| 2025 | 9.40% |
| 2024 | 9.80% |
| 2016 | 10.80% |
Every March for the last half-century, per the Trade Act of 1974, the staff at the U.S. Trade Representative Office has written up a formal report on the administration’s trade goals for the coming year, entitled “The President’s Trade Agenda,” and sent it to Congress. A month later, the two Congressional Committees responsible for trade policy — Ways and Means in the House, Finance in the Senate — fetch them up for a public hearing to explain it. Last year’s hearings, a week after the Trump administration’s April 2 International Emergency Economic Powers Act (IEEPA) tariff decree, were a bit rocky. They did, though, extract an explanation of what the administration wanted the decree to do. Here’s Amb. Greer:
“The deficit [i.e., trade balance] needs to go in the right direction. Manufacturing as a share of GDP needs to go in the right direction.”
A year later, tariffs are deeply unpopular, and the Supreme Court has demolished the April 2 decree and its seven “IEEPA” companions. Nonetheless, the administration has kept a jury-rigged high-tariff system in place through claims of a “balance of payments crisis” and constantly shifting Commerce Department “national security” decrees. Yale BudgetLab calculations estimate that the average U.S. tariff rate is 11.8% this week — down from a 19% peak last summer, but still nearly five times the 2.5% average of January 2025. The administration’s pitch to the Committees last year was that even if tariff decrees imposed “some pain” on families — two-dolls-per-girl rations, broader price increases, etc. — and damaged the Constitutional separation of powers, the benefits of a lower U.S. goods-trade deficit and a relatively larger manufacturing industry would outweigh the harms.
With Amb. Greer’s return engagements coming up — likely next week — how is it working out? Trade balance and GDP shares are secondary and tertiary stats, and not necessarily the right measurements of success. (As an example, very rapid growth in digital industries would mean the GDP shares of the other sectors shrink even if they’re all doing fine.) Many would prefer examining trade policy’s contributions to primary indicators like economic growth, job creation, stable prices, and low unemployment. But balance and GDP share are at least specific and measurable. Here’s a look at how the trade balance and the manufacturing share of GDP have changed, set against “pain” and Constitutional questions:
1. Trade balance: Not yet clear. The trade-balance stats for 2025 and 2024, with 2016 — the Obama administration’s final year, before the first Trump administration’s tariff increases in mid-2018 – added as a longer-term comparison, look like this:
| 2016 | 2024 | 2025 | |
| Goods and services | -$479 billion | -$904 billion | -$901 billion |
| Goods only | -$750 billion | -$1,215 billion | -$1,241 billion |
| Manufacturing only | -$647 billion | -$1,202 billion | -$1,236 billion |
| Trade balance/ GDP ratio | 2.7% | 3.1% | 3.0% |
Census for goods/services and goods balances; BEA’s GDP database for trade balance/GDP ratio; U.S. International Trade Commission Dataweb for manufacturing-only balance (NAICS basis).
So, not much change. The 2025 deficit was about the same as that of 2024, and larger than that of 2016. (PPI note: Comparing dollar-value trade balances over long periods of time is usually misleading, as the figures don’t account for inflation and GDP growth. For 2016, the GDP ratio is best.) On Amb. Greer’s side, though, Census’ monthly figures might be trending down: up sharply in early 2025 as businesses rushed to get low-tariff goods in before tariffs rose; back down by summer as inventories filled; and a few more downward than upward spikes since then.
2. Manufacturing share of GDP: Down. The manufacturing share of U.S. GDP fell from 9.8% of GDP in 2024 to 9.4% in 2025. Job figures concur — manufacturing hiring fell by about 400,000 in 2025, and factories shed 108,000 jobs on net. Conclusions after one turbulent year might be premature, but in 2016 the manufacturing share of U.S. GDP was a lot higher – 10.8% – so post-2017 tariff increases haven’t lifted it. This shouldn’t be a surprise, as U.S. manufacturers are some of the country’s largest importers – Census finds them buying $1.2 trillion of $2.9 trillion in known goods imports in 2024 (latest year available) – and are presumably now carrying some of the heaviest Trump tariff burdens.
Overall, last year’s GDP-share trend looks like the one you’d expect from a general tax on purchases of physical goods. BEA data show the shares of mining, construction, manufacturing, restaurants, and retail all down a bit, and that of agriculture flat, while the corresponding shares of financial services, legal services, information industry, and health grew. So as tariffs raised goods costs, manufacturers, along with other big goods-buyers, shrank relative to industries that spend relatively less of their money on physical goods, and more on services and investment.
