President Trump and his administration have been studying new sectoral tariffs that could cover a broad part of the American economy.
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President Trump has made a lot of attention-grabbing tariff proclamations recently, announcing country-by-country tariff rates via letters on social media, tariffs that American businesses and consumers will end up paying for. But that is just one part of his strategy. NPR White House correspondent Danielle Kurtzleben reports on another growing set of potential tariffs.
DANIELLE KURTZLEBEN, BYLINE: You might have missed some of Trump’s recent tariff threats, like earlier this week, when he told reporters under the wing of Air Force One that he might tariff pharmaceuticals.
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PRESIDENT DONALD TRUMP: And we’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff because…
KURTZLEBEN: Meanwhile, the Commerce Department announced that they’re looking into more new tariffs on drones and polysilicon, which is used in solar panels and semiconductors. Broadly, Trump is imposing two different sets of tariffs, authorized by two different laws. One set includes the tariffs he’s announcing in those country-by-country letters. But then there’s these other tariffs on various products, like pharmaceuticals. Those are known as Section 232 tariffs, named for a part of a 1962 trade law. And Trump has used Section 232 a lot. Here’s Tim Keeler, a trade lawyer who served at the U.S. Trade Representative’s office under President George W. Bush.
TIM KEELER: His use of it could be fairly characterized as revolutionary in his first term. It really hadn’t been utilized very much prior to his coming to office.
KURTZLEBEN: The first step to imposing one of these tariffs is a Commerce Department investigation. Prior to Trump, the last such investigation was in 2001. A key topic in those investigations is national security. By law, Section 232 tariffs are supposed to help bolster national security. Not everyone thinks Trump’s tariffs will do that, though. Ed Gresser is at the Progressive Policy Institute and worked for the U.S. trade representative under President Joe Biden.
ED GRESSER: I think the argument that it is important to have a healthy steel and aluminum industry in the United States is a respectable one. But the argument that you can create this through tariffs has some pretty serious flaws.
KURTZLEBEN: A more efficient way to boost a domestic industry, he says, is through subsidies. Gresser also notes that ships and aircrafts are important to national security, and 232 tariffs on steel and aluminum make those more expensive. In addition, imposing tariffs on goods from everywhere might be actively bad for national security.
JAKE COLVIN: If we can all agree that derisking and diversifying away from China is a national security priority, then we should be developing much stronger relationships with our allies.
KURTZLEBEN: Jake Colvin is president of the National Foreign Trade Council.
COLVIN: At the same time, we are now putting tariffs on steel and aluminum from our friends and allies, who we should really be working together with to strengthen our economy.
KURTZLEBEN: The Trump administration, for its part, says domestic manufacturing is better for national security than relying on other countries. Gresser, at the Progressive Policy Institute, calculates that the Section 232 tariffs would apply to around 30% of imports. That’s less than the 70% that the country-by-country tariffs would cover, but…
GRESSER: They’re still very big, and they can be expanded. You could file more of these cases.
KURTZLEBEN: Further, the 232 tariffs might be more of a sure bet, legally speaking. Earlier this year, a federal court ruled that the country-by-country tariffs are illegal. The Trump administration is appealing that decision, and for now, those tariffs are still in place, set at 10% and scheduled to rise on August 1. According to Keeler, the trade lawyer, 232 tariffs have already been tested.
KEELER: They were challenged in court by multiple different facets, all which were upheld at the federal circuit level.
KURTZLEBEN: All of this underscores a common criticism of Trump’s tariff approach – that it’s too broad. Here’s Colvin with the National Foreign Trade Council.
COLVIN: The real challenge in the current environment is that we’re seeing tariffs as a hammer and every problem with our allies and adversaries, whether economic or not, as a nail.
KURTZLEBEN: There are currently nine Section 232 investigations in process, any or all of which could become new tariffs on more goods. Danielle Kurtzleben, NPR News.
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