FACT: Through July 2025, tariffs up $888 million on toys and dolls, $81 million on bananas, $71 million on tampons, and $45 million on bandages.

THE NUMBERS: Tariff collection, 2024 vs. 2025* –

 

	Jan. – July 2024	Jan. – July 2025
Total Tariff Collection	$43 billion	$122 billion
… on cars	$1,968 million	$12,974 million
… on toys and dolls	$0	$888 million
… on sports equipment	$243 million	$694 million
… on TV sets	$134 million	$500 million
… on coffee	$1.3 million	$359 million
… on tampons	$14 million	$85 million
… on bananas	$0.24 million	$81 million
… on wigs & hair extensions	$10 million	$66 million
… on Band-Aids & other bandages	$0	$45 million

* USITC Dataweb, most recent data available. As the Trump administration’s July 31st revision of its April 2nd tariff decree sharply increased tariff rates on many countries, the full-year increases will probably be much larger.

WHAT THEY MEAN: 

The late Emperor Napoleon Bonaparte began the Grand Army’s retreat from Moscow in the autumn of 1812 with a small symbolic gesture. He sent home 1,500 injured soldiers, presumably hoping that would calm Paris’ opinion while the other 100,000 stayed on. Trump administration officials are trying something similar. Having read the opinion polls and the election returns, they scrapped Mr. Trump’s tariffs on coffee and bananas last Friday. Here’s the Treasury Secretary, Scott Bessent, pitching the idea to a friendly TV outlet:

“You’re going to see substantial announcements over the next couple of days in terms of things we don’t grow here in the United States. Coffee being one of them, bananas, other fruits. Things like that. So that will bring the prices down very quickly.”

The actual list covers 238 tariff lines, including coffee and bananas, and adds beef, Chinese water chestnuts, cassava, taro root, cocoa beans, mangoes, and so on. What does this actually mean? The 238 lines together totaled $51.6 billion worth of imports in 2024. Tariff collection on these products, comparing January to July in 2024 to the same period this year, has jumped from $240 million to $1.72 billion. Bessent’s coffee and bananas illustrate how it works:

Bananas: The Congressionally authorized “MFN” tariff on bananas is zero, except for a 1.4% rate on dried bananas and chips. From January to July last year, CBP collected $0.24 million in tariffs on bananas. The $81 million through July this year — up 33,650% — mainly comes from new 10% tariffs on Guatemalan bananas, and 15% tariffs on bananas from Ecuador and Costa Rica. They brought $64 million, and 10% tariffs on Honduran, Colombian, and Peruvian varieties added $15 million more. As a legal/policy note, the Trump administration’s application of tariffs to these bunches overwrites the actual U.S. tariff system and breaches U.S. WTO commitments, and badly violates the U.S. FTAs with Central America, Colombia, and Peru.

Coffee: Coffee’s Congressionally authorized “MFN” tariff is zero, again with the small exception of a 1.5 cent/kilo tariff on “coffee substitutes containing coffee.” CBP’s coffee take is up $1.3 million in 2024 to $359 million in 2025, for a “28,170%” increase. As with bananas, the increase has hit Latin growers hardest. An initial 10% tariff on Brazilian coffee rose to 50% in July, out of pique over the prosecution of ex-president Yair Bolsonaro, and has brought $69 million. The 10% tariffs on Colombian and Guatemalan coffees brought $53 million and $36 million, respectively. The 20% tariff on Vietnamese coffee brought $13 million, the 10% on Ethiopian yirgacheffe $11 million, and the 19% on Indonesian Sumatra and kopi luwak $7 million.

The rise in banana and coffee tariffs is statistically striking — you don’t often get a chance to talk about 33,500% increases — and beef likewise. But the combined $1.7 billion is only a couple of pennies on the dollar, 2%, when placed against the $79 billion in overall cost increases the Trump administration’s tariff decrees entail. The biggest new costs so far are on industrial consumers — factories buying metal and parts, farmers buying fertilizer, construction sites, utilities, etc. — but the tariff increases in retail and household goods are striking too. Here’s a representative list, with some of Friday’s new exclusions in italics:

	Jan. – July 2024	Jan. – July 2025
Total tariff collection	$43 billion	$122 billion
… on cars	$1,968 million	$12,974 million
… on shoes	$1,871 million	$3,227 million
… on toys and dolls	$0	$888 million
… on sports equipment	$243 million	$694 million
… on beef	$135 million	$627 million
… on TV sets	$134 million	$500 million
… on coffee	$1.3 million	$359 million
… on makeup	$85 million	$301 million
… on vacuum cleaners	$90 million	$180 million
… on OTC medicines	$0	$144 million
… on tampons	$14 million	$85 million
… on bananas	$0.24 million	$81 million
… on cocoa butter	$0	$67 million
… on olive oil	$8 million	$66 million
… on wigs & hair extensions	$10 million	$66 million
… on personal computer keyboards	$0	$48 million
… on bandaids & other bandages	$0	$45 million
… on musical instruments	$19 million	$38 million
… on ginger, turmeric, & spices	$4 million	$17 million

In sum: The retreat on coffee, beef, and bananas, like Emperor Napoleon’s initial dispatch of a few wounded soldiers home, is in principle quite a large concession: the administration has abandoned its claims earlier this year that tariffs don’t raise prices, and that foreigners pay them anyway. In practice, though, it’s a cosmetic gesture rather than a solution. Mr. Trump’s tariff increase on tampons is about as big as the one on bananas, but (at least for now) the tampon tax is staying in place. The tariff hike on toys is twice as big as that of the banana and coffee tariffs put together, and that on shoes tariff increase alone offsets the entire 238-product exclusion list. And since tariffs got much higher in August and we don’t yet have post-July revenue figures, the actual totals now will be much higher.

In the Emperor’s case, the cosmetic gesture was a mistake. The invasion had failed, and the longer he waited to liquidate it, the worse things got. In the end, only 10,000 of his men made it home. There’s maybe a lesson there.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Napoleon retreats from Moscow.

Bessent on coffee and bananas.

PPI background:

PPI Trade Fact from August 21, 2024: Tariffs raise consumer prices. That’s what they’re supposed to do. It usually works. No surprises. Trust Alice, not the Queen.

Laura Duffy’s October 2024 “It’s Not 1789 Anymore: Why Trump’s Backward Tariff Agenda Would Hurt Americans,” explains why tariffs are a poor form of taxation: they can’t raise enough revenue, are opaque and regressive, causing downstream harms.

Tariff decrees:

The actual, Congressionally authorized, Harmonized Tariff Schedule of the United States.

The April 2 “international emergency” trade balance decree.

… the July 31 revision with current country-by-country rates.

… and last Friday’s November 14 re-revision excluding tropical agriculture, metal ores, etc.

