U.S. tariffs are about to don a new disguise once again.

In February this year, after the U.S. Supreme Court ruled that the sweeping tariffs imposed by the Trump administration were unconstitutional, the administration quickly turned to Section 122 of the Trade Act of 1974 to levy a 10% temporary import tariff on most imported goods worldwide for a period of 150 days. Now, the 150-day deadline will expire on the 24th. The U.S. plans to roll out a new round of tariff measures targeting 60 countries and regions under the pretext of so-called "forced labor", based on Section 301 of the Trade Act of 1974, in a bid to achieve a seamless transition.

While the legal pretexts keep changing, the U.S. policy stance of arbitrarily imposing tariffs and ramping up trade restrictions remains unchanged. Why do U.S. tariffs never get lifted upon expiry? How should other economies respond?

How the U.S. Extends Tariff Lifespans

Many observers argue that U.S. tariffs have evolved from temporary trade measures into long-term policy tools. At present, what the U.S. government deliberates is not whether to maintain tariffs, but what legal loopholes it can exploit to prolong their validity.

In March this year, the Office of the United States Trade Representative (USTR) launched Section 301 investigations against 60 major trading partners on the grounds that they "failed to establish and effectively enforce import bans on goods made with forced labor". In June, it proposed imposing an additional tariff of 10% to 12.5% on goods shipped to the U.S. from these economies. The outside world widely regards this as the federal government’s scheme to avoid a tariff vacuum.

Numerous international law scholars point out that extending tariffs via Section 301 essentially forces U.S. domestic standards and unilateral rules onto other economies. Such moves lack basis under international law and run counter to the rules of the multilateral trading system. They not only amplify policy uncertainty for global enterprises, but also erode the stability and predictability of WTO multilateral rules, delivering sustained shocks to the WTO-centered multilateral trading system.

Chad Bown, former Chief Economist at the U.S. Department of State during the Biden administration, commented that U.S. trade policy has in recent years leaned increasingly on domestic laws rather than multilateral rules to shape the international trade landscape.

The International Emergency Economic Powers Act, the Trade Act of 1974, Section 301 investigations… the U.S. government keeps hunting for legal justifications to launch successive tariff programs. At present, the U.S. operates a parallel arsenal of trade restriction instruments: Section 232 invokes national security grounds; Section 301 targets alleged unfair trade practices; Section 122 addresses balance-of-payments imbalances; export controls curb the outflow of critical technologies; and investment reviews screen foreign capital over purported national security risks.

CNN commented that the Trump administration’s trade policy boils down to "one tariff after another".

Why Washington Is Obsessed with Hiking Tariffs

U.S. trade policy has grown increasingly politicized in recent years. A decade ago, U.S. justifications for tariff hikes typically centered on foreign state subsidies or corporate dumping in the U.S. market. Today, more and more U.S. trade measures are wrapped in political rhetoric such as "national security", "supply chain security", "forced labor" and "values".

What lies behind this shift? Analysts note that U.S. Democrats and Republicans have converged on policies to reshoring manufacturing and safeguarding industrial and supply chain security, with tariffs serving as the most tangible policy win to showcase to voters. Against this backdrop, trade policy has gradually become a tool for political mobilization. This explains why the Biden administration retained most tariff policies rolled out during Trump’s first presidential term.

The Brookings Institution observed that Trump, in his second term, seeks to position tariffs as the core of his economic nationalism. Tariffs are not merely economic policy, but central to his political brand.

To many U.S. politicians, tariffs appear to resolve Washington’s practical predicaments. Data from the U.S. Department of the Treasury shows federal tariff revenue has surged alongside broader tariff coverage. Nevertheless, the Congressional Budget Office, Tax Foundation and other institutions stress that tariffs, while boosting fiscal receipts, function effectively as domestic taxes, as their full costs are passed on to U.S. importers and consumers.

In reality, tariffs exacerbate government policy failure in economic regulation. Far from boosting U.S. economic growth, they undermine resource allocation efficiency and impose heavier burdens on ordinary households. Calculations by Yale University’s Budget Lab indicate U.S. tariffs push up household spending and raise operational costs for businesses.

How Trade Partners Are Pushing Back

Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), has repeatedly warned that crafting trade policies around geopolitics rather than market rules will saddle the global economy with long-term woes including lower efficiency, higher costs and slower growth. The International Monetary Fund (IMF) also noted in research that artificially fragmenting the global economy via tariffs and similar policies could trigger massive losses in worldwide output.

Tariffs may alter trade flows, yet they cannot rewrite industrial division of labor. Faced with severe risks to global trade stemming from reckless U.S. tariff hikes, regional trade cooperation has intensified, with governments and enterprises worldwide rolling out countermeasures.

Data from the WTO and other international bodies reveals robust growth in intra-regional trade across ASEAN, the Middle East, Latin America and other regions in recent years. Instead of shrinking markedly due to tariffs, global trade has shifted toward regionalization and diversification.

Many economists hold that global markets are continuously offsetting the impacts of U.S. tariffs through supply chain restructuring, regional cooperation and market diversification.

A growing number of observers recognize that the deeper risks posed by U.S. tariffs stem from their normalization, institutionalization and overbroad securitization. Tariffs can reroute trade channels, yet they cannot reverse the overriding trends of economic globalization and international division of labor. What global trade truly demands is a stable, transparent and predictable international business environment — not the political farce of successive U.S. tariff rounds.

Source: Shanghai Securities News