FACT: Trump tariffs have nothing at all to do with ‘reciprocity.’

THE NUMBERS:  

Trump tariff on anything from Lesotho:	50.0%
Current U.S. tariff on Lesotho goods:	0.0%

WHAT THEY MEAN:

A small landlocked country of 2.2 million in southern Africa, Lesotho’s modest shipments of clothing – $230 million worth last year — accounts for 0.007% of American imports. The Trump administration has singled this out for a 50% tariff, the highest rate anywhere in the world. Should it stay on, the tariff will likely cripple Lesotho’s economy and immiserate the 12,900 young women at work stitching shirts and blue jeans around Maseru this afternoon. Much the same will happen in Cambodia, Madagascar, Pakistan, Bangladesh, Vanuatu, Sri Lanka, and dozens of other low-income countries.

How did this happen?  Background, and a look at the likely effects.

Having spent the last three months claiming that Americans are victims, immiserated, plundered, etc., by “unfair” trade barriers in foreign countries and arguing for “reciprocal” tariffs, the Trump administration seems to have decided in March that calculating “reciprocity” was too hard. The tariffs Mr. Trump imposed by decree last Wednesday – in effect as of this morning – have nothing at all to do with foreign tariffs on American goods.  Instead, the administration did two quite different things:

(1)  Gave every country in the world a 10% tariff. (For those interested in reciprocity, a flawed but not wholly useless concept, the average world tariff is probably a bit above 3%.) This appears to be added to, rather than replacing, the existing 2.4% average. Based on records kept by the U.S. International Trade Commission, the resulting ~12.4% tariff rate would be the U.S.’ highest since the Depression of the 1930s.

(2)  Created a second set of tariff rates for 57 countries (counting the 27-member European Union as a single economy) with which the U.S. ran a “goods trade deficit’” in 2024. I.e., Americans bought more from the relevant place than we sold to people there. (Russia, a -$2.5 billion deficit country last year, gets an exemption.) As practical examples, this means surtaxes of 20% on Dutch cheese and semiconductor manufacturing equipment, 26% on Korean cars and computers, 48% on Cambodian shirts, 28% on Tunisian dates and jewelry, and so on.

Where do these numbers come from? The administration appears to have gotten them not by looking up tariff rates abroad – though they’re easy to find – but from a four-column spreadsheet based on an arithmetical formula. One column has the dollar value of American exports (excluding services trade, so Hollywood film revenue, telemedicine, foreign-student tuition, tech-sector search and data analytics, financial services, architecture and engineering contracts, etc., count as nothing). The second column has the value of goods-only trade deficits, or “exports minus imports.” The third column calculates a “trade balance to imports” ratio, and the fourth divides this ratio by two to get a supposed ‘reciprocal’ tariff.

Here’s a real-world case: The Falkland Islands – a British South Atlantic territory home to 3,162 people – gets hit with a 42% tariff. They sold Americans $22.8 million worth of toothfish and squid last year (fisheries are 40% of the Falklands economy) while buying $4.1 million worth of American airplane parts, ceiling fans, and computer accessories. The administration gets its 42% ‘reciprocal tariff’ on Falklands goods from the following formula:

{(fish – airplane parts)/fish}/2.

Spelling it out, fish minus airplane parts equals $18.7 million.  Divided by fish ($22.8 million), this yields a ratio of “0.84.” Division of this by two then produces the 42% “reciprocal” tariff. Obviously this has nothing to do with Falkland Islands tariffs, nor America’s either. Neither does it get more logical results anywhere else. Some examples, placing the Trump tariff against the actual trade-weighted average tariff rates published in the WTO’s World Tariff Profiles 2024:

Trump tariff on Bosnian goods:	36.0%
Bosnian average trade-weighted tariff:	6.2%
Trump tariff on Brazilian goods:	10.0%
Brazil average trade-weighted tariff:	6.7%
Trump tariff on Jordanian goods:	20.0%
Jordan tariff on U.S. goods (FTA partner)	0.0%
Trump tariff on Madagascar goods:	47.0%
Madagascar average trade-weighted tariff:	8.7%
Trump tariff on UK goods	10.0%
UK average trade-weighted tariffs:	2.3%
Trump tariff on Vietnamese goods:	46.0%
Vietnamese average trade-weighted tariff:	4.5%

 

This sort of fecklessness has drawn appropriate derision from economists. It is also, though, bringing real-world results varying from absurd through disastrous to genuinely tragic. The Falklands’ case is in the “absurd” category – they sell most of their squid and toothfish to Europe anyway – and Falklanders can ridicule it, get angry, or sadly shake their heads depending on temperament. The “disastrous” effects are piling up daily in financial markets and industry sites – about 5% of American wealth already vanished in the last week, likely future layoffs and price spikes, etc.

Others can’t laugh it off. Twelve of the 57 countries on the administration’s list are “least-developed” states: Angola, Bangladesh, Cambodia, Chad, DR Congo, Laos, Lesotho, Madagascar, Malawi, Mozambique, Myanmar, Zambia, Zimbabwe – as well as many more lower-middle income (e.g. Pakistan and Sri Lanka), small southern-Europe democracies under Russian pressure such as Moldova and Bosnia, Arab-world allies like Tunisia and Jordan, Asia-Pacific Treaty allies Philippines and Thailand, small island states Vanuatu and Fiji, and more.

U.S. trade with the least-developed countries in particular, though small in the $7 trillion world of American trade flows, is often an essential source of wage employment, macroeconomic stability, and poverty alleviation. Lesotho’s case is illustrative of the harms they will suffer, but also extraordinary for the scale of the tariff and its likely human impact.

Over the past generation, the country’s 33 garment companies have been especially successful users of the African Growth and Opportunity Act’s tariff waivers, and as a result, are Lesotho’s largest source of wage-paying jobs. Southern Africa, being the region hit hardest by the HIV/AIDS pandemic, Lesotho also has the world’s second-highest adult HIV-positive rate at 19.3% of adults. The garment factories joined the American PEPFAR program – USAID had a $47 million health commitment to Lesotho – as important providers of HIV treatment and education.

Their $230 million worth of clothes account for about 0.2% of American clothing imports. That’s about a day’s worth of U.S. clothes shopping a year, and makes up the “0.007%” of total imports noted above. They also create a ‘bilateral trade deficit’ a bit above $200 million. Since Lesotho doesn’t buy very much, and most American products there arrive via South Africa, the ‘ratio’ formula has pushed Lesotho to the very top of its list. The resulting 50% tariff, an artifact of the Trump calculators’ indifference and laziness, may destroy the industry and its workers’ livelihoods by summer. Considering that this economic blow comes simultaneously with the destruction of USAID and “pause” in PEPFAR’s Lesotho work, the word ‘tragic’ is strong but probably not strong enough.

** Very recent update, 1:45 p.m.: these now seem to be ‘paused’ for 90 days after a financial-market and public-opinion hurricane of opposition. We’ll see; if this is so and the ‘reciprocal’ tariffs stay off, at least for now the ‘10%’ global rate seems to remain.

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.

Comparing tariff rates:

Trump administration’s decree imposing tariffs; see “Annex I” for list of countries.

And for those genuinely interested in “reciprocity,” the WTO’s Tariff Profiles 2024 makes it easy to look up and compare rates.

And reports on the impacts abroad:

The Lesotho Embassy.

… responses from government, academia, and business from Maseru-based Lesotho Reporter.

… and from the Guardian, on-site reaction from Lesotho workers and government.

… and the U.S. Trade Representative Office’s African Growth and Opportunity Act (AGOA) page.

Via the BBC, a view from the Falklands.

… and the Falkland Islands Fishing Companies Association.

And Nikkei talks with Phnom Penh garment workers.

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. Constitution: “Congress shall have power to lay and collect Taxes, Duties, Imposts, and Excises.”

THE NUMBERS: Consumer confidence “Expectations Index”* – 

March 2025:	65.2
February 2025:	72.9
(Recession level)	(80.0)
December 2024:	81.1
October 2024:	89.1

* Conference Board, March 25, 2025

WHAT THEY MEAN:

Is Mr. Trump’s tariff binge — now delayed until 4:00 today, presumably to avoid split-screen footage placing tariff announcements against crashing financial markets, but said to include extensive new taxation of cars, semiconductors, OTC and prescription medicines, Canadian energy, Chinese toys, Mexican fruits and vegetables, etc. — really “the largest peacetime tax increase in history.” The White House’s claim of a $600 billion increase in annual tariff collection would be about 2.2% of GDP. That would make it at least a contender for the title, though it might wind up below the introduction of the Social Security and Medicare taxes in the 1930s and 1960s.

