together to challenge the new tariffs in court. Both lawsuits will drag on for months, if not years, experts predict. It is also expected that the Trump administration will set up further trade barriers despite the legal headwind – despite the economic consequences.