Trump Poised to Roll Out New Tariffs as He Refunds the Old Ones

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(Bloomberg) — Tariff revenue is now flowing out of the US Treasury’s coffers faster than it’s coming in, with nearly $22 billion in unlawfully collected duties reimbursed to importers in May. 

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American consumers shouldn’t breathe a sigh of relief with this unusual form of tax returns, though. Businesses continue to pay tariffs on goods from nearly every country, even after the Supreme Court struck down President Donald Trump’s “emergency” tariffs in February. 

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While the clock runs out at the end of July on the temporary 10% global rate Trump put in place immediately after the ruling, White House officials have pledged to restore the revenue with more durable import duties. A proposal released earlier this month that resulted from a forced labor investigation into dozens of US trading partners is seen as the first step.

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“If implemented as expected, these new levies will raise the average US tariff rate by 0.6 percentage point from current levels, to about 11%,” according to Nicole Gorton-Caratelli and Chris Kennedy of Bloomberg Economics. That’s below the 13.5% rate that prevailed when Trump’s so-called reciprocal tariffs were still in place, but several other investigations in the works are expected to arm the president with new tariff powers.

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The US Trade Representative has proposed duties on goods from Brazil, also citing Section 301 of the Trade Act of 1974, a provision intended to combat unfair trade practices by other nations. Another Section 301 investigation into dozens of US trading partners pegged to excess capacity and production is underway.

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‘Not abated’

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It’s unclear how quickly or how much in refunds will flow through to consumers, and the fresh duties are set to hit as the US economy absorbs higher costs for everything from oil to plastics tied to the Iran war. A interim peace agreement was signed this week.  

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A dashboard of economic indicators has flashed warnings: The University of Michigan’s consumer sentiment index is hovering near a record low, while US inflation accelerated in May to the fastest pace in more than three years. At the same time, the uncertain trade landscape has prompted businesses to pause additional investments or expansions over the last year.

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“We think that pricing pressures have not yet abated, nor will they anytime soon,” said RSM Chief Economist Joe Brusuelas, pointing to higher energy prices and higher costs related to the buildout of AI infrastructure.

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The new duties are starting off on more solid legal footing than those Trump imposed under the International Emergency Economic Powers Act, or IEEPA, which the US customs agency and Treasury Department are currently refunding.