The federal government took in roughly US$175 billion from tariffs instituted under the International Emergency Economic Policy Powers Act before the Supreme court ruled in February that the statute doesn’t allow the executive branch to unilaterally impose tariffs. The money collected is now being refunded.
Undeterred, the White House imposed temporary tariffs under a different statute while it explores other avenues to keep the levies in place – unless Congress finally demands a say in how trade policy is conducted, as is its right.
As Canadian Prime Minister Mark Carney suggested at the Economic Club of New York last week, only by working closer with his allies – rather than treating them as foes – will Trump succeed in “making America great again”. “Examples of where that’s true are legion, where we should work together and compete with the world together,” Carney said.
The debate around what companies would do about tariffs has largely centered on two options: Either companies would pass on the tariffs in the form of higher prices, or they would “eat” the tariffs, essentially absorbing them as a cost of doing business.
Now we know that there was a third option: Pass on some of the costs and pay for the remainder by suppressing wages and benefits paid to workers. Americans may not be conversant with the intricacies of tariff policy, but they sure do know who is paying for them. And those currently running the government and this misguided trade policy may be the next to pay.