3. How much pain? Mr. Trump’s 2024 platform promised to “defeat inflation and quickly bring down all prices.” Tariffs, by contrast, are meant to raise prices, and that’s happened. Harvard Business School’s tariff price tracker follows prices for a basket of tariffed goods and similar domestic goods. It finds that the tariffs have raised prices by about 7.0% above trend rise for the imported things, 4.6% for the domestic substitutes, and 0.8% across the entire goods-and-services economy. Federal Reserve economists concur. Spread across families, a Joint Economic Committee calculation finds this has cost families about $1,750 per household on average.
4. And the Constitution? Returning to USTR’s report, the 2026 version of the “President’s Trade Agenda” report has a startling second line: “[T]he Constitution is our most important trade agreement.” If so, the Trump administration has a big trade-agreement compliance problem. Article I’s first “enumerated power” – “Congress shall have power to lay and collect Taxes, Duties, Imposts, and Excises” – is pretty clear. So is the third sentence, assigning Congress the power to “regulate Commerce with foreign Nations.” If a president can set new tariff rates at will by declaring emergencies, and can conclude ‘deals’ with foreign countries altering both U.S. tariff rates and U.S. regulations without Congressional approval or negotiating objectives, do these clauses mean anything?
The Committees have lots to ask about next week.
PPI’s four principles for response to tariffs and economic isolationism:
Documents:
The Constitution; see Article I, Section 8, for authority over tariffs and trade regulation.
USTR’s “President’s Trade Agenda” reports for 2026 and 2025.
The White House’s April 2nd, 2025, “IEEPA” decree.
The Supreme Court’s Feb. 20, 2026 Learning Resources v. Trump opinion striking it down, along with the IEEPA decrees related to India, fentanyl, Brazilian court cases, etc.
The White House’s February “Balance of Payments Emergency” decree, currently in effect but under court challenge.
And the Commerce Department backs away from its August attempt to define condensed milk and balance beams as “steel or aluminum derivative products”, but raises tariffs on a lot of appliances and other metal things instead.
Data:
Census’ monthly FT-900 trade data reports have exports, imports, balances, etc., through February 2026.
BEA’s GDP figures (and use “GDP by Industry” for manufacturing specifically),
Yale BudgetLab calculates tariff rates.
Harvard Business School professors track price increases.
Fed economists report similar results last week.
Public:
A February Trade Fact takes a deep dive into trade and tariff polling over 2025 and early 2026. Summary: As Amb. Greer spoke to the Committees last April, a broad average across polls suggests that the public opposed Mr. Trump’s tariff decrees by about 60% to 35%, and little has changed since.
And a last look back at the IEEPA decrees:
As a tax matter, in the end, the administration’s eight “IEEPA” tariff decrees raised “negative $4 billion” in revenue and arguably “negative $9 billion.” Though Customs and Border Patrol’s “Trade Statistics” page still mournfully says buyers paid $166 billion in the IEEPA tariffs, CBP now has to pay all it all back with interest By PPI Fiscal Policy Analyst Alex Kilander’s calculations, the decision to defend the IEEPA decrees all the way to the Supreme Court means at least $4 billion in extra liability for taxpayers. Here’s why:
The administration lost its IEEPA case at the Court of International Trade on May 28, 2025. The decision to appeal this all the way to the Supreme Court appeals stretched the litigation out until February 20, 2026. That would be 268 days. As the IRS explains, ordinary Treasury borrowing pays about 4% interest (a rough average; longer-term T-bills pay higher rates than shorter-term), but interest on mistakenly or illegally collected money costs 7%. Anyone who has contemplated buying a house feels intuitively uneasy seeing that sort of spread. Kilander has the formula:
| T-bill borrowing rate proxy: | $166 billion * (1 + 0.04/2)2*0.75 = | $171 billion |
| Tariff refund with interest: | $166 billion * (1 + 0.07/365)365*0.75 = | $175 billion |
In sum, the administration’s 268 days of litigation meant an extra 3% interest on its borrowing. Assuming spending patterns remained the same, that means they (more precisely, “we,” as taxpayers) are out $175 billion, an extra $4 billion. Or, had it decided to scale back the ‘reconciliation bill’ after the Court of International Trade loss and not borrow the $166 billion at all, we would have saved $9 billion.
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.
