Trump is planning to unleash a new trade war under the pretext of 'protecting workers' rights'

Having lost his first trade war, Trump has no intention of stopping. Even though the stated goals of introducing tariffs were not achieved, and the burden of costs fell entirely on the shoulders of Americans, writes Air force.

Trump launched a trade war with the entire world just over a year ago, as soon as he returned to the White House. However, he was soon forced to back down, as both America's main rival, China, and its allies—Canada, Europe, and Mexico—found counter-arguments.

And in February, Trump suffered a final and crushing defeat at the hands of his own allies. The US Supreme Court ruled that most of his trade tariffs, imposed under the pretext of an "emergency," were an illegal attempt to usurp power.

On the subject: Courts are striking down Trump's tariffs, but prices in the US aren't falling: why

This did not stop Trump.

Having lost the case in court, he immediately imposed a 10% tariff on all imports under the pretext of a balance of payments emergency. Since no significant changes had been observed in the US balance of payments in recent years, economists immediately dismissed the new pretext as far-fetched, and businesses took legal action.

The outcome of the lawsuit is irrelevant, as the new tariffs will be lifted automatically in just six weeks, on July 24. Trump was only able to impose them for 150 days—a longer period is not allowed by the forgotten 1974 law, which was dusted off to serve Trump's trade vendetta.

Therefore, Trump instructed his cabinet ministers to find a new pretext by the end of July to impose taxes on American consumers and businesses purchasing imported goods and components. The first set of tariffs was announced this week. The next one is already on the way. What are they?

Trump as a defender of the "workers of all countries"

The White House has accused the world of not doing enough to combat labor exploitation, allowing the president to impose additional tariffs on imports.

For countries with no laws against forced labor, White House officials proposed the president impose a 12,5% ​​tariff. The rest—the European Union, Canada, and Mexico—face a 10% tariff simply for not "rigorously enough" enforcing their existing prohibitions.

"Imposing tariffs under this pretext is a ridiculous legal fiction in the style of dictatorial regimes and the former Soviet Union," notes David Henig, an expert at the ECIPE research center, who represented Britain in trade negotiations with the US during Trump's first term.

There is no doubt that the tariffs will be introduced in July, after the mandatory consultation period expires, since no country in the modern globalized world will be able to prove to Trump that all its goods are made from raw materials and components guaranteed to be produced without the use of forced or slave labor.

There's only one judge here—Trump, and he wants to impose tariffs with the stroke of a pen. The president was extremely displeased that the Supreme Court had deprived him of this power, saying that without it, America "will become a third-world country, and it's possible that it will ultimately be destroyed."

New investigations by the US Commerce Department will restore Trump's authority to impose tariffs. The first is the aforementioned slave labor. The second, coming soon, concerns "excess capacity." This is when China, for example, strains the entire country and helps electric vehicle or solar panel manufacturers flood the world with them, ousting competitors and eventually establishing monopolies.

“This is all another step toward restoring the 2025 Trump tariff system that was destroyed by the Supreme Court,” says Chad Brown of the Peterson Institute for International Economics (PIIE), author of “How to Win a Trade War.”

Trump as a usurper of power in America

Trade tariffs—a ubiquitous tax on the consumption of imported goods—allow Trump to raise additional revenue for the budget, finance a massive deficit, and strengthen the vertical of power through the distribution of subsidies and tax breaks in exchange for loyalty and political support.

The Americans themselves are capable of stopping Trump once again – through the courts.

"It will be clear to any court that this is yet another attempt by the president to usurp Congress's authority to impose tariffs. This is contrary to the US Constitution," noted Alan Wolf of PIIE, who served as deputy head of the World Trade Organization (WTO) until 2021.

Trump's tariffs are met with the same hostility in America as in other countries. Businesses are unhappy with the increased tax burden and the loss of the ability to plan for the future as Trump constantly changes the rules of the game. Meanwhile, citizens are dissatisfied with the concentration of power in the president's hands.

In just one year of his second term, he increased the average import tariff, according to various estimates, from 2-3% to 13-16%. After the landmark Supreme Court ruling, some new tariffs remained in place (for example, special Chinese tariffs and general sectoral tariffs on steel and automobiles), but overall, the average tariff fell to 8-10%. This is why Trump is trying to rebuild the tariff barrier under new pretexts.

How Trump is losing the trade war

Trump claims that tariffs are reviving American industry, while the financial burden falls entirely on the shoulders of foreign producers of goods, since they are afraid of losing the American market and are lowering prices.

However, in practice, as the results of a study by the Federal Reserve Bank of New York show, things are turning out differently. The growth in industrial and construction production since Trump took office has turned into a decline. And more than 90% of the tariffs have been paid by Americans.

Trade wars have also driven America into conflict with its allies. Trump has tried to force them to sign new trade agreements favorable to the United States by threatening tariffs. Some have even agreed and signed deals.

However, before the ink had even dried, it became clear that, on the one hand, Trump's threats were empty, as the court had ruled them illegal. On the other hand, Trump is a man of many minds, readily renegotiating the terms of recently concluded agreements and threatening new tariffs under any pretext—even the fight against slave labor in Norway and Luxembourg.

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As a result, Trump's new round of trade war calls into question both the ratification of the trade deal with the United States' largest partner, the European Union, and the success of negotiations with its closest neighbors, Canada and Mexico, on the terms of revising the North American Free Trade Agreement.

And at the same time, it promises another round of retaliatory measures from China and most other US trading partners.

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