But if the scale remains a little blurry, the public’s view seems by comparison sharp and clear: higher prices and fear for the future. The Conference Board’s survey of American “consumer confidence” (March 25, done after tariffs on Canada/Mexico/China but before last week’s on cars) suggests opinion has gone far enough south to reach the “Tierra del Fuego” latitudes, where phrases like “nose-dive” and “free fall” turn up. Here’s their ashen-faced release a week ago Tuesday:

“The Expectations Index – based on consumers’ short-term outlook for income, business, and labor conditions – dropped 9.6 points to 65.2, the lowest level in 12 years [ed. note: lowest since the end of the post-2008 financial crisis] and well below the threshold of 80 that usually signals a recession ahead.  … Optimism about future income – which had held up quite strongly over the past few months – largely vanished, suggesting worries about the economy and the labor market have started to spread into consumers’ assessment of their personal situations. … [R]esponses also showed that inflation is still a major concern for consumers and that worries about the impact of trade policies and tariffs in particular are on the rise.”

Should the public be that worried? Recent experience offers little guidance, since no administration since Herbert Hoover’s in 1930 has tried something like this. Warning lights are flashing red in GDP outlook, financial markets and manufacturing  (“bearish market sentiment and tariff applications and costs have dominated discussions”) as well as in consumer confidence.  And some real-world leading indicators — say, layoffs in steel factories specialized in automotive metal — are turning down. But apart from the layoffs, these are still mostly “signs and portents.” Spring will bring more reliable stats on macro employment/price/growth impacts; effects on goods-buying industries such as factories, farms, restaurants, retail, and building contractors; and the fortunes of the American export manufacturing and farming, services and digital, and IP sectors now suddenly targets for retaliation.

But whatever the economic gashes and wounds, the most important long-term harm will likely be elsewhere. After all, governments often make policy errors, sometimes they’re pretty big, and countries usually recover in time. (Though recuperation from Hoover’s required a lot of time). Damage to governance goes deeper. And here, Mr. Trump’s approach — bad-faith “emergency” and “national security” declarations, coupled with Executive Orders attempting to create tariffs by decree — carries the risk of infection to the political system separate from its economic consequences.

The Constitution gives Congress, not presidents, authority to “lay and collect Taxes, Duties, Imposts, and Excises,” as well as “regulation of Commerce with foreign nations.” For good reason: giving any single individual power to set tax rates means not only heightened danger of impulsive and unsound decisions, but temptation to use that novel power in corrupt ways — to reward family members, cronies, and supporters, and/or to harm political critics, business rivals, and opposition strongholds.

Earlier presidents never questioned this principle. The sepia-tinged pre-New Deal pols who wanted tariff hikes (e.g., Hoover, Warren G. Harding, William McKinley, Benjamin Harrison) asked Congress to pass bills and sign the result. Historians debate the economic merits, but their tariff increases had a Constitutional legitimacy Mr. Trump’s program wholly lacks. Should his program stick, it will weaken the separation of powers, usurp authority over taxation, and substitute one-man “rule by decree” for authentic (if sometimes ill-judged) law. Next to this, costs to growth, jobs, and living standards are more immediately painful but likely lesser issues.

Where to next? Court cases this year may limit Mr. Trump’s options, but there’s a simpler and better solution: Congress has the power it needs to defend its authority, and should use it. House Speaker Mike Johnson and Ways and Means Committee Chairman Jason Smith, and their Senate counterparts Majority Leader John Thune as Majority Leader and Finance Committee Chair Mike Crapo, need only — per their oath of office to “protect and defend the Constitution” — call a vote. If Congress likes Mr. Trump’s tariffs, it can impose them in the proper way. If not, it should say “no” and end them.

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.

The Constitution and its friends:  

Official U.S. Constitution text, from the National Archives. See Article I, Section 8, first clause, for “Taxes, Duties, Imposts, and Excises.”

PPI’s look last fall at the Constitutional Convention of 1787, the tax power, and the harm inherent in rule by decree.

• Sen. Tim Kaine (D-Va.), with Sens. Klobuchar, Coons, and Paul (respectively Ds-Minn. and Del., R-Ky.), have a resolution this week to repeal the March “emergency” declaration used as a pretext for tariffs on Canadian goods.
• Reps. Don Beyer (D-Va.) and Suzanne DelBene (D-Wash.) on ensuring that any tariff imposed on “emergency” or “national security” grounds must get Congressional approval.
• Rep. Brad Schneider (D-Ill.) on scrapping a surviving Hoover legacy, “Section 338.”
• Rep. Jimmy Panetta (D-Calif.) on ensuring Congressional approval for balance-of-payments tariffs.

On the other side: 

Two hours before today’s White House tariff decrees are supposed to be released, neither their texts nor their content are yet public. For interim reading in their absence, try the President’s Trade Agenda report, put out by the Office of the U.S. Trade Representative on March 3. Each year this is supposed to lay out the year’s main goals and activities. This year’s edition has a lot of puzzling gaps. The report does converge at some points with the options floated in the press this past week. But it doesn’t mention taxation of cars and medicine, trade wars with Canada and Mexico, or any large overall tariff.

Leading indicators:

Conference Board finds Americans fearful, expecting a recession, and thinking a lot about tariffs.

… the University of Michigan’s consumer-confidence survey finds the same thing. Sample:

“The expectations index plunged a precipitous 18% and has now lost more than 30% since November 2024. This month’s decline reflects a clear consensus across all demographic and political affiliations; Republicans joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation. Consumers continue to worry about the potential for pain amid ongoing economic policy developments. Notably, two-thirds of consumers expect unemployment to rise in the year ahead, the highest reading since 2009.”

And about that “$6 trillion”: 

Concise judgment from Ben Ritz and Alex Kilander this February: Trump administration tariffs are “bad tax policy that don’t raise much revenue but do raise costs for businesses and households.”

And Laura Duffy’s It’s Not 1789 Anymore: Why Trump’s Backwards Tariff Agenda Would Harm America (October 2024) on the First Congress and the deep flaws of tariffs as a form of taxation: can’t raise enough revenue to support a modern government; non-transparent to the public and thus unusually easy for well-connected interest groups to manipulate; inequitable as business taxation and regressive as consumer taxation; large harms to “downstream” industries and their workers.

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: The Trump administration is trying to find foreign eggs to lower prices, then immediately tax them to raise prices.

THE NUMBERS: Egg prices,* per dozen large Grade A –

February 2025:	$5.90
December 2024:	$4.15
February 2024:	$3.00

* National averages, via. St. Louis Federal Reserve’s “FRED” Economic Data system.

WHAT THEY MEAN:

Quick followup to our look at public opinion on tariffs last week: A poll released by Fox News (on Friday, two days after our piece) matched the four-fathoms-underwater responses to CNN/SSRS and Reuters/IPSOS: 28% thought tariffs would be good for the economy and 53% bad. More generally, this poll finds “inflation, prices, and the cost of living” the top public concern, cited by 27% of all respondents. “Economy and jobs” is next at 16%. And those thinking of inflation this year often envision an egg.

Eggs are one of those common products, like gasoline or fresh vegetables, where very visible price hikes make people sensitive. Among the apparently sensitized is the Secretary of Agriculture, Brooke Rollins, who is cajoling South Korea and Turkey this month to sell us more eggs. Here’s a passage from Hoosier Ag Today:

“[Rollins] says USDA is also working to temporarily increase the import of eggs in order to increase the supply available for consumers. “Turkey and South Korea have both confirmed they will be increasing breaker egg imports into the U.S. …USDA continues conversations—in fact, I was on one earlier today regarding another country who’s ready to import a significant amount of eggs in the short term, but we continue to work that issue very, very aggressively—again, just for the short term, to keep getting the price of eggs down.”

Two points on this:

1. “Autarkic” economies often suffer shortages and price shocks: Economies with tight import limits, whether whole countries or individual ‘sectors’, suffer price shocks and shortages more frequently than “open” economies with more diversified sources of supply. As the U.S. infant formula crisis was the 2022/23 example, eggs are this year’s, with prices doubling since the outbreak of avian flu last spring.

