Amidst New Round of Scrutiny, Are Tariffs Working for U.S. Manufacturing?

On Feb. 20, the Supreme Court ruled that President Donald Trump exceeded his authority when he imposed sweeping tariffs on imports from nearly every U.S. trading partner. 

Early last year, Trump invoked the International Emergency Economic Powers Act of 1977 to set tariffs on imported goods from more than 100 countries. Although the statute does not mention the word “tariffs,” Trump claimed that it allowed him to unilaterally impose the duties without congressional approval.

Under the act, the president has the authority to take certain steps in response to a national emergency to “deal with any unusual and extraordinary threat” to “the national security, foreign policy or economy of the United States.” That includes the power to “regulate” the “importation” of foreign property. Past presidents have relied on that language to place sanctions or embargoes on other countries, but not to impose taxes. The Trump administration argued that phrase also gives the president the power to levy tariffs.

The Supreme Court disagreed. Writing for the majority, Chief Justice John G. Roberts Jr. said that statute does not authorize the president to impose tariffs. “The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it,” the chief justice wrote.

Not one to be deterred, Trump immediately invoked a new law—the Trade Act of 1974—to impose a flat 10 percent tariff on imports. That went into effect Feb. 24, but it expires in July unless Congress extends it. The administration is also investigating the applicability of other laws that target unfair trading practices and national security threats.

Under the new tariff regime, some countries, such as Colombia, Argentina, Australia and the U.K., will see higher tariffs. Some countries, including China, India, Thailand, Brazil, South Africa, Canada and Mexico, will see a lower rate. And other countries, including Japan, South Korea, and the Europe Union, won’t see any change in tariffs.

Although the new tariffs are lower than what Trump had initially imposed, consumers are unlikely to see any benefit. Many companies will be reluctant to lower prices once consumers have gotten used to them.

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The Supreme Court decision left uncertain the extent to which those who paid tariffs might be able to obtain refunds. On Feb. 23, FedEx filed suit in the U.S. Court of International Trade to demand a refund of the tariffs. FedEx is likely to be joined by many other large corporations demanding refunds. Dozens of companies filed lawsuits against the tariffs before the Supreme Court’s ruling.

Litigation aside, there’s little evidence that Trump’s tariffs are working, regardless of their legal underpinnings. In imposing tariffs, Trump said his goal is to reduce the trade deficit and spur more manufacturing in the United States. One year into his second term, neither goal has been achieved. In fact, the opposite occurred.

From January 2025 to January 2026, the U.S. lost 83,000 manufacturing jobs, according to the latest data from the Bureau of Labor Statistics.

What’s more, U.S. imports grew last year, and the trade deficit in goods hit a record high. The total trade deficit, including trade in both goods and services, shrank slightly in 2025, as growth in exports narrowly outpaced growth in imports. But that was entirely the result of an expanding trade surplus in services. The trade deficit in physical goods grew.

Overall imports of goods and services increased 4.7 percent, to $4.3 trillion, in 2025, while exports rose 6.2 percent, to $3.4 trillion. The trade deficit—the amount by which imports exceed exports—was $901 billion, down from $903 billion in 2024.

Tariffs did lead to shifts in the countries with which the United States trades. Imports of goods from China tumbled nearly 30 percent, to their lowest level since 2009. However, U.S. exports to China fell by nearly as much. The goods trade deficit with China shrank to $202 billion in 2025, the smallest in more than two decades, and for the first time, it was smaller than our deficit with the European Union.

But as Americans bought less from China, they bought more from the rest of the world. Our trade deficits with Vietnam, Mexico, India and other countries were the largest on record.

In short, Trump’s tariffs did not reduce U.S. imports, they merely rerouted them. And, U.S. consumers are stuck with higher prices.



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