The March 26 “national security” decree on cars and parts.

Tariff data:

USITC’s Dataweb has tariff revenue, import values, and more by product and country. Updated only through July 2025.

CBP breaks out FY 2025 tariff collection by decree, but not product and only a few countries; data through September.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: 30% of all U.S. goods trade is with Canada and Mexico.

THE NUMBERS: Canadian and Mexican shares of U.S. goods exports* –

Native American-owned businesses	93%
Hispanic-owned businesses	46%
Farm exports	34%
All U.S. exporters	33%
African American-owned businesses	32%
Small businesses	28%

* 2024 or most recent year available. Census/BEA for exporters by race and ethnicity, Census for small businesses and total exports, and Commerce TradeStats Express for states. 

WHAT THEY MEAN: 

Next July, the U.S., Canadian, and Mexican governments are supposed to review their six years’  experience with the “U.S.-Mexico-Canada Agreement” that replaced the earlier North American Free Trade Agreement in 2020. Should they wish, they can suggest changes in it. Per a new Policy Memo today from PPI’s Ed Gresser, the “USMCA” is working reasonably well, and big revisions would be a mistake.

This year brought genuinely large crises in intra-North American security and trade, and in U.S. trade policy more generally. But the “USMCA” didn’t cause them – they’re the result of the Trump administration’s tariffs and threats against Canada and Mexico – and changing it won’t fix them. Congress should therefore confine any changes in USMCA to technical, consensus matters on which the three governments can easily agree, and focus the next year’s work on these larger matters.

Should the administration nonetheless want some more ambitious thing, Congress should insist on passage of legislation like Rep. Linda Sanchez’s HR 2888, terminating the administration’s “emergency” and “national security” decrees and requiring Congressional approval of any similar new tariffs, first.

Background and detail:

“USMCA” is the third-generation version of the North American integration policy launched in 1965 with the Lyndon Johnson-Lester Pearson “U.S.-Canada Agreement Concerning Automotive Products”. The Ronald Reagan-Brian Mulroney U.S.-Canada FTA in 1988, and its expansion to Mexico in 1993 with the North American Free Trade Agreement came a quarter-century later, and USMCA is the most recent version. As the Policy Memo says:

“Each step rested on the once-uncontroversial idea that it’s good strategy to have close and friendly relationships with one’s immediate neighbors. Pooling strengths can make everyone a bit better off, with more suppliers, more customers, and more common interests. Close relations among neighbors can make these common interests easier to realize, while making problems less explosive and easier to solve or mitigate. Contrariwise, in a tense and economically fragmented region, everyone is a bit worse off, common interests fade, and problems not only grow harder to solve but tend to multiply.”

USMCA maintained its predecessors’ tariff-free trade principle and added some new things: digital trade topics such as cross-border data flow and anti-spam policy; labor rules including a “rapid response” program examining allegations of failure to enforce labor laws in specific facilities; environmental issues including marine pollution, sustainable fisheries, and endangered species protection; a revised and much more restrictive “rule of origin” defining what it means for an automobile to be “made in” North America.

How is it working? Since 2020, Gresser’s Policy Memo observes, “real-world U.S./Canada/Mexico trade has grown rapidly, both in traditional goods and digitally deliverable services. The Biden administration used USMCA’s labor provisions heavily, with (for example) 32 “rapid response” cases. And until the second Trump administration took office last winter, the vast majority of goods and services flowed back and forth in easy and mutually beneficial ways.”

To put some numbers on this, trade with Canada and Mexico accounted for $1.6 trillion of the U.S.’s $5.3 trillion in worldwide international goods trade in 2024 — 30% — and $141 billion of $1.24 trillion in services trade. Canada and Mexico rank 1st and 2nd as buyers of American goods, and are overwhelmingly important as customers for Native American and Hispanic-owned exporters. As buyers of U.S. farm goods, they provide 7 cents in each dollar of American farm income. And typically, they buy anywhere from a fifth to nearly all of a given state’s exports. Samples:

State	Canada/Mexico share of STATE exports*
North Dakota	86%
New Mexico	59%
Ohio	53%
Maine	46%
Wisconsin	45%
Montana	41%
Pennsylvania	37%
Texas	35%
Alabama	33%
North Carolina	32%
California	29%
Nevada	26%
Georgia	26%
Rhode Island	23%
Louisiana	20%

* Goods trade only — i.e., manufacturing, agriculture, mining, scrap, small packages, etc. The U.S. government doesn’t collect services trade data by state.

In sum, it’s working pretty well. Whether over the past six years or the past sixty, patient work by the U.S., Canadian, and Mexican governments — based, to paraphrase Pearson in 1965, on “the mutual understanding, goodwill, and confidence which has grown up between our countries” — has accomplished a lot.

And where to now?  

Big human things are by definition imperfect; USMCA isn’t an exception, and in some idyllic world, it might be useful to attempt something a little closer to perfection. But even that world would have limits on what agreements like USMCA can achieve. The Trump administration’s focus on trade balances is particularly naive, since its first- and second-term tax and fiscal policy is the main reason U.S. trade deficits are higher. (From the Memo: “If the administration is seeking an explanation for the higher post-USMCA imbalances with Mexico and Canada, the best place to look is a mirror.”) And others, such as revising auto rules, may have complex and possibly unwelcome consequences — the stricter USMCA rules haven’t brought the surge of U.S. auto output the first Trump administration predicted, and even stricter rules could do more to raise costs than encourage investment — and would need close study.

And of course, we don’t now live in that idyllic world. Over the past 10 months, mutual understanding, goodwill, and confidence have steadily eroded in the aftermath of the Trump administration’s February tariff decrees targeting Canada and Mexico, its subsequent threats of more, and Mr. Trump’s inexplicable attacks on Canada. This has had economic consequences – both specific, such as the collapse of some U.S. exports (e.g. wine, beer, and spirits, down from $440 million last year to $190 million this year) as Canadians turn away from visibly “American” goods, rising unemployment in Las Vegas as tourism revenue falls, and worries about heating oil prices in New England this winter; and more systemic, as tariffs raise prices for American families and production costs for American factories and farms.  And these economic problems, in turn, may be modest next to the new and radically unfamiliar national security problems long-term mistrust, ill-will, and lost confidence with Canada and Mexico would create for the Americans of the 2030s and 2040s.

In these circumstances, and since next July’s review requires no action, the Policy Memo concludes that Congress should confine the review to technical and consensus matters, and focus policy on fixing these larger matters. The close:

“Canada and Mexico are America’s permanent neighbors, and close working relationships with them are profoundly important in ways far beyond economics. And in economic terms specifically, Canada and Mexico are the largest two customers for American exporters, reliable suppliers of energy for American utilities, food and consumer goods for American families, and equally reliable providers of essential inputs for American industry. The terms of these relationships can always in principle be improved and adapted, but they’re already good and the USMCA is a strong foundation for them.

