President Donald Trump ended the week with new announcements on tariffs for certain countries on medicines, trucks, furniture, and kitchen and bathroom fixtures. This comes after the Trump administration in early September initiated investigations into new tariffs on industrial robots, machines, and healthcare items.
This type of sectoral tariffs already exists on cars, copper, steel, and aluminum, and investigations are underway to introduce them on other commodity groups.
Court setbacks drive on
Two severe court setbacks for Trump's punitive tariffs against countries - based on their large trade surpluses with the US - may have driven the development, according to Elisabet Kopelman. The punitive tariffs on countries account for 70 percent of the US's tariff revenue, but risk being rejected even in the US Supreme Court later this fall.
If you get a setback on this, then you will come back with even more types of tariffs, she says and continues:
But the fact that the US wants to increase its self-sufficiency and strengthen its industrial base is also part of this.
The announcements of new tariffs and investigations come at the same time as it is clear that the Trump administration is lowering tariffs on cars from the EU to 15 percent, from today's 27.5 percent. This is in line with the tariff agreement between the EU and the US in August.
Kopelman does not believe that Trump's tariffs will create any significant amounts of new jobs in the US. Production in the US must have a high degree of automation to be competitive in the face of the high labor costs there, she reasons.
However, the tariff revenues are an important source of funding to cover holes in the US government finances, which, among other things, are created by Trump's extended tax cuts.
The tariffs can neutralize the effect of the fiscal proposals that came in the summer, "One Big Beautiful Big Act". But it does not cover all the holes in the US budget, says Kopelman.
"A form of tax increase"
She notes that Trump's tariffs in recent times seem to have dampened concerns about the US government finances.
It may not be the most effective, but the tariffs are still a form of tax increase, she says.
The tariffs can be expected to have a temporary effect on inflation in the US. But concerns about this have been dampened in recent times, according to Kopelman.
This has, among other things, paved the way for the US central bank, the Federal Reserve (Fed), to recently lower the interest rate and start talking about more interest rate cuts.
The US had in late August raised its import tariffs to an average of 19.5 percent, according to a recent calculation from the Western economic cooperation organization OECD. This can be compared to 15.4 percent in mid-May.
Last year, US tariffs were on average 2.4 percent.
This year's level is the highest tariff level on imports to the US since 1933, and it is expected to push up inflation in the US to an average of 3.0 percent this year, from this year's average of 2.7 percent, according to OECD.
The tariffs in the US have so far during the budget year, with one month left, generated $165 billion (approximately 1,550 billion kronor). In annual terms, the revenues are expected to be even higher in the future.
Source: Bloomberg, OECD.
In early September this year, the Trump administration initiated investigations into new tariffs on industrial robots, machines, and healthcare items. Among the healthcare items that may thus receive new US tariffs are face masks, wheelchairs, hospital beds, and medical technology such as pacemakers.
The US Department of Commerce has 270 days to complete its recommendations.
The same type of so-called sectoral tariffs - according to Section 232 of the Trade Expansion Act - already exists on cars, copper, steel, and aluminum imported into the US.
On Friday night, Trump announced that there will also be sectoral tariffs on medicines, trucks, kitchens, and bathrooms. And it is also being investigated, as previously, sectoral tariffs on semiconductors, critical minerals, and aircraft.
Source: Bloomberg, The Wall Street Journal.
