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It will take some time for the effects of President Trump’s “Liberation Day” announcement of higher US tariffs to become apparent. Here, I’ll just offer some notes and quick reactions.

1) The announced tariffs represent a very large increase. Here’s a figure showing historical US tariff rates. You will notice that the average rates have been under 10% for the entire post-World War II era. If you squint, you can see the Trump tariff increases from his first term in 2017. The jump in 2025 represents tariffs already announced earlier this year, which by historical standards were already substantial. Yesterday’s announcement of a universal tariff on US imports of 10%, plus more for many countries, comes on top of all earlier announcements. I’m sure that estimates of the average US tariff rate are being calculated even now, but it will surely be above 10%, perhaps in the range of 20%. In short, Trump is taking US tariff levels back to the time of the Great Depression, and the late 19th century.

2) For better or worse, the announced tariffs are fully the political responsibility of the Trump administration. This tariff increase was not a bill proposed within Congress, debated and analyzed, and then subject to a vote. It was concocted behind closed doors.

3) It is not clear that President Trump actually has authority to impose these tariffs by decree. Article 1 of the US Constitution–which lays out the structure and powers of the legislative branch–states in Section 8: “The Congress shall have Power To lay and collect taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States …” On its face, this certainly seems to suggest that new tariffs need to start in Congress and be signed into law. Over time, Congress has passed laws that give the president the power to impose tariffs in specific settings for specific industries, but Trump is in effect claiming that these partial and piecemeal laws have delegated him complete power over tariffs, because it is a “national emergency” that the US economy has trade deficits–which it has had since the 1980s. Maybe! But Trump’s declaration of “national emergency” to claim of complete power over tariff-setting is contrary to the plain text of the Constitution.

4) The amount of the tariffs seems arbitrary and unclear, because the US import tariffs are, in theory, set at half the foreign level, or 10%, whichever is higher. But James Suriowecki reports that the Trump administration apparently took the trade deficit in goods with each country, divided by total US imports from that country, and called the result the “tariff rate” for that country. A minor problem with this calculation is that it involves only trade in goods, not including services. A major problem is that this isn’t actually the tariff rate that other countries are charging. My guess is that there will be a blizzard of adjustments to these announced tariff rates, which means the uncertainty surrounding them will continue.

5) Promises have been made by the Trump administration about the benefits of this proposal. For example, there have been promises that tariffs on imports are all paid by foreigners, so the new tariffs will not cause price increases for US consumers. There are promises that the new tariffs will raise $600 billion per year in additional federal revenue, promises that the number of US manufacturing jobs with high wages will climb dramatically, and promises that US trade deficits will be eliminated. For example, when President Trump was talking about the tariffs to come, he said: “All I know is this: We’re going to take in hundreds of millions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money! I’m telling you – you just watch. We’re going to have jobs, we’re going to have open factories, it’s going to be great.”

6) These predictions about the positive effects of tariffs need to be remembered. The predictions do not fit with standard economic beliefs about the effects of tariffs. (Indeed, given all these promised benefits, one wonders why Trump did not set the tariffs at a much higher level?) If the benefits are realized, Trump will deserve enormous credit; conversely, if they are not realized and more dire economic outcomes emerge instead, Trump will deserve enormous blame.

7) Whether one like it or not, US multinational firms have in fact invested in global networks both for purchasing supplies and exporting products in the last few decades. With much higher inport tariffs, the value of those investments by major US firms takes a real hit. If and when other nations retaliate against US exports, these major firms–and all US exports, including farm products–will take a hit as well. The costs of reorganizing supply chains and export sales for US firms will be very real. The costs of losing a share of the existing gains from trade will be very real.

8) I’m no political savant, but it seems to me that President Trump is making a potentially enormous unforced error by raising tariffs so dramatically. For many of Trump’s policies–say, tougher immigration, pushing back against the so-called “DEI” efforts, hunting down government waste and abuse, and others–he has a considerable wave of popular support behind him. But I have not observed a similar popular outcry for substantially higher tariffs. Instead, many Trump voters expressed strong concerns over a rising cost of living. These voters will not be amused when they find that prices of imported goods are rising (or that such goods are much less available) and that with a lack of competition from imported goods, prices of domestic producers will tend to rise as well. Trump voters who are working in industries that rely on exports will not be amused to see their international markets reduced, either. In addition, by enacting these tariff policies near the start of his term, the effects of the policies will play out while Trump is still president. The credit or blame will be his.

9) The US enacted high tariffs during the Great Depression–the infamous Smoot-Hawley tariffs of 1930. Those tariffs were not a primary cause of the Depression, but they didn’t help, either. My sense is that the experience of those failed tariffs was part of the shared US political consciousness for some decades. However, that experience eventually faded in popular memory. My expectation about Trump’s tariffs is that there will be waves of lobbying and renegotiations, and with each one, Trump will claim another victory for his approach. But I confess to a darker thought. Part of me hopes that Trump will keep his tariffs in place until the costs are broadly apparent to all, so that a modern consciousness of why this approach doesn’t work can take effect for the next few decades.

10) President Trump’s claims about the benefits of tariffs seem based on demonstrably false beliefs. For example, he seems to believe that trade imbalances are the result of tariffs, that the existence of trade balances proves that other nations are imposing unfair trade imbalances, and that reciprocal unfairness by the United States will eliminate trade imbalances. He seems to believe import tariffs won’t affect prices to US consumers. He seems to believe that although manufacturing jobs are declining all over the world, including in China, tariffs will make manufacturing jobs resurgent in the United States. None of this is plausible. Trump also seems to that that the US economy will be stronger with more limited connections to global trade. But I am unaware of any real-world examples of countries that made themselves rich by withdrawing from the world economy.

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