“Meanwhile, the second Trump administration’s approach to trade and to our two large neighbors is weakening the U.S. economy, eroding American national security, and damaging the Constitution. The USMCA did not create these crises, and changing it will not solve them. As the review approaches, Congress should make clear that the agreement does not need major revisions, and confine the administration’s work on it to consensus issues on which the U.S., Canadian, and Mexican governments can agree without controversy. Instead it should focus trade policy in 2026 on settling the larger problems:

• Arresting the damage that uncontrolled tariff escalation is doing to American family living standards and U.S. industrial competitiveness.
• Healing, or at least mitigating, the national security harm the administration has done through its approach to Canada and Mexico.
• Restoring constitutionally appropriate development of trade policy.

“Passage of the bill introduced by Rep. Sanchez, which would reverse most of Mr. Trump’s tariff decrees and ensure Congressional votes on any similar future ideas, would be an ideal first step in this. With it passed, the task of improving and perfecting existing agreements might return to the center of policy. But not before.”

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

PPI’s newest: Gresser on USMCA at 6.

USMCA:

The USMCA itself.

… for the review clause, see Chapter 34, “Final Provisions”, Article 34.7.

… for some innovations, Chapter 19 on Digital Trade, Chapter 23 on Labor, and Chapter 24 on Environment.

… and for a challenging but illuminating read, Chapter 4 on Rules of Origin, pp. 4-B-1-1 to 4-B-1-47, explains automotive rules of origin. TL/DR: 75% of the value must be North American (as opposed to 65% during the NAFTA period); metals used in cars and trucks must all be North American (current average is about two tons of metal per vehicle); and 40% of labor content must be “high wage.”

Next step:

Rep. Linda Sanchez and Ways and Means Committee Democrats’ HR 2888.

And backstory:

The 1993 North American Free Trade Agreement.

The 1988 U.S.-Canada FTA.

The 1965 U.S.-Canada Agreement Concerning Automotive Products.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT: The world is growing more ‘carbon-efficient.’

THE NUMBERS: Growth 2005 to 2024 –

World GDP:	84%
World primary energy use:	33%
CO2 emissions:	32%

WHAT THEY MEAN: 

As UN delegates head to the Amazon for next week’s “COP-30”* meeting in Belem, the “climate optimism” argument isn’t easily made. The European Union’s “Emissions Database for Global Atmospheric Research” (“EDGAR” for short) has the discouraging figures, updated for 2024 last month: despite lots of activism and policy, worldwide carbon dioxide emissions have grown about 30% in the last twenty years, from 30.0 billion tons in 2005 to 39.6 billion tons in 2024. Five large economies — China, the U.S., India, the EU itself, and Japan — accounted for 62% of the total last year. Their patterns since 2005 explain why emissions are up:

Total CO2 Emissions	2005	2024	Change
World	30.0 billion tons	39.6 billion tons	+9.6 billion tons
China	6.2 billion tons	13.1 billion tons	+6.9 billion tons
United States	5.9 billion tons	4.6 billion tons	-1.3 billion tons
India	1.0 billion tons	3.2 billion tons	+2.2 billion tons
European Union	3.7 billion tons*	2.5 billion tons	-1.2 billion tons
Japan	1.3 billion tons	1.0 billion tons	-0.3 billion tons
All other	13.9 billion tons	15.2 billion tons	+1.3 billion tons

* Not including the UK. UK emissions were 0.56 billion tons in 2005, and 0.29 billion tons in 2024.

In sum, the big “developed” economies have cut emissions noticeably, though not drastically. But the much larger emissions growth in China, and more recently in India, has more than offset their drop. (India, in fact, had 2024’s largest jump in CO2 emissions, up by 140 million tons; Chinese emissions grew by 100 million tons, and U.S. by 14 million tons.) On a worldwide scale, the full group of “developed” economies* put about 11.3 billion tons of carbon dioxide into the sky last year, China 13.1 billion tons, and the rest of the world 15.2 billion tons. In sum, the a pretty gloomy overall-emissions picture, fitting well with the uncomfortable 33° C / 91° Fahrenheit Belem weather forecast for Monday’s COP-30 opening.

Viewed in another way, though, EDGAR’s figures suggest a case for long-term optimism: the world economy is steadily growing more carbon-efficient. Since 2005, emissions have grown by 32%, and primary energy use by an essentially identical 33%. (From 139 terawatt-hours to 186 terawatt-hours.) Meanwhile, actual real-world GDP has nearly doubled from $83 trillion to $173 trillion (PPP basis), or more precisely has grown 84%. Put in more relatable terms, as of 2005, every thousand dollars worth of GDP — an hour’s worth of orders in a busy American restaurant, three shiny Motorola Razr flip-phones coming off the line in Shenzhen, a Belgian train stopping to take on a hundred passengers, a refrigerator delivered to a Bombay home — produced an average of 318 tons of carbon dioxide. Now, the same activities (swapping out the Razrs for iPhone 17s) produce only 229 tons of carbon. Some country samples:

CO2 Emissions per $1000 GDP	2005	2024	Change
China	759 tons	391 tons	-48%
World	318 tons	229 tons	-28%
India	272 tons	221 tons	-19%
United States	334 tons	180 tons	-46%
Japan	244 tons	170 tons	-30%
European Union	194 tons	100 tons	-48%
UK	194 tons	80 tons	-59%

The most profligate carbon-emitters among medium-sized and large economies are Iran, at 556 tons of carbon per $1000, and South Africa, at 506 tons. China is the least carbon-efficient very large economy, but has matched the U.S. and European Union in reducing emissions relative to output.  The gap separating these countries, and even the U.S., Japan, and the EU, from the world’s most carbon-efficient economies — Sweden at 57 tons per $1000, Ireland at 52 tons, and Switzerland at 46 tons — suggests lots of possibilities for sustained or accelerated efficiency gain.

So: Actual worldwide reductions from the 2000 base have proven very difficult to achieve.  But the less ambitious goal of reduced carbon output over time may well be realistic. UN forecasters, in fact, do see emissions turning down, with renewable energy sources now providing more power to the world than coal, and world carbon emissions totals likely to drop by about 10% – that is, by 4 billion tons — by 2035. All this suggests that policy and activism are not futile; emissions can go down without drastic declines in living standards; and the Belem delegates have at least a longer-term case for optimism.

* “COP-30”: The “COP” acronym stands for “Council of Parties” to the 1992 UN Framework Convention on Climate Change. “30” refers to their 30th meeting.

** Taking “traditional developed economies” to mean the U.S., Canada, the EU, the U.K., Iceland, Norway, Switzerland, Israel, Japan, South Korea, Taiwan, Singapore, Australia, and New Zealand.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Policy:

PPI’s Energy and Climate Solutions Project looks at U.S. energy policy and production, emissions and climate options, and community impacts.

