Donald Trump’s second presidency began with a blaze of executive orders which horrified and impressed in equal measure. It also begged the question: if it really were so easy for a president to circumvent the legal obstacles and assert his will, how come none had behaved in this way before?
A year on, we are learning the truth: no, a president can’t just do what he likes, and there is a horrible price to pay if he tries. In the case of Trump’s “Liberation Day” tariffs the notional bill is $166 billion. That is the sum that US Customs believes it will have to refund to importers who paid tariffs which were ruled unlawful by the Supreme Court in February. A computer portal to handle the refunds was set up this week, the administration of which adds more cost. Trump had argued that he had the powers to apply the tariffs under the International Emergency Economic Powers Act. But the court, which many thought had a sympathetic bias towards him, thought otherwise.
There is the cost to the economy, too, of the damaging effects of the tariffs on many industries who rely on imports of raw materials and components and have had to pay much more to buy them, making their own products uncompetitive; the number of industrial jobs in the US economy has contracted sharply in the past year.
But the biggest cost of all may end up being inflation, now running at 3.3 percent. Consumers don’t seem to have entered much into Trump’s reckoning when coming up with his tariffs, only the interests of producers of wholly US-made goods. But that isn’t all. The tariffs have created a very tricky political problem in what happens to the $166 billion worth of refunds. Does it stay with the importers, or does some of it get refunded in turn to the consumers who paid inflated prices for imported goods to cover the importers’ extra costs? Naturally, the importers think the money is all theirs. They claim that they absorbed the cost of the extra tariffs; although the elevated rate of retail inflation suggests this is not entirely the case.
Equally naturally, consumers tend to think they should have a share of the cash. But as things stand, however, there is no mechanism by which they can apply for or receive any of the refunds; they will be paid only to the importers who directly paid the tariffs.
This is not going to please Trump’s support base of ordinary, low income Americans who have to continue paying elevated prices in the stores, while corporations who sell them the goods enjoy a feast of refunds. Liberation Day was supposed to be for the masses, but in time it seems the masses have been stiffed. Trump’s once-keen political antennae has gone badly haywire.
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