The lost output is hard to replace because only a few countries can sell eggs to Americans. Policy is jointly and fiercely patrolled by USDA’s Animal and Plant Health Inspection Service, the Food and Drug Administration, and the Agricultural Marketing Service, for “high path avian influenza” and “virulent newcastle.” The three agencies, for understandable reasons, require countries hoping to sell eggs to American grocery stores to have food-safety systems comparable to that of the United States, and the individual poultry operations hatching them out to pass FDA inspection.

In principle this is correct — health and safety first; set policy through science and medicine rather than through responses to fears or price concerns. And in contrast to infant formula, where strict quotas and high tariffs make it very hard for American groceries to buy, eggs don’t have especially high import barriers. (Egg tariffs, HTS 04072100, are now 2.8 cents per dozen, or a quarter of a cent per egg.) But in practice, the regulatory gauntlet is so costly and difficult that egg trade is very small. USDA’s “Global Agricultural Trade System” database reports only two countries — Canada and Turkey — selling us any significant quantity, and even they don’t do much. (Canada shipped about 2.7 million dozen fresh eggs last year, Turkey 5.7 million dozen, and the rest of the world a few thousand dozen more.) The U.S. egg industry, by comparison, shipped about 53,000 million dozen to groceries each year, which puts imports below 1% of egg sales.

In such circumstances, as with infant formula three years ago, domestic problems bring swift consequences and they tend to last.  When last fall’s avian flu outbreak slashed U.S. production, shortages and price spikes followed immediately. So a dozen eggs now cost twice what they did last spring. Ms. Rollin’s Easter weekend egg hunt, like the Defense Department’s infant formula airlift two years ago, illustrates the effect of tough import limits even when the rationale for them is understandable.

2.  The Trump administration is trying to simultaneously lower and raise egg prices: Meanwhile, the rest of the administration is trying to make eggs cost more. As Ms. Rollins looks for ways to bring egg prices down, Mr. Trump has spent the past month hyping a plan to personally impose tariffs of 10%, 25%, or some yet-to-be-decided random level, on eggs and other products from Canada, the European Union, Mexico, China, and maybe every other country in the world.

Supposedly these tariffs, on chicken eggs and the other 11,413 additional “tariff lines,” will hit next week. Courts may well declare this plan unconstitutional: Congress, not presidents, has the power to set rates for “Taxes, Duties, Imposts, and Excises.” But if courts allow it on the basis of vaguely written statutes and precedent from case law, the new tariffs will put a heavy tax on all the eggs Ms. Rollins can find, and cancel much, or all, or “more than all” of whatever egg price relief she may achieve.

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.

Health and sickness:

The CDC has avian flu updates and counts of affected birds.

A perspective from the Animal and Plant Health Inspection Service.

USDA’s Food Safety Inspection Service explains egg import rules.

And the FDA’s egg standards.

Trade:

St. Louis Fed’s FRED services track egg prices.

Rollins and USDA on egg price strategy.

And egg-trade links from the Agricultural Marketing Service.

A reminder:

PPI in 2022 on the infant formula crisis.

And last:

Mr. Kennedy, the Health and Human Services Secretary, has suggested just letting avian flu spread around so that, eventually, hopefully, chicken populations gain immunity to it. Scientific American points out that encouraging the unchecked spread of disease is unwise, and new strains of flu virus rapidly replace old ones.

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: Americans dislike tariff increases and high prices.

THE NUMBERS: Political “independents,” asked*: “Do you approve or disapprove of Donald Trump’s handling of tariffs?” –

Disapprove:	71%
Approve:	29%

* CNN/SSRS, March 6-9, 2025

WHAT THEY MEAN:

What do Americans think of the Trump administration’s tariff binge? As a point of departure, here’s the “Chapter One” pledge from last fall’s Republican party platform:

“The Republican Party will reverse the worst inflation crisis in four decades that has crushed the middle class, devastated family budgets, and pushed the dream of homeownership out of reach for millions.  We will defeat inflation, tackle the cost-of-living crisis, improve fiscal sanity, restore price stability, and quickly bring down prices.”

We noted at the time that promises to cut prices and to raise tariffs – that came four notches down, in “Chapter Five” — contradict one another. (Lewis Carroll’s White Queen might happily believe six impossible things before breakfast.  Alice knows they’re impossible nonetheless.) A hypothetical Trump administration, we predicted, would have to choose between them.

The actual administration now appears to have chosen. Here’s the Treasury Secretary, Scott Bessent, telling Americans they’re wrong to care about the cost of goods, and the administration’s policy will likely bring prices up, not down:

  “Access to cheap goods is not the essence of the American dream.  … [shift to mumbling voice] Can tariffs be a one-time price adjustment? Yes.”

Insights from three different sources — consumer confidence surveys, public opinion polls, and House of Representatives debate — give some sense of what Americans now believe tariffs do, whether they like the administration’s approach, and how strongly they may feel.

First, the Conference Board’s February consumer-confidence readout and the University of Michigan’s March survey find Americans expecting prices to rise and believing they know why. The Conference Board summary:

  “Average 12-month inflation expectations surged from 5.2% to 6% in February. This increase likely reflected a mix of factors, including sticky inflation but also the recent jump of prices of key household staples like eggs and the expected impact of tariffs.  References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics. There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.” 

Second, March public opinion polls suggest that Americans put more value than Mr. Bessent on cheap goods (see below for why this might be) and aren’t persuaded that tariff hikes will bring them much good in exchange. One, a CNN/SSRS poll done between March 6 and 9, asks about Mr. Trump’s handling of tariff policy. Reuters/IPSOS (March 3 to 5), meanwhile, asks about tariff increases in the abstract without mentioning Mr. Trump personally. Findings:

CNN/SSRS: “Do you approve or disapprove of the way Donald Trump is handling tariffs?”

	Approve	Disapprove
All respondents	39%	61%
Political independents	29%	71%
Republicans	80%	20%
Democrats	6%	93%
Non-college	41%	59%
Under 35	28%	72%
Over 45	45%	54%
Men	39%	60%
Women	39%	61%
Earns less than $50,000	38%	62%

 

Reuters/IPSOS:

	Agree	Disagree
“It’s a good idea to charge tariffs even if prices increase.”	32%	53%
“When the U.S. charges tariffs, American workers come out ahead.”	31%	49%
“Increasing tariffs will do more harm than good.”	53%	31%

 

Both show the administration (a) nearly four fathoms “underwater,” (b) holding a core Republican vote but not persuading anybody else, and (c) losing the “swing” and “non-white working-class” voters who last fall thought Mr. Trump would at least try to “quickly bring prices down.”

Third, political-system reactions — specifically, debate last week in the House of Representatives — cast some indirect light on the intensity of feeling. House Democrats, guided by Foreign Affairs Committee Ranking Member Greg Meeks, requested a vote last Wednesday to terminate the “emergency” declaration Mr. Trump is using to threaten tariffs on the energy, cars, groceries, home-building materials, medicines, and so on Americans buy from Canada and Mexico.  Rather than defend this, their Republican counterparts dodged by writing a surreal “House Rule,” declaring the last 9½ months of 2025 to be a single “day.”  Mr. Meeks:

“‘Each day for the remainder of the first session of the 119th Congress shall not constitute a calendar day.’ What? If you don’t think that makes any sense, neither do I. House Republicans are declaring that the days are no longer days and that time has literally stopped.”

It doesn’t make sense. But in the arcane ‘House Calendar world’, it does prevent a debate and avert a vote.  That day’s Congressional Record reports 23 comments on tariffs by House Democrats and none by Republicans. Rule of thumb: House members have a keen sense of local reaction to issues.  When they don’t want to talk about something, there’s a reason. At least for now, the administration’s choice to abandon its “bring down prices” pledge, and raise tariffs instead, doesn’t seem one many Americans like.

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.

In this spirit, the Congressional Record for March 12 (pp. H1083 – H1183) records an honorable day for Rep. Meeks and House Democrats.  They are right on policy, to keep costs down for hourly-wage Americans trying to manage family budgets and to oppose unprovoked attacks on America’s neighbors and friends. And they are right on principle: Congress, not the president, has authority over “Taxes, Duties, Imposts, and Excises”, and attempts by presidents to bypass this and impose tariffs by decree are fundamentally anti-Constitutional. We applaud.

Public opinion:

CNN/SSRS on Mr. Trump’s handling of tariffs, budgets, the economy in general, and more.

