It’s a myth that August is a quiet month for markets and politics. The same, apparently, is true for tariff policy and litigation, where August has brought a virtual heat dome of confluent events.
The United States and Canada may be barreling towards “a full-blown trade war with no end in sight,” with potential legal tests of § 338 tariff authority brewing. The Trump Administration’s § 301 forced-labor tariffs cover “60 economies that, together, account for 99.4% of all U.S. imports,” with more § 301 tariffs on China under consideration on a market-flooding rationale. The month also brought new tariff actions under § 201 and § 232 on quartz countertops, polysilicon for semiconductors and photovoltaics, and drones. This week, Jon Endean has a comprehensive tariff litigation update on these multiple fronts.
Tariffs have returned to the headlines, but the question remains: after a multidecade bipartisan consensus supporting free trade, are tariffs here to stay? Increasingly, the most likely answer may be “yes.” The bigger question is what supports the emerging tariff equilibrium. More on federal revenue needs, private-sector entrenchment, and the paradox of judicial enforcement, below the fold.
The factual predicate is twofold. First, President Biden retained portions of the first Trump Administration’s tariff regime, despite criticizing those tariffs during his 2020 campaign. For example, the Biden Administration retained and expanded § 301 tariffs on China, drawing applause from “most members of Congress” and calls from Democrats “to go even further.” Second, while Democrats have opposed the second Trump Administration’s broad tariffs and chaotic exercise of authority, bipartisan support remains for tariffs as a policy instrument. Indeed, Democrats played a role in advancing new presidential tariff authority in August’s Senate-passed bipartisan Russia sanctions bill, joining Republicans in rejecting an amendment that would have stripped this authority from the legislation. The conversation about tariffs isn’t binary; it’s about which tariffs, for what purpose, with respect to which sectors, within what statutory limits, and against whom.
The case for tariff persistence starts from an even more fundamental place, however. Tariffs generate substantial federal revenue that’s not easily replaceable, especially for a party with established spending priorities (Democrats) or tax cut preferences (Republicans). In Politico, Sam Sutton and Victoria Guida make the fiscal case explicit:
The fiscal outlook for the U.S. is bleak. The bond market is getting yippy. And “no matter what happens, we’re going to be in a fiscally hawkish Washington in a way we haven’t been for a long time. And that puts a new priority on revenues—especially if there’s changes in tax policies that cut the other way,” said Josh Lipsky, vice president and chair, international economics at the Atlantic Council.
Tariff revenue may remain relatively small—Politico points to estimates “of $100 billion to $200 billion per year”—but that revenue may become baked into the policy baseline inherited by subsequent administrations. That’s hard to shake off.
And, as described by John Kellman in the Wall Street Journal, businesses have adjusted to the “new normal” of widespread tariffs—and tariff volatility. Companies have adjusted supply chains, pricing strategies, and investment decisions, making the removal of tariffs a lower-priority issue. Indeed, today’s priority may be shaping tariffs, rather than fighting them. In the Wall Street Journal, Sharon Terlep and Gavin Bade report that General Motors and Ford are lobbying policymakers for distinct tariff rules based on their business models:
Behind the scenes, the crosstown rivals are clashing as each company jockeys for tailored tariffs and policies while claiming to be the most American automaker.
The political economy of trade policy is changing, and the question isn’t so much about free trade as about the benefits and burdens of import tax frictions.
Finally, the Trump Administration’s tariff portfolio plainly remains vulnerable in the courts. These legal challenges, however, show the resilience of tariffs as an instrument. The Trump Administration has responded to adverse judicial decisions by shifting among statutes and rationales, rather than by changing policy. The courts’ Darwinian pressures are, in some sense, compelling Executive Branch personnel to develop more nuanced paths to the same end. Reciprocal tariffs may be gone, but they’ve been replaced by a modular system that’s increasingly entrenched—and, depending on how this expertise is socialized among administrative actors, potentially translatable to subsequent administrations.
These dynamics illustrate a potential paradox of judicial enforcement. If the problem is tariffs and the solution freer trade, today’s lawsuits may yield the opposite effect long-term. To the extent that the Trump Administration is an outlier on tariff policy, forbearance in litigation might leave a future administration with more room to reverse course. Just wait things out, leave the doctrinal infrastructure contingent and inchoate, then reorient policy under another President. Instead, lawyers from inside and outside of the current administration are building out the tools needed to produce legally durable tariffs. These tools won’t disappear when administrations change.
Even if policy winds shift, the temptation—and perhaps necessity—to deploy or retain tariffs still will exist. As the legal mechanisms for imposing tariffs become more diversified and institutionalized, the odds are greater that a durable, sophisticated tariff regime will persist across administrations.