Diplomacy:

The UN’s “COP30” conference.

… the UN’s updated report, with forecasts of emissions falling by 2035.

… and Brazil’s COP30 page.

Data:

The European Union’s Emissions Database for Global Atmospheric Research (EDGAR), updated with 2024 figures.

U.K.-based energy researcher John Kemp compares GDP, population, energy use (renewables, coal, etc.), and emissions across countries and continents.

And the World Bank reports total GDP, worldwide and by country, over time.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT: Congress has passed 19 ‘trade negotiating authority’ bills.

THE NUMBERS: U.S. trade policy –

Treaties of Amity and Commerce*, 1789-1930	93
Congressional tariff bills, 1789-1930	45
Congressional trade negotiating authority bills, 1934-2015	19
U.S. trade agreements related to tariffs,** 1934-2015	62

* A generic term; sometimes the actual titles were “Amity, Commerce, and Navigation,” “Friendship and Commerce,” etc.
** Counting RTAA agreements, GATT and WTO agreements, and Free Trade Agreements.

WHAT THEY MEAN: 

Dire predictions from Mr. Trump, as the Supreme Court prepares to hear oral arguments on his “national emergency” tariff decrees next Wednesday:

“If this country is not allowed to have the President of the United States negotiate on behalf of it with tariffs, we are put in a position where we’re going to be a third-world country. … I think it’s the most important case that we’re going to have for many, many years to come.”

Last week’s antics suggest good reason to restrain presidents on this topic. Apparently to publicize his personal distress over an advertisement run by the Province of Ontario, Mr. Trump announced a plan to place 10% tariffs on everything Americans buy from Canada. (The ad ran during some baseball playoff games. It — accurately — replays parts of a 1987 radio address on tariffs and trade by the late President Ronald Reagan, including a pitch for duty-free U.S.-Canada trade.) If this actually happens, the effect would be a 10% tax (“surcharge” in the Treasury Secretary’s preferred usage) on all of Maine’s $2.5 billion heating oil supply this winter, half the fertilizer Kansans use in spring planting, auto parts for Midwest factories, etc.

Families now budgeting for January utility bills, and farmers and factory managers worried about rising costs, are likely better off without this sort of thing. Should Americans still worry, though, about the more abstract question of “presidents negotiating on tariffs with foreigners”? Not really. Some background on the case and the record of presidents and tariffs:

The Justices next week will hear the administration’s appeal of two tariff cases it lost this summer, V.O.S. Selections v. Trump and Learning Resources v. Trump. Both successfully challenged the use of the International Emergency Economic Powers Act (“IEEPA”) to declare “states of emergency” and overwrite the Congressionally authorized Harmonized Tariff Schedule with a new and ever-changing tariff system through a series of Executive Orders.

The basic question, then, is not about “whether presidents can negotiate on tariffs with foreigners,” but about the “separation of powers” within the United States — specifically, whether presidents can override Congress’ Constitutional authority to set rates for “Taxes, Duties, Imposts, and Excises” by using the IEEPA law to rule by decree. No previous president ever claimed a right to do that. Lots of them had tariff policies nonetheless, and often achieved what they wanted.

1789-1933: From the early republic to the Great Depression, Congress set tariff rates directly by passing bills. The U.S. International Trade Commission counted 42 such tariff laws between 1789 and 1916. Adding three more in 1921, 1922, and 1930 yields a total of 45. Presidents frequently influenced these bills: Polk and Wilson wanted low rates and got them through the “Walker” and “Underwood” tariffs; Harding and Hoover wanted high rates and likewise got them through the “Fordney-McCumber” and “Smoot-Hawley” bills. They didn’t negotiate these rates with foreign countries, though. Instead, they handled a complementary international job: As Congress set rates, presidents negotiated 93 “Treaties of Amity and Commerce” with mutual guarantees of “most favored nation” tariff status, non-discriminatory tax and port access for merchant ships, humanitarian aid for shipwrecked sailors, etc. Samples: the United Kingdom (1794, negotiated personally by John Jay, on temporary leave from his job as Chief Justice of the Supreme Court; and nearly wrecked the Federalist Party), the Hanseatic Republic, the Kingdom of Siam
(1833, very much a work of art as a single nine-foot parchment with calligraphy in English, Thai, Chinese, and Portuguese),  and the Empire of Brazil (1828, excludes “bucklers, breastplates, helmets, coats of mail” and other evocative military kit).

1934-2024: Concluding that the 1930 Congressional tariff increase had worsened the Depression, and that the overall bill-and-treaty program ignored U.S. exporters, the first New Deal Congress and the Roosevelt administration designed a different approach which remained in use up to 2024. This involved setting tariff rates through international agreements, with Congress writing up policy goals in advance, presidents handling the negotiating, and Congress approving the result or choosing not to. To this end, Congress passed 19 “trade negotiating authority” bills from the first Reciprocal Trade Agreements Act in 1934 through President Kennedy’s “Trade Expansion Act of 1962” to the “Bipartisan Congressional Trade Priorities and Accountability Act” under President Obama in 2015. Presidents used them to conclude 62 trade agreements, starting with tariff-reduction accords with Cuba and Brazil in 1934, and moving on through multilateral “GATT” agreements, FTAs, WTO agreements ranging from information-technology tariffs to Internet issues and trade facilitation during the Obama presidency, to the replacement of the North American Free Trade Agreement with the “U.S.-Mexico-Canada Agreement” in 2020.

In sum: The Supreme Court’s tariff case is indeed important. But it’s important for the integrity of the Constitution, Congress’ authority over “Taxes, Duties, Imposts, and Excises,” and the security of the American public against sudden and arbitrary tax hikes on fuel oil, fertilizer, auto parts, groceries, etc.. It isn’t important for future presidents’ ability to negotiate with other countries over tariff rates, or otherwise influence tariff policy. They’ve been doing that for a long time, without violence to the Constitution, and will be perfectly able to keep doing it regardless of this case’s outcome. The Justices needn’t worry.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Legal update:

The Supreme Court’s Docket 25-250 for V.O.S. Selections and Docket 124-1287 Learning Resources, with filings to date from the plaintiffs and the administration.

Amicus brief from House & Senate Democrats defending Congressional tariff authority.

Economists’ amicus brief explaining that trade balances are not national emergencies.

Court of Appeals opinion upholding C.I.T.’s view, August 29.

Court of International Trade decision striking down “IEEPA” tariffs, May 28. (See V.O.S. Selections v. Trump, #25-66.)

International Emergency Economic Powers Act text.

The official Constitution transcript, from the National Archives; see Article I, Section 8, first clause.

