Who Wins And Loses In The Latest Tariff Tumult

Key Takeaways

• The replacement of President Donald Trump’s emergency tariffs after last week’s Supreme Court ruling creates new winners and losers.
• Winners include China and Brazil, whose exports now have lower tariff rates than before.
• Losers include U.S. consumers, who are unlikely to have cost savings passed on to them.

The smoke is still clearing from the latest shakeup of U.S. trade policy this week, but economists have identified definite winners and losers from the latest changes to tariffs.

The tariff landscape got turned on its head last week when the Supreme Court ruled the majority of the import taxes President Donald Trump imposed last year under emergency powers were illegal. In response, Trump called for a 15% worldwide tariff under a different legal mechanism.

Because the old tariffs established under the International Economic Emergency Powers Act targeted individual countries with specific rates, replacing them with a one-size-fits-all rate creates definite winners and losers.

What This Means For The Economy

Economists’ forecasts for the U.S. economy were little changed after the ruling, since the overall tariff rate is only slightly lower than before, despite changes in who’s paying them.

Winners

The biggest winners of the exchange are China and Brazil, whose exports now have much lower tariffs than they did last week.

The effective tariff rate for Brazil’s products fell to 9.6% from 13.5%, Ryan Sweet, chief international economist at Oxford Economics, calculated. China’s tariff rate fell to 27.2% from 35.2%.

For U.S. companies, the impact is mixed. Importers, as a whole, are better off because they face overall lower tariff rates. Some companies may also get refunds from the tariffs already paid if they are able to successfully sue.

However, U.S. businesses also face increased uncertainty, which tends to discourage investments.

Related Education

What Is a Tariff and Why Are They Important?

Why Economic Uncertainty is Worse Than Bad News for Small Business Owners

Losers

U.S. consumers are firmly in the “loser” column as they cannot get refunds from the government and companies are unlikely to lower prices even if they are paying less in tariffs.

“Tariff rates are set to be similar overall to their level prior to the court ruling, so consumers will continue to feel this tax increase,” Kimberly Clausing, nonresident senior fellow at the Peterson Institute for International Economics think tank, wrote in a commentary. “Prices will likely be higher at the store because the longer tariffs last, in whatever form, the more their costs are passed through to consumers.”

Internationally, the biggest losers are countries that were paying lower than a 15% tariff rate. That includes Britain, Singapore, and some small countries. Another group of countries, including Japan, Switzerland, and the European Union, could also come out behind because they had negotiated a maximum 15% tariff rate with the Trump Administration last year.

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