Reuters/IPSOS on the same topics, without attaching them personally to Trump.

Quinnipiac (March 6-10) on Mr. Trump’s approach to trade with China, Canada, and Mexico.

The Conference Board (Feb. 25) finds consumers losing confidence and worried about tariffs and their price impact.

… and the University of Michigan Consumer Sentiment survey gets similar results.

Meanwhile:

As Americans worry about price increases, retaliations against American exporters are piling up. Current status:

• Canadian against $20 billion of U.S. steel, tech, and other exports.
• EU against $28 billion worth of American motorcycles, whiskey, beef, textiles, and other food and manufactured goods.
• Chinese against $28 billion in soybeans, chicken, wheat, pork, and other farm exports.

So far, they have chosen to use tariffs hitting American manufacturers and farmers. More inventive things with wider target ranges are ahead:

• Ontario Premier Doug Ford threatens a 25% ‘export tariff’ on Ontario’s energy sales to households, utilities, and businesses in New York, Michigan, and Minnesota.  The administration is puzzlingly irate: a Canadian export tariff has exactly the same impact on Americans as Mr. Trump’s own tariffs on Canadian energy. Why complain?
• The European Union’s Anti-Coercion Instrument, designed in 2023 to counteract Chinese trade pressures, can fade protection of U.S. patents, trademarks, and copyright, or tax services exports such as film, TV programs, and digital platforms.

And last — Tariffs, the hedge-fund alum, and the single mom:

Back to Mr. Bessent: “Cheap goods are not the essence of the American dream.” Without wealth-bashing for its own sake, that’s kind of easy for him to say …

Tariffs are taxes on purchases of physical goods, incorporated in store prices for shoppers and in production costs for goods-using businesses like manufacturers, restaurants, farms, and building contractors. That means they’re toughest on people who spend a lot of their money on goods.  Who might these people be?

The BLS’ Consumer Expenditure Survey finds that in 2023, America’s single-parent families spent 40% of their $52,462 post-tax median income on food, clothes, home furnishings, and other goods. This is twice the 20% of income that the top-decile families (median post-tax, $259,432) spent on goods. Put more directly, tariffs hit the waitressing single mom twice as hard as the law firm partner. Mr. Bessent, a hedge-fund alum whose income comes from real estate rentals, royalties, and capital gains, is an extreme case even in the top decile, probably spending closer to 1% than 20% of income on physical, tariff-able goods.  So he may personally have trouble seeing why anyone would care if food and clothing prices jump.

For better analysis and policy advice, Treasury can turn to Laura Duffy’s It’s Not 1789 Anymore: Why Trump’s Backward Tariff Agenda Would Harm America. As she explains, tariffs — though a defensible choice among the bad revenue options available to 18th-century Americans, or to the present-day governments of extremely poor and/or unstable countries — are a poor form of taxation and badly wrong for modern America: can’t raise enough revenue; non-transparent; regressive and inequitable; severe downstream harm.

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: 69% of Americans want their next car to cost less than $50,000.

THE NUMBERS: Steel use per $1 billion of U.S. “real GDP,” 2017 and 2024* – 

2024:	3,990 tons
2017:	5,050 tons

*BEA for U.S. GDP adjusted for inflation in 2017 dollars (Table 1.1.6), and the U.S. Geological Survey’s Mineral Commodity Summaries (“apparent consumption”) for steel and aluminum use.

WHAT THEY MEAN:

The Trump administration’s explanations for its tariff binge shift and vary. (“Foreigners ripping us off,” “fentanyl,” “trade balance,” “reciprocity,” etc.) But they often converge on an assertion that higher trade barriers would make U.S. manufacturing grow, and that the harms of higher tariffs –lost wealth, foreign retaliations against American farm products and manufactures, depressed family living standards — are less than this future benefit. (lllustrative comments below from Cabinet Secretaries Bessent & Lutnick.) Outside the administration, Shawn Fain, president of the venerable United Auto Workers union, makes a similar claim, advocating trade collaboration with Mr. Trump in the Washington Post last January on the grounds that higher tariffs would mean fewer imported cars, more U.S. car production, and presumably, more auto-plant hires and dues-paying UAW members.

Autos are very pertinent this month. Despite the financial-market plunges and fading GDP outlook accompanying the Trump administration’s Canada and Mexico fiasco, it still appears to envision putting tariffs on cars — as well as medicines (both prescription and over-the-counter), semiconductors, building materials, and various other things — in April. So is Mr. Fain right about what might happen afterwards? We’ll start with the people who get the final say — Americans thinking about buying cars this year — and draw from recent heavy-industry tariff experience to inform an answer.

The day the Post published Mr. Fain’s article, Deloitte released a January 2025 poll of Americans on car ownership. Two points jump out: (i) 69% of Americans hope to pay less than $50,000 for their next car, and (ii) 44% of Americans aged 18 to 34 years are willing to give up auto ownership altogether in favor of “Mobility as a Service.” (“MaaS,” meaning using a mix of ride-sharing, bicycles, public transit, taxis, and rental cars instead of buying a personal car.)

Now to the recent heavy-industry experience:

In March 2018, the first Trump administration raised tariffs to 25% on most steel and 10% on most aluminum. Between September 2018 and the summer of 2019, it added tariffs of 25% and 7.5% to most Chinese-made products. Both mostly stayed in place during the Biden era. Since then U.S. manufacturing output and job growth have slowed. The average post-financial-crisis, Obama-administration-policy year saw $41 billion in real-dollar manufacturing output growth and a net gain of 125,000 manufacturing jobs. Post-2018, the averages are $31 billion in real output growth and 40,000 net new jobs. Meanwhile, the Bureau of Labor Statistics’ count of specifically unionized manufacturing workers has dropped by 216,000, and the manufacturing share of U.S. GDP has shrunk by about a point:

Manufacturing share of U.S. GDP, 2024**:	10.0%
Manufacturing share of U.S. GDP, 2017:	10.9%

One can argue — in a miniature version of the broader claim that lost wealth and diminished family purchasing power are prices worth paying for the industrial-sector growth the administration is predicting — that somewhat smaller U.S. total manufacturing output is worth it to get larger steel and aluminum industries. But that didn’t happen either. Instead, steel production in the U.S. has fallen from 87.8 million tons in 2018 to 81 million tons in 2024, and primary aluminum production from 740,000 tons to 670,000 tons.

Why?  The reason appears to be that industrial buyers now use less metal. The U.S. Geological Survey’s annual “Mineral Commodity Summaries” reports that from 2012 to 2017 the U.S. economy used 99 million tons of steel and 4.94 million tons of aluminum on average each year. From 2019 to 2024 — the six years since the tariffs, skipping 2018 since the tariffs came halfway through — the comparable averages were 94 million tons of steel and 4.37 million tons of aluminum. The 2024 totals were lower still, at 93 million tons of steel and 4.3 million tons of aluminum. So steel use dropped by about 5% and aluminum by 12%; both fell even faster relative to real GDP; and U.S. domestic production of these metals is down a bit rather than up.

Now back to cars. A 25% tariff on cars in April might raise the cost of a new $50,000 car to $60,000. Meanwhile, tariffs on the many “inputs” that go into a car — metals, semiconductors, Internet routers, wiring, radios, shatterproof and mirrored glass, leather and vinyl for seat covers, etc. — would make it more expensive for U.S.-based factories to make cars, and also raise repair and tune-up bills. Taking Deloitte’s insights on the auto-buying public into account, the likely result is that (a) some of the 69% of Americans hoping to pay less than $50,000 for a new ride wouldn’t buy one, (b) used cars would grow more attractive compared to new ones, and (c) more young Americans would choose not to buy them at all.

In sum, it’s hard to see how Mr. Fain’s hopes could materialize. And it’s easy to imagine the opposite: higher car prices, quieter dealerships, fewer sales, and eventually fewer hourly-wage auto production jobs. So here’s an alternative suggestion for the UAW’s policy shop: rather than work with Mr. Trump to raise tariffs and car prices, ask the members for ideas on how to give young Americans the low-cost cars they seem to want.

* Using the BEA and BLS annual averages, more or less equivalent to the mid-year total.

** BEA’s ‘GDP by Industry’ data. These are complete through Q3 2024; and the manufacturing share was 10.0% in the second and third quarters. The first estimate for Q4 is not yet available until March, so the final annual share may be slightly above or below the current 10.0% estimate.