Reagan & Ontario v. Trump:

The Canadian Broadcasting Corporation replays Ontario’s tariff advertisement.

President Reagan’s April 25, 1987, radio address on tariffs and trade.

… and as a follow-up, the September 12, 1988, speech signing the U.S.-Canada Free Trade Agreement.

From February, New Hampshire NPR explains Canada’s role as northern New England’s main source of heating oil.

And last week, KHSB/Kansas City talks to soybean farmers on vanishing export markets and rising input costs.

Long look back:

Dr. Douglas Irwin’s Clashing Over Commerce reviews U.S. trade policy history from the Revolution forward. Hamilton and the Jay Treaty v. Jefferson and reciprocity; the antebellum Whigs-and-protectionism-v.-Democrats-and-revenue debate; high-tariff isolationism under McKinley, Harding, and Hoover; Roosevelt, Cordell Hull, and postwar liberal internationalism; 21st-century globalization arguments, all there.

PPI’s Ed Gresser, speaking at the Cosmos Club two weeks ago, compares the last general tariff increase — the “Smoot-Hawley” Tariff of 1930 — with the Trump administration’s 2025 decrees. Summary: nearly identical rates; different economic and logistics-industry contexts; overlapping ideological goals, but radically different methods of reaching them. Period-piece cameos by a giant airship (the 776-foot Graf Zeppelin), the Senate’s old two-handed telephones, and the D.H. Lawrence novel Lady Chatterley’s Lover.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Note to Commerce Secretary: No, Mr. Lutnick, ballistic missiles are not made of wood.

THE NUMBERS: U.S. Commerce Department, Sept. 29, 2025 – since wood is “critical” to production of munitions, missile defense, and “thermal-protection systems for nuclear reentry vehicles,” “national-security” tariffs of –

10% on lumber
25% on upholstered furniture
25% on kitchen cabinets
25% on bathroom vanities

WHAT THEY MEAN: 

Until recently the Commerce Department’s Bureau of Industry and Security took pride in a sort of austere, technocratic reputation: an elite group of 600 experts who spent their time tracking avionics and biotechnology innovation, coordinating export-control lists in the Wassenaar Arrangement or the Australia Group, and evaluating about 40,000 U.S. business applications for sensitive high-tech export licenses each year. Long hours, code-word clearance, cryptic tech jargon, that sort of thing, plus a touch-grass reminder from the mission statement: “A ‘reasonable person’ standard should be applied to all decisions: How would a ‘reasonable person’ decide this issue?”

Now, apparently, not so much. The Commerce Secretary, Mr. Lutnick, seems to have converted BIS into a kind of surrealist comedy troupe, whose job is to turn mundane things like whipped cream, pine boards, and bathroom vanities into hair-raising and expensive national security alarms.  In mid-August, for example, BIS declared condensed milk and cream to be “steel or aluminum derivative products.” Also perfume, balance beams, mosquito repellent, propane, and windshield-deicing fluid, and lots more things. As metal “derivatives,” under the Trump administration’s spring decrees, they are now “national security” goods subject to a 50% tariff.

One such pronouncement might be a weird anomaly. Two look like policy. Here’s their September 29 announcement about wood:

“The Secretary [i.e. Mr. Lutnick] found that wood products are used in critical functions of the Department of War [Defense], including building infrastructure for operational testing, housing and storage for personnel and materiel, transporting munitions, as an ingredient in munitions, and as a component in missile-defense systems and thermal-protection systems for nuclear-reentry vehicles.”

With this “finding” as foundation — your home workbench billets or IKEA purchase might be “weakening United States industrial resilience and placing national security and economic stability at risk” — come tariffs of 10% on lumber and 25% on upholstered furniture, kitchen cabinets, and bathroom vanities.

What? Most lumber used in the U.S. — about 35 billion of about 50 billion board feet a year — is grown here. It’s not scarce. The rest is mainly from Canada, with some more from Sweden, Chile, and a few other countries. So, no risk to America’s wood supply. Nor is wood critical either as an “ingredient” of munitions such as artillery shells, bullets, tank rounds, etc., or as a “component” of missile defense systems. As to “thermal-protection systems for nuclear re-entry vehicles,” old Poseidon missiles in the 1970s did use disposable Sitka spruce nose-cones for insulation during launch. Outfitting the fleet required about 50,000 board-feet of spruce — i.e., one millionth of annual U.S. wood needs. Newer missiles are said to mainly use a graphite composite. No worries there, either.

The main use of lumber is to build family homes. Per the National Association of Home Builders, a typical new house contains 15,000 board feet of wood valued at $18,000 to $40,000, or 7% of the median $428,000 construction cost. So the lumber tariff’s main effect will be to make home-building cost a bit more, probably adding one or two thousand dollars to home contracts next spring. As to why BIS also chose to tax kitchen cabinets, bathroom vanities and upholstered furniture, but not tables, desks, bookcases, or naked-wood chairs and church pews, perhaps they’ll explain at some point.

As deadpan comedy or performance art, “condensed milk is made of metal!” and “American lumber for American missiles!” aren’t bad, though probably best in small doses. As policy, though, they mean (a) you’ll pay more for groceries and furniture, and (b) specialized government tech experts who ought to be studying biotech labs and satellite factories, researching Russian and Chinese military procurement patterns, meeting with NATO members and Asia-Pacific allies on semiconductor trade, and making decisions a “reasonable person” would find sensible, are instead sifting through furniture tariff codes and writing up bizarre press releases. Either way, the joke seems mostly on you.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

BIS then:

For nostalgia buffs, a summary of BIS’ pre-2025 work, from their 2023 Annual Report.

… the apparently dated but still-posted BIS mission statement.

Some international venues: the Missile Technology Control Regime (missiles, guidance and targeting software, specialized skin-cladding, fuels, etc.); the Wassenaar Arrangement (dual-use goods and conventional weapons); the Nuclear Suppliers Group (radioactive ores and metals, transport technologies, reactors, etc.); and the Australia Group (chemical and biological weapons).

BIS now:

BIS’ surreal September decree, on lumber, munitions, nuclear re-entry vehicles, etc.

… and their similar August edition on condensed milk and cream, perfume, propane, balance beams, and so forth, with comment in the Wall Street Journal from PPI’s Ed Gresser.

From the commercial side:

The National Association of Homebuilders on lumber tariffs, home prices, and mill capacity.

And a note on ballistics:

Per note above, the Poseidon C-3 missiles of the 1970s and 1980s did use Sitka spruce nose-cones as insulation during launch. (The Smithsonian Institution’s Air and Space Museum has one. Here’s a picture, with purpose and dimensions.) Each required a bit less than 0.2 cubic meters of wood, which means the full 619-missile Poseidon fleet must have used about 119 cubic meters over 25 years. Converted to commercial-lumber jargon, that’s about 50,000 board-feet, the equivalent of (a) about 100 farmed spruce trees; (b) three house frames; or (c) one millionth of the 50 billion board feet Americans use each year. Modern Tridents are said to have replaced wood with a lighter graphite composite, though perhaps the spruce is still a second- or third-best option choice.

