On Wednesday, as if on cue, former President Donald Trump announced terrible tariffs on a wide variety of imported goods. These tariffs are set to go into effect on October 1. This aggressive maneuver puts an eye-popping 100% duty on pharma drugs. It slaps a 50% tariff on kitchen cabinets and a 30% tariff on upholstered furniture. The Administration’s goal with this decision is to strengthen domestic manufacturing and combat issues related to national security.
These tariffs result from investigations launched under Section 232 of the Trade Expansion Act. This provision allows for the use of tariffs under the guise of national security. It has been successfully applied in other sectors, most famously in the automotive sector and in metal industries such as steel and aluminum. Trump’s administration cited a “large scale FLOODING” of imports that threatens local manufacturers as a key reason for these tariffs.
The Commerce Department’s inquiry into the medium- and heavy-duty truck industry commenced in April, inviting companies to submit their projected demand for trucks and related products. The Federal Reserve Bank of St. Louis recently posted an exhilarating chart that illustrates a robust rebound in U.S. heavy-duty truck output. Monthly shipment values jumped from a pandemic low of $1.1 billion in April 2020 to a record $3.2 billion by July. Yet, the nominal value of these monthly shipments has been slowly sinking over the course of this year.
The advance notice also defined heavy-duty trucks as any truck with a gross vehicle weight rating greater than 26,001 lbs. Trump’s tariffs seek to shield American manufacturers such as Peterbilt, Kenworth, Freightliner, and Mack Trucks from what he described as “the onslaught of outside interruptions.” He doubled down on the need to focus on domestic production in the statement’s other key takeaways.
“All ‘Heavy (big!) Trucks’ made in other parts of the world will now face higher tariffs,” – Donald Trump
These new tariffs further Trump’s strategy. He wants to shield U.S. industries from what his administration has perceived to be predatory market practices and unfair competition stemming from foreign markets. Trump strikes similar themes, whether restricting Object X, like pharmaceuticals or furniture. His goal, he claims, is to shine a light on how imported goods pose a direct risk to our national security and economic stability.