The Trump administration has proposed new tariffs of at least 10% on dozens of trading partners, marking the most significant move yet to rebuild the president's tariff agenda after Supreme Court rulings struck down previous efforts. According to reports from TNND, the new tariffs rely on Section 301 of the 1974 Trade Act, giving the president authority to place permanent duties if the administration can point to unfair trade practices violating trade agreements. The proposal stems from an investigation finding 59 countries and the 27-member European Union have failed to guard against imports made with forced labor. More than a dozen economies including Canada, Mexico, Taiwan and the EU will face 10% levies, while 44 others including China, Japan and India will be hit with 12.5% taxes. The tariffs will not go into effect immediately and are subject to public comment and review with hearings scheduled to start July 7. As per TNND, the administration is working on another slate of tariffs related to countries' manufacturing practices that will presumably be added to the forced labor ones.
New econometric analysis reveals that US consumers are bearing the overwhelming majority of tariff costs, fundamentally undermining the effectiveness of trade policy as a tool for export diversification. According to the Kiel Institute, US household and business consumers paid 96 percent of the US tariffs imposed in 2025, with the Federal Reserve Bank of New York estimating that consumers paid 94 percent between January and August 2025, falling to 92 percent between September and October 2025. This data suggests that foreign producers are absorbing only a small fraction of headline tariffs, while 92 to 96 percent of tariffs are passed on in higher prices to US household and business consumers. The Kiel Institute found that foreign exporters absorb less than 4 percent of the tariff burden, with the coefficient on log tariffs in unit value regression at -0.039, statistically significant at the 10 percent level. This carries significant implications for export diversification efforts, as foreign producers have little incentive to seek alternative markets when they can pass costs to US consumers.
US Trade Representative Jamieson Greer has argued that the economics profession needs to re-examine its disdain for tariffs as a trade policy tool, according to reports from Business Standard. Writing for a publication associated with the International Monetary Fund, Greer defends President Donald Trump's extensive use of tariffs to address America's persistent trade deficits with major trading partners. As reported by Business Standard, Greer states that the US is using tariffs and agreements on reciprocal trade to encourage inbound productive investment, increase incentives for domestic production, and open markets for US exports. However, the effectiveness of this approach has been significantly impacted by recent legal developments, with the latest proposal facing immediate pushback from trading partners and the reality that tariffs are primarily paid by US consumers rather than foreign producers.
Trump's latest tariff proposal faces significant legal hurdles following the February 2026 Supreme Court ruling that found the president does not have authority to impose tariffs of unlimited amount, duration, and scope – including country-wide tariffs. According to TNND, Alan Wolff, a former deputy director-general at the World Trade Organization, wrote that the new tariffs are "unlikely to survive judicial review." The Supreme Court had previously ruled that Trump exceeded his authority using the International Emergency Economic Powers Act to increase levies without Congress' approval. The administration then moved to place a 10% global duty using a different authority, which a court also ruled was illegal and will expire at the end of next month. Legal experts suggest there is no indication that Congress meant 'one or more, or multiple foreign countries' to be addressed all at once, and courts may view it as an attempt to transfer full tariff power from Congress to the president. However, the new tariffs under Section 301 are expected to be more durable than the initial law Mr. Trump used to enact tariffs, as reported by TNND.
The new tariff proposal has been met with immediate pushback from major trading partners, many of which are already negotiating agreements with Washington. According to TNND, Bernd Lange, chair of the European Parliament's trade committee, called accusations against the EU regarding forced labor "absurd" and noted that "the EU has adopted the world's most stringent rules against products made with forced labour." The EU is considering a vote to lower tariffs on U.S. goods as part of a deal struck last year, while the U.S., Mexico and Canada are in negotiations over the U.S.-Mexico-Canada Agreement that is under review this year. Most countries opted against retaliating for original tariff rounds and instead tried to work out trade deals with the administration, with China being a notable exception that quickly ratcheted tariffs above 100% before coming to an uneasy truce. The evidence suggests that export diversification from US markets will be a slow process, despite the erratic nature of US trade policy. As reported by TNND, only 2025 trade data are examined in recent analysis, and it remains to be seen whether diversification trends will continue in 2026. The United States offers the world's largest and richest consumer market with no value-added taxes, making diversification particularly challenging for foreign producers.
