Donald Trump does not give up easily. When the U.S. Supreme Court struck down his tariffs as being illegal because he invoked so-called “emergency powers”—even though there was no emergency—did the president throw up his hands and say, “Oh well, I guess that’s the end of that?" Not in the slightest. Now the White House is back with another attempt at tariffs, apparently based on even more preposterous claims.
Trump’s Trade Commission is holding hearings to find justification for an “accelerated timeframe” for invoking a new clause, Section 301 of the Trade Act of 1974, as a vehicle for reinstating the previous tariffs. The Trade Commission is investigating unfair trade practices to determine whether “the acts, policies, or practices of a foreign country are unreasonable or discriminatory and burden or restrict U.S. commerce.”
Slavery…in the EU?
There’s nothing wrong with doing that, but here’s where it gets really peculiar in a kind of, well, Trump-ian way. The Trade Commission hearings are investigating dozens of countries, including our top trading partners like the European Union, Canada, Japan, Australia, Mexico, China, and India. More specifically, the hearings are shining a spotlight on specific trade infractions that could justify slapping tariffs on a nation. One of the potential violations is: “forced labor,” which is a nice term for: “slavery.”
Say what? The Trump administration is investigating Germany, the UK, Canada, Norway, Denmark, Japan, and Switzerland—the land of chocolate, cheese, and watches—for slavery? As the rationale for imposing tariffs?
Stretching the logic further, even if slavery isn’t occurring in the investigated country, maybe that country is trading with other countries that are…using slaves? The sketchy rationale has many a trade expert scratching their heads.
To be clear, some of the 60 nations being reviewed for slave labor might make sense, including China, Saudi Arabia, Kazakhstan, and Libya. The U.S. has long-standing sanctions against some Chinese exports because of forced labor of the Uyghur ethnic and religious minority. But for most of the other five dozen nations, it’s pretty ridiculous because those are some of the highest-ranked on ethics and corruption by Transparency International, way above Trump’s America, which is ranked a lowly 29th.
It’s also ridiculous because many of those countries, such as those in the EU, Canada, Norway, the UK, and more, have better labor practices than we have in the US. The Trump administration is clearly on a fishing expedition for whatever charges it can make—similar to when it accused Canada of exporting fentanyl to the U.S. as a reason for tariffs, when in reality Canada exports a minuscule amount, no more than the U.S. exports to Canada.
If the U.S. trade representative makes the required findings following an investigation about any individual country, the president may then impose very high tariffs or other trade restrictions on that country. Game on.
Is Trump trying to raise drug prices in other countries?
The fishing expedition doesn’t stop there. Other parts of the hearings are looking into countries’ policies that “may artificially lower drug prices, including price-fixing and discriminatory policies against U.S. technology and pharmaceutical products.” Numerous studies have found that the US allows drug companies to charge more for pharmaceuticals than just about every other developed nation. The same pill made by the same factory sells for five times the price in the US because pharmaceutical companies are price-gouging the American public.
Is the White House going to demand that international trade partners increase the price of their domestic pharmaceuticals to U.S. levels in order to avoid higher tariffs? Apparently so. The Trump administration has targeted a rebate that the UK receives from pharmaceutical companies and that they pass on to consumers to lower prices; the White House is demanding an agreement that will increase the net price that the UK pays for new medicines by 25%. How is this a win for either British or American consumers? According to Trump’s trade representative, this will ensure that higher prices for new medicines are not “materially eroded” by any rebate schemes. In other words, if countries like the UK and others don’t cooperate in increasing their pharmaceutical prices to U.S. levels, that will be the justification for slapping a tariff on that country.
Further grounds for investigation: discrimination against U.S. technology companies. In the past, this had been used, justifiably, to target China for coercing technology transfers. But now it is clearly an attack on the EU because of its passage of laws regulating Big Tech companies, including the EU’s groundbreaking Digital Services Act and Digital Markets Act, to justify retaliatory tariffs.
Tariffs vs trade surplus
Another part of this “investigation” will look into what the White House is calling “manufacturing overcapacity,” targeting 16 major economies to determine if their production policies unfairly burden U.S. commerce. Again, some of these investigations might have a degree of legitimacy, depending on the country, such as China and India. But in reality, the United States runs a trade surplus in goods with 136 countries and a trade deficit with only 97 countries. Would it then be fair for those surplus counties to slap a reciprocal tariff on the United States?
For example, the U.S. has a goods trade surplus with the Netherlands ($61B), the UK ($32B), the UAE ($24B), Spain, Belgium, Australia, Hong Kong, Brazil, Belgium, UAE, Singapore, many Latin American countries, and more. Yet most of these countries are nevertheless being targeted by this “investigation.” Not to mention that the US actually has a trade surplus in services (as opposed to goods), exporting far more services to many countries—especially in technology, financial services, and travel—than we import. While the U.S. has a massive trade deficit in goods, our consistent services surplus, which exceeded $278 billion in 2023, helps offset that imbalance.
The U.S. trade imbalance on a volume/dollar level is really with only 10 countries, in this order: China, Mexico, Vietnam, Germany, Canada, Japan, Ireland, South Korea, India, and Italy. So why then is Trump casting his net far wider than those ten?
Trump wants tariffs as a political weapon, not an economic one
None of this makes very much sense. Addressing such a broad range of alleged trade infractions to justify tariffs is like having the hometown referees officiating at the local high school basketball game. What’s clear is that what Trump really wants is the power to “negotiate” with each country, using tariffs—an economic tool—as a political cudgel to get any number of political or economic concessions. The White House wants to be able to say to countries, “Be nice to us or we will impose tariffs,” and following the Supreme Court ruling, it can no longer do that.
Before, Trump was able to do things like threaten a new tariff on Canada because he didn’t like a Canadian television ad criticizing his trade policies. Previously, the president had what has been described as “a little tariff switch” in the Oval Office that he could flip on and off anytime he wanted to. If he wakes up in the morning and he doesn’t like what a world leader has said, before he could crank the tariff dial as high as the urge struck him.
So that’s what these Trade Commission hearings are really about. Trying to find any reason or rationale, no matter how ridiculous, to return to a tariff policy that allows the president to have unilateral trade leverage over dozens of countries as a way to strong-arm political concessions that are not necessarily related to actual trade issues. Section 301 is the new legal fig leaf to cover Trump’s naked unilateralism.
Donald Trump and his White House team are determined to take back this lost power as part of his imperial presidency. But the question is: would that be good for U.S. trade policy? Is it beneficial to have our trade relations with dozens of countries dependent on the whim of a single, unpredictable man with an ego-driven authoritarian streak?
Steven Hill was policy director for the Center for Humane Technology, co-founder of FairVote, and political reform director at New America. See more of his writing at his Substack newsletter DemocracySOS.
