Since the beginning of March, Trump has implemented global tariffs leading to large fluctuations in the stock market and international retaliatory tariffs. Courtesy | Wikimedia Commons
President Donald Trump’s tariff plan opposes both economic and legal procedures and destabilizes the average American’s finances, according to some Hillsdale professors.
“This is an unforced error by the Trump administration,” Associate Professor of Economics Charles Steele said. “Trump is making a big mistake.”
On Wednesday April 9, Trump announced a 90-day pause on higher tariffs on most countries while keeping the 10% baseline tariffs announced last week, but raised China’s tariffs to 125%, according to ABC News. Since the beginning of March, Trump has implemented global tariffs on steel and aluminum, autos and auto parts, and other imported items, leading to large fluctuations in the stock market and international retaliatory tariffs.
Though Trump may be attempting to minimize the trade deficit, Steele said, he should instead focus on industrial regulation and tax policy in offices like the Environmental Protection Agency and Occupational Safety and Health Administration.
“Some of the leading obstacles to doing any kind of manufacturing, mining, and any other type of manufacturing in the U.S. are the EPA, OSHA, and many other bureaucracies that block the development of all different types of products in the U.S.,” Steele said.
Steele said he would understand the tariff plan more if it were being used as a bargaining tool to make other countries come to the table about their own tariffs, but if it’s meant to “re-industrialize” America, it won’t work.
Douglas Johnson, associate professor of business, said Trump’s actions show he thinks the States are better off forcing domestic production.
“Right now the uncertainty of the policy is having as much of an effect as the actual policy,” Johnson said. “Nobody is going to be able to pull the trigger on anything because they don’t know how serious and committed we are to this strategy.”
Johnson said the tariffs have come at an especially bad time for him, due to the changes in the stock market.
“I am of an age where I’m beginning to think about my retirement,” Johnson said. “The last week has not been good for that. That volatility, at a personal level, is going to affect how I spend my money and what long term purchases I’m going to make.”
In some cases, American labor costs are so high that manufacturing overseas in places like Asia, even with the significant tariffs, is still a better option than the cost of moving and manufacturing in America. Companies that are forced to return to America will likely have to cut employment to keep up with their expenses, Johnson said.
“We have supply chains that have emerged over the last 30 years in response to what we thought would be the trade patterns with Mexico and Canada,” Johnson said. “To bring those facilities back into the states will not be cheap and will take awhile.”
Associate Professor of Politics Joseph Postell said he is concerned about the legality of Trump’s actions.
“I think the president does not have the legal authority to issue the tariffs under the statute that he’s invoking,” Postell said. “Other statutes do give him the authority — he would have been better off citing them.”
Trump invoked the International Emergency Economic Powers Act of 1977, which gives him the ability to regulate foreign imports, according to Postell.
“This has generated a pretty big legal controversy because it’s never been used to impose tariffs,” Postell said. “It doesn’t say explicitly that presidents can use tariffs. Usually they’ll freeze assets under the law. This is actually a relatively questionable legal basis.”
If a district court rules Trump’s interpretation of the IEEP Act illegal, then he would likely appeal and take it to the Supreme Court, Postell said.
“Assuming this is an emergency and we can do whatever we want, the Supreme Court has made it clear that you can’t do that,” Postell said. “You can’t take a statute and just discover that it gives you the authority that no one has ever found. You can’t teach an old law new tricks.”