At a somewhat further remove, Thor missiles used an “ablative” coating (a flammable skin meant to burn or boil off in transit from space to atmosphere) derived from the artificial fiber Rayon, whose makers use wood pulp as a base. Modern missiles can use that or different ablatives with a petrochemical base. In any case, BIS’ September decree doesn’t cover wood pulp.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. public disapproves of Trump tariffs by about 63% to 35%.

THE NUMBERS: Trump administration tariffs on goods from –

Brazil	50%
Venezuela	15%

WHAT THEY MEAN: 

A concise 73-word resolution from Senators Ron Wyden (D-Ore.), Rand Paul (R-Ky.), Chuck Schumer (D-N.Y.), Jeanne Shaheen (D-N.H.), Peter Welch (D-Vt.), and Elizabeth Warren (D-Mass.):

“Pursuant to section 202 of the National Emergencies Act (50 U.S.C. 1622), the national emergency declared on April 2, 2025, by the President in Executive Order 14257 (90 Fed. Reg. 15041) is terminated effective on the date of the enactment of this joint resolution.”

This resolution would repeal the Trump administration’s April decree imposing a worldwide 10% import tax, plus various country-by-country rates ranging from 15% to 40%. It’s up for a vote before the end of October. So are two more from Sens. Kaine (D-Va.), Paul, Wyden, and others, which would terminate a February administration tariff decree on Canadian-made goods and another from July on Brazilian products. A look at each, and their effects so far:

The decrees: The Trump administration has been trying since February to replace the Congressionally authorized “Harmonized Tariff Schedule” with a new one, but also to evade the Constitutional approach to changes in tariff rates — Congressional bills — through a series of decrees declaring states of “emergency” or “national security” need. The three at issue this month use a 1974 law, the “International Emergency Economic Powers Act,” meant for quick action in the outbreak of wars, pandemics, or similar events. They are:

1. Canada, February 1: The first decree — “Executive Order 14193” — claimed Canada is “failing to devote significant attention or resources, or cooperate with U.S. law enforcement” on drug trafficking (in particular fentanyl), and imposed 25% tariffs on Canadian-made and -grown goods. It has since been revised to cover just products not ‘compliant’ with the U.S.-Mexico-Canada Agreement. Per CBP’s data, northern-border drug trafficking is small: of the 21,100 pounds of fentanyl seized at borders and within the U.S. in 2024, only 49 pounds — about 0.2% — were “northern border” seizures. This includes some internal U.S. production in border states as well as international traffic. Canadian law enforcement, meanwhile, reports seizures of about 6.4 kilos (14 pounds) of fentanyl last year, so it’s possible more flows north from the U.S. to Canada than comes down.

2. Worldwide, April 2: The second, “Executive Order 141257,” declares the U.S. trade balance a ‘national emergency’ justifying the wholesale replacement of the Congressionally authorized tariff schedule with dozens of new rates set by country, plus a worldwide 10%. Overall, it has hiked U.S. tariff rates from last year’s 2.4% to about 18%. The U.S. has run a goods-trade “deficit” since 1975. Since then U.S. GDP has quadrupled (per BEA from $6 trillion to $24 trillion, in real 2017 dollars) and U.S. employment has doubled from 77 million to 160 million. As to whether this long deficit pattern is a problem, reasonable analysts disagree; it’s hard, though, to see a 50-year stretch enduring through booms, recessions, etc. as an “emergency.”

3. Brazil, July 30: This one, “Executive Order 14233,” revises the April 2 decree to put a 40% on most Brazilian goods (though with many exemptions), on top of the original 10%. So, a 50% total. Identical goods from next-door Venezuela get 15%. Entitled “Addressing Threats to the United States from the Government of Brazil”, this decree cites as “threats” overly intrusive online content moderation and the prosecution of ex-President Bolsonaro for attempting to overthrow Brazil’s 2022 presidential election. It probably isn’t controversial to note that Venezuelan speech policies and court procedures are pretty far below Brazilian standards.

Now to some real-world results:

1. Lost growth, higher inflation: In “macro” terms, yesterday’s IMF “World Economic Outlook” projections for the United States show the U.S. losing about a point of growth and gaining a point of inflation. More locally, here’s an Ohio sample — higher costs, higher prices — from the Cleveland Fed’s September Beige Book:

“Many manufacturers reported that tariffs had increased the costs of electronic components, tools, metals, and other raw materials, with multiple contacts noting a lack of domestic suppliers for some items. Retail contacts cited higher costs related to tariffs on vehicles, beef, and other commodities. One healthcare contact said tariffs had affected hospital drug pricing, pushing up the cost per unit of service. Some manufacturers and auto dealers reported passing along 100 percent of tariff increases to customers, while others said they were slowly raising prices in response to higher tariffs. … Several contacts in manufacturing and professional and business services reported waiting to see “how things settle” before increasing prices but anticipated doing so in the near term.”

2. Industrial contraction: The core goals of all this, according to U.S. Trade Representative Greer, are a higher manufacturing share of GDP and a lower trade deficit. Since the administration’s decrees began in February, manufacturing has dropped from 9.8% of GDP in 2024 to 9.4%. Automakers in particular have been hit hard, with the three Michigan-based U.S. producers losing about $6 billion. The trade balance has jumped up and down, but overall is $150 billion more in deficit than in 2024.

* Lost exports and tourism revenue: Tariffing Canadian products — concentrated in industrial supplies such as fertilizer, aluminum, energy, and lumber — is proving a good way to raise production costs for American manufacturers like the Cleveland Fed’s Ohioans, as well as farmers and building contractors. It’s also damaging the U.S. economy in less obvious ways.  For example, though the Canadian government isn’t retaliating, a lot of Canadians are doing so individually. The Cleveland Fed’s Boston cousins, in their own, September Beige Book, point to a sharp drop in Canadian tourist visits as a blow to the northern New England economy: Maine got 1.1 million Canadian visitors in the summer of 2024, and a third less —780,000 – this summer. Kentucky and California get similar unexpected shocks, with exports of bourbon and wines down by half this year, as Canadians seek out recognizably “American” things so as not to buy them.

The Census hasn’t yet published August trade data, so we don’t know what happened vis-à-vis Brazil that month. It’s likely, though, that the main cost increases come in agricultural products — particularly coffee and orange juice — and that lost exports will be most painful in Texas and Florida. Texas is the top exporter to Brazil at $11.6 billion; Florida is most Brazil-reliant, with Brazilian customers buying a fifth of Florida’s $11 billion in aerospace exports, half of its $2.4 billion in semiconductors, and a third of its $1.6 billion in agricultural chemicals.