FURTHER READING

Our four principles for response to Trump administration tariffs, whether last week’s on Canada/Mexico/China, or the car/medicine/semiconductor proposal:

*  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.

Cars:

Deloitte’s poll finds prospective buyers hoping for cheaper cars, and nearly half of young Americans wondering to get one at all.

… and UAW President Fain in the Washington Post on hopes for high-tariff cars.

Data: 

BEA’s ‘GDP by Industry’ series.

BLS’ gloomy look at trends in union membership in 2024. See Table 4 for manufacturing — down 216,000 members since the 2018 tariffs, probably for many reasons but not a hopeful sign for tariff-enthusiasts — and other industry-by-industry figures.

Metals:

The U.S. Geological Survey’s Mineral Commodity Summaries 2025.

USITC’s estimates for the effects of steel, aluminum, and China tariffs as of 2021, including the cost burden (“nearly full pass-through” to consumers), and effects on other industries in for the metal tariffs — a $2.2 billion expansion (again as of 2021) of aluminum and steel output, offset by a $3.5 billion contraction in auto parts, machinery, tool-making, and other metal-using manufacturing industries. No estimate for construction, and note that while the metals section estimates both benefits for protected metal-producing companies and cost for metal-using industries, the China section does only the “protected and benefiting” side and therefore isn’t useful as a picture of the effect on manufacturing.

And, as promised, some then-and-now with Cabinet Secretaries:

Then: Here’s the Republican party platform promising lower prices a few months back:

“The Republican Party will reverse the worst inflation crisis in four decades that has crushed the middle class, devastated family budgets, and pushed the dream of homeownership out of reach for millions. We will defeat inflation, tackle the cost-of-living crisis, improve fiscal sanity, restore price stability, and quickly bring down prices.”

Now: As Trump administration officials propose tariffs on groceries, lumber and other home-building materials, medicines, cars, T-shirts, etc, Treasury Secretary Bessent (via Politico) now says Americans shouldn’t care about prices — “access to cheap goods is not the essence of the American dream” — and then mumbles a bit:

“Can tariffs be a one-time price adjustment? Yes.”

Also now: Meanwhile, two blocks down 15th Street, Commerce Secretary Lutnick says the following (again via Politico) about Trump administration amplifying steel and aluminum tariffs:

“When you imposed the tariffs the first time, you added 120,000 jobs,” Lutnick told Trump. “And since that time, [the tariffs have] been picked away and nicked away and excluded away, and we’ve lost 107,000 jobs. And remember, these aren’t just general jobs. These are steel workers in America.”

Fact Check: Per the Bureau of Labor Statistics’ “Employment, Hours, and Earnings” survey (in “durable goods manufacturing”) 83,300 people worked in iron and steel mills as of February 2018. The count has varied in a narrow band since then — 88,400 high, 78,100 low, 83,500 in January 2025 — with the low point in January 2021 as the Biden administration took over and COVID re-opening got underway. Nothing remotely like “120,000 jobs gained” happened, and “107,000 jobs lost” is impossible since it’s a bigger number than the total number of steelworkers.

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: Isolationism and appeasement are dangerous.

THE NUMBERS: Ukraine economic indicators, 2022 and 2025* –

	2022	2025
GDP	$161 billion	$189 billion
Growth rate	-29.7%	2.5%
Inflation	20.2%	9.2%
Unemployment	24.5%	12.7%

* International Monetary Fund, World Economic Outlook database October 2024

WHAT THEY MEAN:

As President Zelenskyy returns to Kyiv, some thoughts on Russia’s war, the Ukrainian cause, the White House’s revival of isolationism and appeasement, and the dangers it poses for America and America’s friends:

Three years ago this week, we noted that Russia’s invasion of Ukraine was one of very few attempts since World War II — arguably only the second, together with Saddam Hussein’s invasion of Kuwait in 1990 — by one UN member to attack another and attempt to wipe it off the map. From this point of departure, we made three points about the event and the appropriate American and Allied response to it. Here they are, shortened a bit for space:

(1) The post-World War II ban on wars of conquest is the foundation of international order, whether one’s point of reference is international law and the UN Charter, or the logic of peace and security.  Respect for it is essential to international achievement in any field, from peaceful settlement of disputes among countries, to scientific and medical progress, environmental protection, economic policy, and international security.

(2) Russia’s violation of this ban in the attack on Ukraine was then, and remains now, especially dangerous as the action not of the rogue dictator of an isolated minor power, but of a permanent member of the UN Security Council. Should it succeed, we can expect more such events and a much more dangerous world. Should it fail, conversely, the taboo on wars of conquest will be stronger and future imitators more effectively deterred.

(3) The Biden administration and allies from Australia, Korea, and Japan to Canada, the EU, and the UK were right to respond with economic and military aid for Ukraine, and extensive sanctions on Russia. Hindsight from 2025 can dispute some of their specific choices, especially on weapons provision. But whether from the moral or the national-interest perspective, their decision to stand with Ukraine was correct.

It remains so now. Ukraine has used its support well. Its army defeated Russia’s initial attack on Kyiv in 2022 and holds the line in the east. Its very modest navy — mainly a collection of small boats armed with ingenious home-built naval drones — defeated Russia’s Black Sea Fleet in 2023, sinking a third of its capital ships and forcing the rest to shelter in port ever since.  And on the home front, as the IMF data above show, Ukraine’s economy has grown by about 20% since the low of 2022, with unemployment and inflation both cut by half; its start-up tech community has created ex nihilo an internationally competitive high-tech defense industry; and its Black Sea victory has reconnected Ukraine’s agricultural heartland to customers in Europe and the United States. More basically, Ukraine’s public is not about to buckle, its government is stable, and its defense is a just cause.  Americans have no reason to reassess our commitment.

The Trump administration, to our great dismay, has taken a different approach, vividly displayed in Friday’s White House meeting.  In the past month it has refused to condemn Russia’s invasion, opened direct talks with Russia without the presence of Ukrainians or European allies, and now has made an open attempt — including stopping military aid — to coerce Ukraine itself. This is full of risk — above all for Ukrainians, next for U.S. allies such as the Baltic states and Poland, and finally for Americans too.

The administration’s recycling of the term “America First” for its approach is evocative and instructive.  The first group to use this name, the “America First Committee,” was an organization created in September 1940 – that is, during the Battle of Britain — with a specific goal: to prevent Franklin Roosevelt from aiding the U.K. with ships, planes, industrial supplies, and food through the “Lend-Lease” program. Its roughly 800,000 members varied — some were sincere pacifists, others convinced isolationists and worried college students, and some admired dictators as “strong” and “decisive” personalities and considered fascism the energetic “wave of the future.” All of them were wrong, and some of them were bad. Their failure in 1940 was good for the world and America alike.

Eight decades later, Friday’s White House meeting – as well as the administration’s extraordinary decision to oppose the UN’s February resolution condemning Russia’s invasion of its neighbor – recall the ugliest part of this earlier America First movement.  The February meeting by the Secretary of State and National Security Advisor with Russian officials in Saudi Arabia — likely about Ukrainian land among other things and, we repeat, without Ukrainians present — echoes the naivete of the Committee’s pacifist/isolationist members: won’t a few concessions appease an aggressive power?  Could it hurt to try?  The obvious point of reference is the 1938 Munich Agreement, where the leaders of the two big European democracies — the U.K.’s Chamberlain and France’s Daladier — conceded Czech land to an aggressor in the hope of avoiding conflict. Here’s the classic in-the-moment verdict from an opposition MP:

“[Our people] should know that we have sustained a defeat without a war, the consequences of which will travel far with us along our road; they should know that we have passed an awful milestone in our history, when the whole equilibrium of Europe has been deranged, and that the terrible words have for the time being been pronounced against the Western democracies: ‘Thou art weighed in the balance and found wanting.’

“And do not suppose that this is the end. This is only the beginning of the reckoning. This is only the first sip, the first foretaste of a bitter cup which will be proffered to us year by year unless by a supreme recovery of moral health and martial vigour, we arise again and take our stand for freedom as in the olden time.”

Churchill was speaking of a fait accompli. By contrast, Mr. Trump’s venture has so far not succeeded.  Americans of both parties who have a greater sense of realism, who appreciate the danger of appeasement and isolationism, and who are more willing to be guided by right and wrong, may be able to prevent a second such outcome. They need to try.

