Exporters Split on Liberation Day, Importers Warn of Inflation and Recession Risks
Trade groups mostly reacted in alarm to the dramatic change in tariffs with every country that is coming this month, whether because of expected retaliation against their exports or, in the case of sectors that are largely supplied by imports, the increase in costs.
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The National Foreign Trade Council, which represents corporate giants like Amazon, Caterpillar, KPMG, Oracle, Chevron and Toyota, issued a statement that said the group also wants to increase exports, both services and goods, "but dramatically increasing America’s tariffs will undercut that objective." The group said the tariffs would rise to levels not seen since the Great Depression, and that will add costs for American manufacturing.
“There is simply no way to mitigate all of the added costs of inputs to finished goods from the Administration’s complex and growing web of tariffs. Consumers should expect to see higher prices for everything from groceries to home renovations to auto insurance as construction and repair costs rise.
“The Administration, Congress and America’s key trading partners and allies quickly need to identify paths forward to de-escalate and seek a durable new normal that lowers barriers, rebuilds trust and minimizes uncertainty."
The American Apparel and Footwear Association wrote, "Before today’s so-called ‘Liberation Day,’ the average tariff on clothes, shoes, and accessories, necessities every American must buy, was already more than five times higher than on other U.S. imports. True liberation would have involved eliminating this high tariff burden and relieving U.S. consumers of its regressive and misogynistic effects, rather than layering on more costs that fuel inflation."
The Consumer Technology Association wrote, "President Trump’s sweeping global and reciprocal tariffs are massive tax hikes on Americans that will drive inflation, kill jobs on Main Street, and may cause a recession for the U.S. economy. Americans will become poorer because of these tariffs. This will not be a golden age -- but a return to the global economic catastrophe of the Smoot-Hawley tariffs of the 1930s that will disproportionately hurt low-income and hardworking Americans.”
The Institute for Agriculture and Trade Policy's trade director wrote, "Trump is treating trading partners as enemies. They are not. We need to reform our trade policy, but abrupt and erratic tariff hikes with zero plans to stimulate sustainable production will cost thousands of people their jobs, both in the U.S. and in other countries, including key allies. Market disruptions mean that smaller- and medium-scale farmers are made even more vulnerable.”
The American Farm Bureau Federation wrote, "More than 20% of farm income comes from exports, and farmers rely on imports for crucial supplies like fertilizer and specialized tools. Tariffs will drive up the cost of critical supplies, and retaliatory tariffs will make American-grown products more expensive globally. The combination not only threatens farmers’ competitiveness in the short-term, but it may cause long-term damage by leading to losses in market share."
However, not all reaction was negative. The Coalition for a Prosperous America, which had argued for 18% tariffs on all trading partners to revive American manufacturing, wrote, "A permanent, universal baseline tariff resets the global trade environment and finally addresses the destructive legacy of decades of misguided free-trade policies. This is exactly the type of bold action America needs to restore its industrial leadership."
The 10% tariff applies mostly to countries that the U.S. has goods trade surpluses with. The action is designed to end bilateral trade deficits, but the Office of the U.S. Trade Representative said they chose to impose an additional 10% tariff on those countries' exports so that they did not become a way to circumvent tariffs. The order says the president can reduce the 10% or the higher tariffs "should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters."
Eric Trump, one of the president's sons, tweeted, "I wouldn’t want to be the last country that tries to negotiate a trade deal with @realDonaldTrump. The first to negotiate will win -- the last will absolutely lose. I have seen this movie my entire life… ."
A fellow from the right-of-center think tank Hudson Institute, Walter Riley, responded, "But what will they negotiate? It won’t be FTAs because FTA partners got a tariff. It won’t be around the deficit, because goods-surplus countries got a tariff. Israel already lowered its tariffs and still got a 17% tariff. What else would they need to do to get to 10%?"
Several trade groups representing specific domestic interests hailed the tariffs. The Southern Shrimp Alliance said shrimp exporters would face 10% to 46% tariffs, and said, "We are grateful for the Trump Administration’s actions today, which will preserve American jobs, food security, and our commitment to ethical production."
The National Council of Textile Organizations said it was particularly pleased that apparel from Mexico and Canada that complies with yarn-forward rules of origin will continue to enter duty free -- but said the same offer should be available to CAFTA members (who are mostly facing 10% duties, except Nicaragua).
They also hailed the particularly high tariffs on Vietnam, China and Cambodia. “We encourage the administration to keep these penalty tariffs on finished textile and apparel products in place long-term with countries like China and Vietnam to provide the necessary market signals to recalibrate the global textile and apparel supply chain."