* Unhappy public: The public reaction, based on polling, is pretty negative and (depending on the pollster) either steadily bad throughout or bad at the start and worse since. The Washington Post’s May survey, for example, reported 64% of Americans disapproving and 34% approving, and an identical 64/34 split in September. Fox News’ poll differs a bit, finding slightly less unhappiness early on, but a deteriorating trend over time towards a September finding like the Post’s: 53%-28% disapproval in March, 57%-28% disapproval in June, 63%-36% disapproval in September.

Last thought: The administration’s decrees this year have different targets and varying pretexts. Their effects are more uniform: unfounded claims of threat, real-world harm to U.S. industry and consumers, and unpopularity. In terminating them, the Senate can do some real-world good, but also fulfill a more basic, abstract, and important responsibility.

To state the obvious, when presidents — in the U.S. or anywhere else in the world — try to declare states of emergency and rule by decree, it’s a bad sign. The public is right to oppose it. And in the U.S. specifically, the Constitution unambiguously gives Congress authority over “Taxes, Duties, Imposts, and Excises.” An American president who wants a higher tariff rate should therefore ask Congress to pass a bill. If he or she tries to impose this tariff rate alone, Congress should stop him, as Sens. Wyden, Paul, Kaine, et. al. propose to do this month.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Law:

The relevant three decrees: Canada on February 1, worldwide on April 2, and Brazil on July 30.

Data:

IMF’s sunny October 2024 outlook.

… and the chilly October 2025 reprise.

Census Bureau trade data, with no October release due to the current “government shutdown.”

Around the country:

The Boston Fed’s September Beige Book notes falling Canadian tourism in northern New England.

And the Cleveland Fed’s September Beige Book has Ohio manufacturers, retail, and hospitals all facing higher costs and expecting prices to rise.

Read the full email and sign up for the Trade Fact of the Week.

FACT: U.S. imports from Russia are up 30% this year, likely to hit $5 billion.

THE NUMBERS: U.S. fertilizer imports,
January – July 2025* –

Total	25.3 million tons
Canada	7.9 million tons
Russia	3.3 million tons
Saudi Arabia	0.8 million tons
Qatar	0.7 million tons
All other	12.7 million tons

* U.S. International Trade Commission Dataweb

WHAT THEY MEAN: 

Secretary of State Marco Rubio used a September 23 NBC appearance to term it “absurd” that some EU countries are still buying Russian energy. As the EU develops a new set of sanctions on Russian use of cryptocurrency, “shadow fleet” oil transport, and banking, the Trump administration has cited these purchases to avoid new sanctions on Russia itself. A day before Rubio’s appearance, though, Politico trade reporter Doug Palmer published a startling find about the United States’ trade with Russia:

“Russia’s fertilizer exports to the United States are rebounding in 2025 after falling in 2023 and 2024, according to Commerce Department data. The data also shows that U.S. imports of Russian enriched uranium and platinum are on their way to higher levels this year. In total, imports from Russia are up nearly 30 percent from 2024, and could reach close to $5 billion by the end of the year.”

Not only have U.S. imports from Russia jumped, but the Russian fertilizer and  specialty metals — mainly platinum-group metals palladium and rhodium, used in catalytic converters, along with the uranium — still arrive duty-free despite the tariffs the Trump administration has imposed on similar goods from allies and other suppliers. Here’s the background:

Before the war in 2021, American purchases from Russia looked like this:

Total	$29.7 billion
Energy	$16.9 billion
Rhodium	$0.7 billion
Palladium	$1.6 billion
Uranium	$0.7 billion
Fertilizer	$1.2 billion
Seafood	$1.1 billion
Diamonds	$0.3 billion
All else	$7.1 billion

Two weeks after Vladimir Putin launched his invasion of Ukraine in February 2022, the Biden administration banned Russian energy, diamonds, seafood (mainly Arctic crab), and luxury goods. As they fell to zero, American imports of Russian goods accordingly dropped by 90%, from the $29.7 billion of 2021 to $3.0 billion in 2024. Biden’s team left a couple of holes, though, as it didn’t ban fertilizer or specialty metals. The EU’s Russian imports are down from $174 billion in 2021 to $36 billion.

A week later, Congress withdrew Russia’s ‘Most Favored Nation’ tariff status. Legally, this shifts tariff rates from the generally low ones of the normal, Congressionally authorized tariff schedule to those set in the 1930 “Smoot-Hawley” tariff bill. For most countries, this would be a very big hit, shriveling up the trade that the Biden administration hadn’t already banned. But as we noted at the time, Russia was an unusual exception. The Congressional tariff-writers in 1930 wanted high rates on finished manufactured goods and farm products, but low ones or zero on natural resources and other factory and farm inputs. In practice, that’s mostly what Russia was selling: the ‘non-MFN’ tariffs on fertilizer (see Column 2 here) are all zero, as are those on uranium, palladium, and rhodium. So withdrawal of MFN status didn’t matter for these things.

The Trump administration’s April tariff decrees, meanwhile, exempted Russian goods on the unconvincing grounds that the U.S. already sanctions Russia in other ways. In practice, that means leaving Russian fertilizer and metals duty-free. Mr. Trump’s July 31 decree then taxed identical stuff from other sources at 10% and up: 10% on fertilizer from Saudi Arabia or Qatar, and 15% if it’s from Nigeria, Israel, or Trinidad; 30% on South African palladium and rhodium. (Canadian fertilizer and potash remain duty-free for now under the bruised-but-still-in-force “U.S.-Mexico-Canada Agreement”.) So Russia is now picking up market share at their expense. In sum, as Palmer notes, imports from Russia are up about 30% this year and are likely accelerating.

Across the Atlantic, meanwhile, the EU — after some strong persuasion of the populist semidemocrats in Hungary and Slovakia, the main European buyers of Russian oil and gas — is supposed to stop buying Russian energy altogether by the end of 2027. Mr. Rubio isn’t wrong to urge them to stop sooner, though it’s hard to see why that means the U.S. should hold back on financial and shipping sanctions. And with U.S. imports of Russian fertilizer and metals jumping this year, Europeans aren’t alone in earning adjectives like “absurd.”

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Radio Free Europe/Radio Liberty on new EU sanctions proposals.

On NBC last month, Sec. Rubio’s strong words for European buyers of Russian energy.

… and a day earlier, Palmer reports for Politico Pro (subs. req.) on rising U.S. fertilizer and metal imports from Russia.

Policy: 

The Biden administration’s bans on energy, seafood, diamonds, and luxuries.

The EU’s current schedule for ending Russian energy buying.

Data:

Census’ topline summary of U.S.-Russia trade by month.