FURTHER READING

PPI on Ukraine:

Tamar Jacoby leads PPI’s Kyiv-based New Ukraine Project.

… and recent pieces on Friday’s White House meeting and the February UN vote as an warning of the possible end of U.S. global leadership.

PPI President Will Marshall (July 2024) on Ukraine and NATO.

Ben Ritz on the modest budget impact of aid to Ukraine, and the very high cost failure might bring.

And Ed Gresser on economic trends and the impact of Ukraine’s Black Sea naval victory, with a point of departure in Ukraine’s large society of beekeepers and their 11-tons-of-honey-a-day American market.

Primary sources:

The UN Charter. Core sentence: “All members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations.”

President Zelenskyy’s Victory Plan, October 2024.

Ukrainian Ambassador Sergiy Kyslytsya at the UN Security Council, February 2022.

The Ukrainian Embassy has updates on home events and U.S.-Ukraine relations.

The State Department’s release on Rubio goals for Russia talks.

… Rubio/Waltz do their best to explain in Riyadh.

And a look back:

The Franklin D. Roosevelt Library remembers Lend-Lease.

Historian Susan Dunn on Roosevelt, Willkie, Lindbergh, the America First Committee, and the 1940 presidential election.

Churchill on the Munich Agreement, 1938.

And from an earlier generation, British historian A. L. Rowse recalls the 1930s in Appeasement: A Study in Political Decline. Two apposite quotes:

“The fundamental reason for the Second World War was the withdrawal of the United States out of the world-system: that, more than anything else, allowed the aggressors to get away with things.  Not all the mistakes this country [i.e. the UK] was responsible for in the 1920s and 1930s equaled the one enormous and irreparable error the United States made in contracting out of responsibility.”

“Whatever concessions were justifiable to Weimar Germany, no concessions should ever be made to Hitler.  That this was the right line to adhere to all the evidence now proves: hold the ring around Hitler’s Germany, and the break will come inside.”

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 number of African American-owned exporters grew by 60% in 2022. (Most recent year available.)

THE NUMBERS: African American businesses exporting to Africa –

Year	Number of firms	Export total
2022	491	$192 million
2021	163	$105 million
2020	138	$45 million
2019	278	$45 million
2018	200	$27 million
2017	300	$62 million

*   Census and BEA data collaboration

WHAT THEY MEAN:

A Black History Month look at U.S.-African trade and its role in the recent African American export boom:

As a point of departure, here’s then-President Bill Clinton peering into the future, as he signs the African Growth and Opportunity Act in the millennial spring of 2000:

“Sub-Saharan Africa is home to more than 700 million people [ed. note: now 1.25 billion], one of our biggest potential trade partners. I say potential because American exports now account for only 6 percent of the African market. This bill will surely change that as it expands Africa’s access to our markets and improves the ability of African nations to ease poverty, increase growth, and heal the problems of their people. It promotes the kinds of economic reform that will make sub-Saharan nations, on the long run, better allies, better trade partners, and stronger nations.”

Scrolling ahead a quarter-century: A unique Census Bureau/Bureau of Economic Analysis data collaboration, “U.S. Exporting Firms by Demographics,” provides the most detailed statistical portrait of a trading community anywhere in the world, with insights on exporting companies by size, export market, ownership by race and ethnicity, gender, veteran status, and more. Its count two years ago revealed an exceptionally severe blow to African American exporters during the COVID-19 pandemic. As economies worldwide closed the overall count of American exporting businesses fell by 17,000, or 5%. Loss counts varied by ownership but, in most cases, not by a lot: the Census/BEA counts of white-owned and women-owned exporters, for example, fell by 1.5% and 2%, that of Hispanic businesses dropped by 7%, and the number of Asian-American and Native American exporters remained stable. The African American exporting community, by contrast, lost a third of its members, contracting from 1,514 in 2019 to 1,001 in 2020.

The next edition, as we noted last February, found a modest but hopeful rebound in 2021, to 1,139. And the most recent, out three weeks ago, reports a surge to 1,802.  Its count of businesses and their $1.2 billion in exports — substantially driven by a boom in exports to African customers — are both the highest numbers in the six-year-old series. A table:

Year	Number of Firms	Total Exports
2022	1,802	$1.195 billion
2021	1,139	$1.122 billion
2020	1,001	$1.097 billion
2019	1,514	$806 million
2018	1,400	$830 million
2017	1,200	$616 million

Policy likely helped support this strong recovery: Gina Raimondo’s Commerce Department made a concerted effort to raise the exporter count through more engagement with this and other “underserved” — women, rural, veterans, ethnic — communities through the Global Diversity Export Initiative. So did the economic environment across the Atlantic – Africa’s GDP growth is a point above the world rate, and the continental market is becoming simpler, more efficient, and easier for small businesses to manage as the African Continental Free Trade Area “AfCFTA” enters into force. African American firms seem to be tapping this opportunity especially quickly — almost 500 of the 1,802 exporters have African customers, and the African share of the total sales has jumped from 6% before the pandemic to 16%. A 2022 table by market:

	Number of Exporters	Export Value
World	1,802	$1.195 billion
Mexico	154	$225 million
Africa	491	$195 million
(Nigeria)	204	$76 million
(Ghana)	104	$14 million
(South Africa)	41	$10 million
Canada	460	$162 million
European Union	319	$100 million
United Arab Emirates	110	$85 million
United Kingdom	201	$63 million
Caribbean Islands	n/a	$55 million
All Other	n/a	$310 million

In sum, very much the situation President Clinton imagined in which African growth supports American businesses and production, with particular (though by no means exclusive) benefits for the diaspora.

The cautionary notes in this relate more to policy than data or economics. Like all U.S. exporters, African American exporters are at risk of retaliation and loss of markets as the Trump administration threatens tariffs against America’s major trading partners. Mexico, Canada, and the EU, all recent targets, provide 40% of African American export earnings – a bit below the 50% for all U.S. businesses and far below Native American exporters’ 78%, but still a lot.  On a lesser but still important scale, it isn’t clear that the newly confirmed Commerce Secretary, Mr. Lutnick, will have the same interest in export promotion generally, or this community specifically, that his predecessor did. And the African Growth and Opportunity Act itself, now approaching its 25th anniversary and still the “foundation” of U.S.-Africa economic relations today, ends this September — which would mean some fraying of business ties — unless Congress renews it.

So a lot to do and some risk to manage. But still, a happy piece of transatlantic community-building, African/African American business success, and modern black history to record this February.

FURTHER READING

Data: 

From Census and BEA, “Demographics of Exporting Companies” data for 2022, with links to reports for 2017 through 2021.

Community links:

The Pew Center reports on America’s black-owned businesses.

The Brookings Institution finds a post-COVID boom in African American business startups.

The Hilltop, Howard University’s student paper, looks at the challenges and achievements of D.C.-area African American small businesses.

And also from the Pew Center, background and data on African and Caribbean immigrant families in the United States.

AGOA:

President Clinton at the AGOA signing ceremony, May 2000.

… and the U.S. Trade Representative Office’s 2024 AGOA report.

An origin point: 

If AGOA is the foundation of U.S.-African economic relations today, here’s a deep-past predecessor:  President Lincoln’s Ambassador to the U.K., Charles Francis Adams (yes, son of President John Quincy & grandson of Founder John) spent most of the autumn of 1862 facing down London Confederate sympathizers and outwitting would-be gun-runners. But he also took a week to inaugurate U.S. commercial diplomacy with sub-Saharan Africa, to join Maryland-born Liberian President Stephen Benson as signatories of the 1862 U.S.-Liberia Treaty of Amity and Commerce. Ambassador Adams’ private diary for that rainy October day (via the Massachusetts Historical Society) shows some emotion:

“I had received this week powers to negotiate a Treaty of commerce with the Republic of Liberia. I notified President Benson of the fact, and he came this day to see me about it. I gave him the form of Treaty he had first sent through me to Washington, modified as it came back to me, both of us be put into shape and executed early next week. He did so. Thus it seems that my name is to be on the first national act recognizing the restoration of the status of the Americo-African to a condition of equality with the White. I think it is an era in our history. We received the mail bags from America and found the news generally quiet cheerful. A long letter from Charles [Charles Jr., then a Union Army Lieutenant] to his mother, giving an interesting narrative of the whole campaign in Maryland, including the two great actions at South mountain and Antietam, which he witnessed. I returned thanks to God for all his mercies, and especially for his preservation thus far safe and well.”

