| Industry type | Import value | Share of Imports |
| All identifiable U.S. importers | $2.925 trillion | 89% |
| … Manufacturers | $1.220 trillion | 37% |
| … Wholesalers | $0.971 trillion | 29% |
| … All known others | $0.735 trillion | 22% |
| All else, not identified by importer type | $0.370 trillion | 11% |
WHAT THEY MEAN:
As legal devices, the Trump administration’s tariff decrees are faring poorly. The Supreme Court killed most of Plan A — “emergency” declarations under the International Emergency Economic Powers Act — in February. The specialized Court of International Trade found Plan B, a Section 122 claim that the U.S. is in the midst of a “balance of payments crisis,” illegal last Thursday:
“Because the Proclamation’s use of trade and current account deficits to stand in the place of balance-of-payment deficits within the meaning of the statute renders the Proclamation ultra vires … Proclamation No. 11012 is invalid, and the tariffs imposed on Plaintiffs are unauthorized by law.”
Plan C, announced in March and probably going live in July, disinters a third old trade law (“Section 301”), hoping to use it to impose tariffs on allegations of “structural excess capacity” and forced labor law. (PPI’s unimpressed comment here.) Court rulings on this one will presumable coming next year. In the interim, a reality check: if the administration’s decrees are struggling as a legal matter, are they nonetheless achieving their real-world economic goals?
A year ago, the administration said that while tariff increases might cause pain, this would be transitory. Though prices might go up, and living standards for American waitresses, teachers, truck drivers, and auto mechanics might fall, new manufacturing output and jobs would compensate with better opportunities. A year later, this hasn’t happened: manufacturers have shed about 100,000 jobs, and their “GDP” share is down from 9.8% to 9.4%. Why not? A likely explanation is that the administration’s mental picture of both “trade” and “manufacturing” was naïve: manufacturers are far larger importers than it realized, and a lot of the tariff burden has fallen on them. Two examples, then the big-picture point:
Whether or not foreign chassis have gotten too cheap, the administration’s tariff decrees are definitely making the U.S.-made version more expensive. Last June’s “Section 232” tariff decree — not legally challenged so far, and thus fully in force — imposed a 50% tariff on steel on “national security” grounds. According to the Commerce Department, American buyers of steel now pay an average of $971 per ton for their metal, more than twice the $460 average their overseas competitors pay. A 40-foot container chassis costing about $25,000 requires about three tons of steel, and this price gap means the U.S. version now starts out $1,500 in the hole against foreign rivals — even before the potential Plan C tariffs on screws, coatings, rivets, lathes, sandblasters, gantry welders, laser cutters, positioning tables, etc., and all the inputs and capital equipment needed to make things out of metal.
To explain, the U.S. uses about 3 million tons of rubber a year. This includes 1 million tons of natural rubber produced by rubber-tree tapping, and 2 million tons of artificial rubber produced in factories. They aren’t substitutes for one another: artificial rubber is less chemically active and therefore preferred for gaskets, fan belts, tubes, and the soles of shoes; natural rubber, being stretchier and more friction-resistant, is the main material for airplane and truck tires, as well as for condoms, surgical gloves, construction joints, and medical devices.
All natural rubber comes from abroad — mainly Southeast Asia, secondarily West Africa — because the rubber tree, Hevea brasiliensis, is a tropical plant which thrives in hot, rainy climates. (Curious D.C. Metro residents can see one in the U.S. Botanical Gardens’ climate-controlled Tropics Room near the Capitol.) Since rubber trees don’t grow in places with cold winters, the U.S. produces no natural rubber at all. Tariffs on natural rubber, no matter how high, won’t bring rubber-tree plantation jobs to Minnesota or North Carolina, but will raise costs and reduce sales for every U.S. manufacturer of airplane and truck tires, vibration dampers in bridges, specialized medical equipment, and so on.
These specific cases illustrate a systematic administration error: a belief that “trade” operates on something like 19th-century terms, with manufacturers buying raw materials, farmers and miners exporting bulk commodities, and countries competing to export finished manufactured goods. This wasn’t exactly true then, and hasn’t been close to reality since the 1950s. Just-in-time delivery, supply chains, and coordinated production mean the largest amount of trade is in “intermediate” goods — neither raw materials nor finished stuff, but parts and components used to assemble more complex things. The largest U.S. importers are accordingly not “buyers of finished goods” such as retail chains, hospitals, construction firms, restaurants, and so forth. Instead, they are the chassis-makers buying metals, the airplane-tire-makers buying natural rubber, and other manufacturers buying energy, paint, screws, semiconductor chips, etc., so as to turn these “inputs” into final products or “semi-finished goods” they then sell to others. So though tariffs on steel may benefit steel companies, those benefits only come at the expense of chassis-makers and other metal-users; and tariffs natural rubber are pure losses for U.S. manufacturing.
Statistically, the Census’s annual “Profile of Importing and Exporting Companies” release last Tuesday credits manufacturers with $1.2 trillion in imports — over 40% of the total import value they could identify by industry. That suggests last year’s tariff decrees likely hit U.S. manufacturers with $150 billion or so in new costs. So as the tariffs raised prices for the waitresses, teachers, truck operators, and repair-shop mechanics, they also made it more expensive to operate factories in the United States. Thus no industrial boom has materialized.
In sum: So far, legal judgments on the administration’s tariff decrees haven’t been positive. Real-world economic impacts, likewise.
PPI’s four principles for response to tariffs and economic isolationism:
Data:
Census counts U.S. importers and exporters by industry type, company size, etc., as of 2024 (see Table 1d for the importers), and finds that manufacturers are the largest importers.
Legal update:
Plan A: The April 2nd, 2025, “international emergency” decree. Now defunct.
… the Supreme Court’s February 20 ruling striking it down.
Plan A(ii): The June 3, 2025, steel “national security” decree is an exception since it hasn’t so far faced legal challenge and is still in effect.
Plan B: The February 26, 2026, “balance of payments crisis” decree, ruled illegal last week with appeal pending.
… the Court of International Trade’s ruling striking it down last Thursday.
Plan C: The U.S. Trade Representative Office’s “Structural Excess Capacity” investigation, with a gloomy assessment of how “reindustrialization” is going, and a memorably loopy explanation of “Structural Excess Capacity”:
“The Trump Administration’s reindustrialization efforts continue to face significant challenges due to foreign economies’ structural excess capacity and production in manufacturing sectors. Across numerous sectors, many U.S. trading partners are producing more goods than they can consume domestically. This overproduction displaces existing U.S. domestic production or prevents investment and expansion in U.S. manufacturing production that otherwise would have been brought online. In many sectors, the United States has lost substantial domestic production capacity or has fallen worryingly behind foreign competitors.”
PPI’s Gresser testified on the “Plan C” 301 investigation last week. (Quick summary: inconsistent with the statute and a breach of the separation of powers; economically irrational; data unpersuasive and at times irrelevant.)
… and in Monday’s Wall Street Journal (subs. req.)
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.