Finland-based Centre for Research on Energy and Clean Air tracks purchasing of Russian energy by country; also see their aggregate totals.

The U.S. Energy Information Agency on U.S. energy production, importing, exporting, and use.

And the U.S. Geological Survey on platinum-group metal uses, reserves, production, and trade.

PPI perspectives:

PPI’s New Ukraine Project, led by Kyiv-based Tamar Jacoby, reports on Ukrainian economic reform, the mood at the front, military industry growth, and more.

Energy and Climate Policy Director Elan Sykes (2023) on American liquefied natural gas as a replacement for European purchases of Russian energy.

And our Trade Fact reminder: Isolationism and appeasement are dangerous.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

FACT: Trump administration tariffs are failing to achieve their goals.

THE NUMBERS: Manufacturing share of U.S. GDP:

2025 (Jan. – June)	9.4%
2024	9.8%

WHAT THEY MEAN: 

What is the Trump administration trying to do? Rep. Brendan Boyle (D-Pa.)’s adept questioning of U.S. Trade Representative Jamieson Greer at April’s House Ways and Means Committee hearing (2:30:33) extracted a definition and two measurable goals:

“The deficit [i.e. trade balance] needs to go in the right direction. Manufacturing as a share of GDP needs to go in the right direction.” 

Amb. Greer’s two metrics have some pretty serious flaws as definitions of “success.” (See below in “Further Reading” for a brief critique.) But in contrast to vague administration slogans like “production society” and “new golden age,” they’re actual things official stats regularly measure. So, eight months since Mr. Trump’s tariff binge started, how do they look?

1. The manufacturing share of U.S. GDP is smaller: The Commerce Department’s Bureau of Economic Analysis does the official ‘GDP by Industry’ estimate. Its most recent release, out last Thursday, puts the manufacturing share of U.S. GDP at 9.4% this year, down from 9.8% in 2024.

2. The U.S. trade deficit is bigger (but volatile): The Census Bureau’s monthly tallies of U.S. trade flows show a goods-trade deficit of $840 billion so far this year (from January to July), 23% larger than the $682 billion they report for January-July 2024. Alternatively, (a) for manufacturing specifically, this year’s $800 billion deficit outdoes last year’s $655 billion, and (b) the larger goods/services balance at $654 billion is up about 30%n from last year’s $500 billion.

Cautionary note on trade balance, though: The higher 2025 deficit reflects in part a surge of imports in January, February, and March, as worried businesses pushed to get products in and pile up inventories before tariffs went up. Since May, deficits have dropped a bit. Census’ most recent monthly total was $103.9 billion in July, equal (with rounding) to the $104.4 billion in July 2024. This year’s total is pretty certain to be bigger than last year’s, and last July’s summer tax bill will probably push up trade deficits next year (again, see below). But there’s some room for uncertainty.

In sum: So, Amb. Greer’s metrics don’t look very good. In the months since his exchange with Rep. Boyle, both — especially the manufacturing/GDP share — have gone in a pretty clear direction. It’s not the one the administration probably expected or wanted.  In common parlance, they seem to be going south.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Amb. Greer at the April Ways and Means Committee hearing; exchange on “success” defined by changes in trade balance and the manufacturing share of GDP at 2:20:33. The site also has prepared text and a full hearing video.

… or for a lengthier discussion, see Amb. Greer’s “Reindustrialize America” remarks.

Check the data:

The Bureau of Economic Analysis’ GDP by Industry calculations, updated last Thursday for the first half of 2025.

Census’ most recent monthly FT-900 trade release, with exports, imports, and balances generally, by product type, and by country. Also from Census, see –

… the FT-900 archives back to 1991.

… and a one-page summary of U.S. imports, exports, and trade balances from 1960 to 2024.

    Manufacturing share – 

Why would tariffs bring down the manufacturing share of GDP? Mainly because manufacturers buy lots of natural resources, capital goods like industrial machinery, inputs like paint and metal, and components and parts from brake-pads to semiconductor chips, light bulbs, and cloth. Taxing these things through the tariff system makes manufacturing here more expensive. Here’s an example, from an appeal filed to the Commerce Department in June by the National Aerosol Association (a trade group representing makers of whipped-cream canisters, perfume spritzers, etc):

“[B]oth the producers and the fillers of metal aerosol packages in the United States face increased prices for their key inputs as a result of the Section 232 tariffs, as tinplate steel, laminate steel, aluminum, and empty aerosol containers made from those metals are all subject to Section 232 tariffs. As a result, these U.S. industries are currently operating at a material disadvantage compared to foreign producers of empty and filled metal aerosol products, none of which face increased prices associated with Section 232 steel and aluminum tariffs.”

As PPI’s Gresser noted last week, the Commerce Department responded in August with a decree declaring that condensed milk and cream are made of metal. Perfume, windshield de-icing fluid, balance beams, propane, and much else too. In effect, the DoC’s solution is not to make “manufacturing in America” less expensive, but to make the relevant goods more expensive for families, too. The likely effect is that they’ll buy less.

And perspective:

Trade balance and the GDP share held by manufacturers can suggest things. But especially when taken alone, they aren’t very reliable gauges of trade policy success specifically, or economic health in general. Some background on both –

1. Manufacturing share of GDP: This is “the size of manufacturing relative to other parts of the economy,” not “how strong is the manufacturing sector.” This ratio could fall during a factory boom if other large parts of the economy — say homebuilding, the digital economy, retail sales – grew even faster. That in fact happened in the late 1990s. Likewise, the “manufacturing share of GDP” could rise in a terrible year, despite lots of factory closures and job loss, if housing and banks crashed even harder. This hasn’t happened recently, but 2009 and 2010 came close.

2. Trade balance: By economic math, the national trade balance equals the gap between national savings and national investment rates. Changes in these “macro” figures change the balance, and trade policy in the sense of agreements, rules, and tariff rates typically has little impact on them.  The government’s largest influence on these figures is the fiscal deficit, which is part of the national savings rate. Deficits typically rise after large tax-cut bills — as in the early 1980s, the early 2000s, and the first Trump administration — and trade deficits typically follow it up.

Household savings and business investment levels are even stronger influences than government fiscal balance. Thus, trade deficits tend to rise in boom years (when investment booms and families spend) and fall in recessions (when investment crashes and consumers pull back). For example, in 2009 — this century’s worst year for the U.S. economy generally, for job loss, and for manufacturing specifically — the U.S. trade deficit fell by almost half, from $712 billion to $395 billion or from 5.0% to 2.9% of GDP. No one cheered.

What might be better definitions of success? The typical person would probably think economic policy in generally should try to bring down the cost of living, create growth, and provide more job opportunities, and trade policy should help. It takes work to sift out the effect of trade policy on these things from all the other things that go on in an economy, but that’s what academic economists, the U.S. International Trade Commission, etc., are for.

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