And some then-and-now from Ghana, Ethiopia, and Madagascar: 

Dr. King reflects in 1957 on Ghanaian independence, transatlantic parallels between civil rights and decolonization, and the potential African American role in African economic development.

… and today’s Accra-based African Continental Free Trade Area Secretariat.

The Ethiopian Embassy recalls the launch of U.S.-Ethiopian trade and diplomacy in the 1903 Commercial Treaty signed by Ohio diplomat Robert Skinner and Emperor Menelik II – “King of Kings” by title, best remembered as war leader and preserver of Ethiopian independence, but also a capable commercial strategist when opportunity arose.

… and at its modern Addis Ababa HQ, the African Union on continental integration.

From 1867, the Treaty of Amity and Commerce with Queen Rasoherina’s Kingdom of Madagascar. Sample:

“Commerce between the people of America and Madagascar shall be perfectly free, with all the privileges under which the most favored nations are now or may hereafter be trading. Citizens of America shall, however, pay a duty, not exceeding ten per cent., on both exports and imports in Madagascar, to be regulated by a tariff mutually agreed upon, with the following exceptions: Munition of war, to be imported by the Queen of Madagascar into her dominions, or by her order. Prohibited from export by the laws of Madagascar are munition of war, timber, and cows. No other duties, such as tonnage, pilotage, quarantine, light-house dues, shall be imposed in ports of either country on the vessels of the other to which national vessels or vessels of the most favored nations shall not equally be liable.”

… and U.S. Amb. Claire Pierangelo (2023) applauds Madagascar’s success as an AGOA clothing exporter.

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: Foreign aid spending in 2023: 0.15% of GDP and 0.7% of the federal budget.

THE NUMBERS: In 2023 –

U.S. GDP	$27,721 billion
U.S. federal spending	$6,135 billion
U.S. Agency for International Development budget	$43 billion

WHAT THEY MEAN:

Here’s Herbert Hoover arguing for food aid to Germany in 1920 as head of Woodrow Wilson’s post-WWI European famine relief program:

“No matter how deeply we may feel at the present moment, our vision must stretch over the next hundred years and we must write now into history such acts as will stand creditably in the minds of our grandchildren … Twenty million are starving. Whatever their politics, they will be fed.”

From this start, American foreign aid programs have lasted for the hundred years Hoover imagined. The large mile-markers — the Marshall Plan, John F. Kennedy’s creation of the U.S. Agency for International Development (USAID) in 1962 (the agency now under mysterious attack from the Trump administration), and the second Bush administration’s launch of the President’s Emergency Plan for AIDS Relief (PEPFAR) and the Millennium Challenge Corporation — highlight a steady national commitment spanning lots of projects, long hardship-post and conflict assignments, some ideas that didn’t pan out, and many successes.

Last year, USAID oversaw a $35.4 billion budget supporting countries from Ukraine and Kenya to Jordan and Papua New Guinea, with the largest share going to HIV/AIDS treatment and prevention, and other lines supporting nutrition, humanitarian relief, primary education, economic growth, clean water, and more.  The administration’s attempt to dismantle the agency seems to rest on three arguments: claims of “fraud,” which appear to have no basis at all; the assertion that development and humanitarian relief are fiscally unaffordable (not correct, see below for some financials); and an argument that money doesn’t always go abroad but is at times spent in the United States.  Here’s a look, through the lens of USAID’s current work in one country:

Malawi, a landlocked African nation of 19 million people west of Mozambique and Tanzania, is one of the world’s seven most “rural” countries (82% of Malawians live on the land). It is also one of the world’s seven poorest countries, with an annual per capita income of $600. USAID’s program here, at $243 million in 2024, has two main focuses:

HIV/AIDS:  About half the Malawi budget, $143 million last year, goes to HIV/AIDS treatment and prevention via PEPFAR grants to support health education in high school, clinic support and medicine supply, and prevention of new infections in early childhood and children.  Over PEPFAR’s 20 years, Malawi’s HIV positivity rate is down by nearly half, from 13.1% to 7.1%. Sample from USAID grantees Ana Patsogolo Activity, whose work concentrates on education, awareness, and financial support for orphans, girls, and young women:

“Ana Patsogolo Activity (AP) seeks to bolster HIV prevention by decreasing young women’s reliance on transactional sex, strengthen their self-efficacy, independence, and decision-making, and serve as a bridge to wage employment or self-employment pathways for adolescent girls and young women. … APA’s enhanced package includes targeted content and strategies, namely: financial literacy for youth; voluntary savings and lending associations (VSLAs) [fpr youth] able to be employed and earn income; and locally based skills training in collaboration with rural community development agents and artisans. To support girls who are too young to engage in technical training or internships (i.e. the 10 – 14 age band), their caregivers are linked to VSLAs to improve household financial stability.”

Agricultural Development: Many Malawian smallholder farmers, formerly tobacco growers, are trying to diversify into healthier crops as worldwide smoking rates fall. “Feed the Future”, an agricultural development program run by USAID in partnership with the Department of Agriculture and other agencies, is helping them develop (or more accurately revive) a local Malawi peanut industry, with nuts destined in part for local sale and in part for export to other African markets.  Some USAID money for this project does indeed go to Americans at home – for example, to scientists at the University of Georgia – and for good reason.

Georgia is a state especially renowned for peanut farming. A USAID grant supports work at the Peanut Innovation lab to help aspiring Malawi peanut growers solve two problems: productivity and safety.  Malawi grows peanuts on 363,000 hectares of land, about the same as the U.S.’ 421,000 hectares, but gets only 381,000 tons of peanuts out of it — barely a fifth of the U.S.’ 1.9 million tons. Meanwhile, Malawi soil is unusually rich in an unpleasant substance called “aflatoxin” (a fungal chemical that raises the risk of liver disease), making its peanuts’ safety less reliable. USAID’s grant to the university helps apply Georgian farming techniques and science to both:

“Researchers in Malawi and the U.S. are working together to study the effects of pre- and post-harvest interventions in increasing peanut productivity and reducing aflatoxin contamination. Interventions being evaluated include planting and harvest dates and better row/plant spacing, improved disease and pest management, and several drying and storage options.  Researchers are also examining the levels of aflatoxin and microbial contamination in locally produced peanut products, an area of high concern for both local and international markets. Trainings for local producers, often women, aim to lower contamination levels and support the production of peanut products at much higher quality and food safety standards.”

Over the past seven years, this work and a similar soybean program with research based at the University of Illinois, has reached 565,660 Malawians, doubling income for the farmers in the program. And since 2020, a separate program, Global Alliance for Trade Facilitation, has been training Malawian officials and logistics professionals in port and customs, both to move crops out of the country to markets more easily and to facilitate the imports — machinery, fertilizer, pest control — that can help them find markets and buy useful inputs more cheaply.

In sum: In Malawi, USAID money aims to keep girls safe and improve the livelihoods of very poor farmers.  More generally, PEPFAR operates similar programs in 55 countries, and Feed the Future in 20. To the criticism that this sort of work — aflatoxin research, peanut pest management, health education for rural girls — is “fraud”: obviously not.  On the claim that it’s unaffordable: U.S. GDP is $28 trillion, and grows by about $2 trillion a year in nominal terms, while the overall U.S. budget is now about $7 trillion and rises by $200 billion to $300 billion a year because of rising retirement, health, and interest spending.  The USAID budget is stable and appropriated, about $0.04 trillion a year. By way of analogy, at 0.15% of GDP it has an impact similar to that a $120 movie-and-ice-cream outing might have on a median-income $80,610 family: not nothing, but fully affordable and not the cause of family financial trouble.  And if some of the money supports research and employment in Georgia: why would that be bad?

As with anywhere in government, aid projects should be well-designed, expenses controlled, and results more important than hopes. But none of this can justify abandoning a century of American commitment to the sick, the poor, and people in distress.  Put another way, as Mr. Hoover hoped, the famine relief program in the 1920s did, in fact, embody both practical ‘acts that stand up creditably’ to later scrutiny and a larger “vision” that continues to inspire a century later. The work of USAID staff on the ground on PEPFAR health support, in Feed the Future Innovation Labs, on economic growth, democratization, humanitarian relief, and more, is in that tradition. It, too, will stand up creditably in years ahead. Those trying to tear it down won’t.

 

FURTHER READING

Hoover looks back on the beginning of American humanitarian aid, 1914-1920.

… the National Archives reviews his Belgium relief program.

… and a century later, foreignassistance.gov tracks modern USAID and other agency spending levels, agency responsibilities, and projects.

Malawi background:

The University of Georgia’s Peanut Innovation Lab explains the Malawi peanut program.

A USAID grantee through PEPFAR, the Ana Patsogolo project, works to prevent HIV/AIDS infections in orphans, children, and young women, operating in Botswana, Uganda, and Eswatini as well as Malawi.

And the Global Alliance for Trade Facilitation helps upgrade customs and improve port efficiency.

PPI Perspectives:

PPI’s New Ukraine Project lead Tamar Jacoby has an up-close look at USAID in Ukraine.

And Paul Weinstein on the right approach to government reform.

And more on USAID:

The Democratic Voice of Burma records a quiet tragedy at the Umpiem Mai refugee camp just west of Myanmar, after a USAID-supported clinic had to close two weeks ago. Having lost access to her oxygen supplies, 71-year-old Pe Kha Lau died three days later.

A state-by-state look at USAID links to American businesses, universities, charities, and volunteer groups.

The Washington Post’s Glenn Kessler dismantles the White House’s shoddily cherry-picked justifications for cutting USAID.

And the Center for Global Development’s Charles Kenny has both backstory on these particular projects and the larger picture.

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: Extra tariff costs for Valentine’s Day in 2026: $2.5 billion?

THE NUMBERS: Valentine product tariffs, now and (maybe) in 2026 – 

	2025	2026?
Corset:	23.5%	43.5%?
Rose:	6.5%	26.5%?
Chocolate (boxed confectionery)	5.6%	25.6%?
Gold jewelry with diamonds	5.0%	25.0%?

WHAT THEY MEAN:

Having dropped his campaign-era “stabilize prices and quickly bring down costs,” Mr. Trump’s plan — short form, “there may be some pain” — appears to be threatening tariffs against all and sundry: Colombia, steel, Canada, medicine, small packages, China, etc. We did predict this, and will look at the industrial side in a week or two in light of recent experience. (In short, with steel and aluminum in the news, the main result of the 2018 steel and aluminum tariffs appears to be a ~10% drop in U.S. use of the two metals.) But this Valentine’s eve, here’s a seasonal forward look at what lovers might expect.

The National Retail Federation predicts $27.5 billion in Valentine’s Day spending this year: $14.8 billion on the long-stemmed reds, the dark chocolate, the bling, and the scraps of silk, plus $6.8 billion on cards and evenings out and $6.9 billion on other miscellaneous gifts and entertainment. Using NRF’s predictions and administration hints at a worldwide 20% tariff, the “some pain” program seems likely to raise next year’s V-Day costs by about $2.5 billion. Here’s an explanation, starting with some practical background on tariff payments and how they affect retail prices, and then a look at the four standards:

A tariff is a tax on purchases of goods from abroad, paid by the U.S. buyer — a business or an individual — to Customs and Border Protection. For industrial buyers like auto parts manufacturers or home-builders, the check is part of production cost. For retailers like florists and lingerie shops, it’s part of the “landed cost” from which they mark up to the store price. Taking the hypothetical sweater example in PPI’s Joint Economic Committee testimony last month, and converting appropriately for the season:

Consider a container of $100,000 worth of these sweaters corsets, hypothetically valued at $10 each, arriving at the Long Beach container port from Vietnam this week for a retailer’s Christmas Valentine selection.  As the cranes move the container from ship to truck, the buyer reports the arrival to Customs and Border Protection and writes the agency a $19,700 $23,500 check, reflecting the 19.7% 23.5% tariff assigned to the sweaters corsets under HTS line 61051000 62123000. The price increase works like this:

Corset purchase from manufacturer	$100,000
Shipping bill from maritime carrier	$5,000
Retailer’s MFN tariff payment to CBP	$23,500
Total “landed cost”:	$128,500

The buyer then marks up from this $128,500 “landed cost” to profit a bit on each article.  In this case, the 23.5% tariff raises the landed cost, and a few days later, the cash register price, by about 22.8%. Dumping another 20% tax on top of this — another $20,000 check — raises the landed cost to $148,500, meaning tariffs would hike store prices by 46%.  Assuming tariffs raise store prices by a similar 90% of the actual tariff rate (though in practice this would vary based on freight costs — likely a bit higher for land cargo, and a bit lower for air freight):

Roses: Valentine flower spending is $2.9 billion, roughly a tenth of NRF’s $27.5 billion total.  February being a winter month, America’s 11,600 florists buy abroad: about two-thirds of the roses come from Colombia, and most of the rest from Ecuador. Colombian blooms get no tariff — there’s a free trade agreement — while buyers of Ecuadoran roses pay 6.5%. The florists pay about $140 million for flowers in the January/February season, and write CBP tariff-payment checks totaling about $7 million. Had Mr. Trump followed through on his 50% tariff threats against Colombia three weeks ago, they would have taken a $70 million hit, and the store price of a dozen long-stemmed reds would likely have jumped from the roughly $90 current national average to around $125 or $130. Next February, a 20% overall tariff would raise flower prices by perhaps $500 million.

Chocolate: All commercial chocolate ultimately comes from abroad — mostly from West Africa. Patterns are complex, with U.S. chocolatiers buying lots of cocoa beans and paste to make candy and syrup, retailers bringing in boxes of high-end European confectionery, and the chocolate trade regime a maze of sugar and dairy quotas as well as tariffs. To simplify, chocolate confectionery has a 5.6% tariff and import value of $1.3 billion last year. A 20% new tariff might cost buyers $220 million for confectionery only, or $400 million if it hits early enough to raise U.S. manufacturers’ bean, butter, and paste costs.

Diamonds: Jewelry purchases come to $6.5 billion. As with chocolate, virtually all gems come from abroad — diamonds mainly from kimberlite pipes beneath Botswana and South Africa, and colored stones variously from Colombia (emeralds), Thailand and Sri Lanka (sapphires), and Thailand, Cambodia and Myanmar (rubies). Uncut gems are duty-free, while jewelry usually has tariffs from 5.0% to 6.5%, depending on the metal involved. A 20% tariff might hike costs by a billion dollars, depending again on whether it hits early enough to hit New York diamond-cutters as well as jewelry retail.

Lingerie: Lingerie spending by NRF’s estimate will be about $1.6 billion. Asian seamstresses stitch most of the ladies’ underwear worn in the United States, with China providing half and Indonesia, Sri Lanka, Thailand, Vietnam, and Cambodia most of the rest.  Trade policy is puritanically tough here, with underwear tariffs averaging 13% — nearly six times the overall U.S. 2.4% average — and (as we’ve earlier noted with strong disapproval) quietly taxing women’s at 15.5% and men’s only 11.5%. With annual lingerie tariff charges already about $650 million, a new 20% tariff might raise prices by $1 billion.

In sum: In love gifts as in industrial metals, the likely outcome is higher prices, then less purchasing. Money isn’t everything, of course. If they’re priced out of higher-cost roses and jewelry next February, younger and lower-income couples can still exchange cards and remind each other that “it’s the thought that counts.” But they might also want to know who’s responsible.

FURTHER READING

The USITC on steel and aluminum.

… NRF’s 2025 V-Day forecast.

PPI background:

December testimony to the Joint Economic Committee on likely impacts of tariff hikes.

On tariffs and prices, from last August: “Trust Alice, not the Queen.”

And our four principles for response to tariffs and economic isolationism. TL/DR:

• Defend the Constitution and oppose attempts to rule by decree.

• Connect tariffs and trade policy to growth, work, prices and family budgets, and living standards.

• Stand by America’s neighbors and allies.

• Offer a positive alternative.

More on flowers:

Our Valentine’s look last year at rose trade.

And 2025 advice from the Society of American Florists.

More on gems: 

Still duty-free for now — the Bangkok Gem and Jewelry Fair opens next week.

You probably can’t afford this one even without a tariff — the Motswedi, a 2,492-carat Botswana diamond found last summer.

More on chocolate:

Top-end French chocolatier Valrhona.

Ghana’s Cocoa Board on chocolate history worldwide and in West Africa:

And an underwear reprise:

Washington Post writer Catherine Rampell on our 2023 V-Day blast against the unfair, gender-biased U.S. underwear tariff system.

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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