by Asad Mirza
Despite legal setbacks, Donald Trump has rebuilt his tariff regime through new laws, raising revenue but fuelling global trade uncertainty, diplomatic strain and economic fragmentation
Six months ago, the US Supreme Court delivered Donald Trump’s trade agenda what looked like a fatal blow, ruling that his emergency tariff powers were unconstitutional. Optimists in boardrooms from Frankfurt to Mumbai assumed the tariff era would quietly wind down before the November midterms. Instead, the past fortnight has delivered the opposite: a “whirlwind week” of new duties, threats and legal manoeuvring that has convinced trade watchers the tariff wall isn’t crumbling—it’s being rebuilt, brick by brick, on more durable foundations.
New Foundations
Trump had no patience for lengthy tariff investigations when he returned to office, preferring to hammer trading partners immediately to extract concessions—a chaotic approach eventually undone by the Supreme Court’s ruling this year. His administration has now shifted into a new phase, building a more durable tariff regime using traditional, court-tested trade statutes it once had little patience for. The centrepiece is a new round of 10–12.5 per cent duties on 60 countries, justified by their alleged failure to enforce bans on goods made with forced labour, timed precisely to backfill a blanket tariff that Congress declined to renew.
The choice of legal vehicle matters. These new duties rely on Section 301 of the Trade Act of 1974, a law permitting tariffs against countries engaged in “unjustifiable,” “unreasonable” or “discriminatory” trade practices—crucially, one that allows a permanent tariff without going to Congress. It’s a workaround built to survive the challenge that felled his IEEPA-based tariffs.
The Pretext
The “forced labour” justification has not survived scrutiny well. If Trump were genuinely targeting forced labour, Japan and New Zealand would not face the same tariffs as China, and there wouldn’t be a carve-out for oil and gas imports.
Trade groups make the point more bluntly: the tariffs cover countries responsible for 99 per cent of US imports by value but include fewer than half the nations on the Labour Department’s own forced-labour watchlist. Even Rep. Richard Neal, the top Democrat on the House Ways and Means Committee, called it “too convenient to be taken seriously,” warning it cheapens a real human rights issue into a pretext built on “dubious legal theories and personal grievances”.
Are the Tariffs Working?
The honest answer is: it depends what “working” means. On the narrow metric Trump cares most about—revenue—the numbers are undeniably large. June set a new monthly record with $26.6 billion in customs duties, up from May’s $22.2 billion, bringing the fiscal-year total to $108 billion, though this remains a small fraction of the $526 billion the government collects in total monthly receipts.
That growing revenue stream is precisely why some economists now warn the tariffs are becoming structurally embedded: with US public debt nearing $40 trillion, future administrations may become dependent on tariff revenue, making the tariff wall “very durable”, according to the Atlantic Council’s Josh Lipsky, who argues American financial markets have gone from hating tariffs to tolerating them to actively needing them to help cope with the deficit.
Rather than “deglobalising” trade to America’s advantage, as Trump promised, critics argue the world is instead “reglobalising” around trading partners who commit to rules rather than those who wield tariffs like a club.
Trade War
What makes this tariff campaign distinct from a conventional policy is how personally Trump seems to experience it. He has repeatedly, almost obsessively, invoked one historical ghost: Herbert Hoover. “I never want to be the late, great Herbert Hoover,” Trump told Axios, referencing the president whose 1930 Smoot-Hawley tariffs are widely blamed for deepening the Great Depression.
The irony, as Dartmouth economist Douglas Irwin told Axios, “just writes itself”—because Trump has now revived the very Smoot-Hawley provision, Section 338, that he claims to want no part of. This is a pattern seen throughout Trump’s second term: a defiant refusal to accept legal or economic defeat as final. When the Supreme Court struck down his emergency tariffs, economist Paul Krugman observed that Trump’s furious reaction—branding the justices a “disgrace”—reflected an inability to accept limitations on his power, prompting him instead to construct “zombie tariffs” through obscure legal loopholes before the old ones expired.
For Trump, tariffs function less as calibrated economic instruments than as a demonstration of unilateral authority—a tool for leverage, punishment and self-vindication as much as trade policy. Even Canada’s case shows the pattern: officials acknowledged the 50 per cent tariff threat was tied not just to trade grievances but also to Canada’s retaliation against earlier US tariffs, illustrating how Trump treats tariffs as pressure levers in personal and diplomatic disputes alike.
Uneasy Accommodation
Rather than confronting Washington, most trading partners are choosing quiet accommodation. The European Union, despite calling the new forced-labour tariffs “unjustified,” is prioritising staying under the 15 per cent cap negotiated in last year’s Turnberry agreement rather than risking open confrontation, with an EU official noting the bloc’s priority is “stability and predictability” for its companies.
Brazil has been less conciliatory, calling its 12.5 per cent tariff “arbitrary and unjustified”, while Australia’s trade minister pushed back directly, insisting the country takes modern slavery “seriously” and rejecting the tariff’s premise. The pattern across dozens of capitals is one of grudging compliance rather than retaliation—a tacit acknowledgment that resisting Washington carries more economic risk than absorbing the levy.
India’s Balancing Act
India’s experience captures this dynamic well. After a brutal 2025, in which combined tariffs on Indian goods reached 50 per cent—a “strategic shock” one former Indian trade official warned threatened to wipe out India’s long-established presence in the US market, hitting textiles, gems, jewellery and leather hardest—New Delhi has since worked to de-escalate.
The rate was brought down to a temporary 10 per cent after the Supreme Court ruling, and more recently India secured a further concession, dropping from the standard 12.5 per cent forced-labour rate to 10 per cent after last-minute enforcement commitments, having amended its foreign trade policy to prohibit forced-labour imports.
The 2025 damage was real: exports to the US fell for three consecutive months, with a 16.3 per cent single-month decline in August after Washington doubled tariffs from 25 per cent to 50 per cent. New Delhi’s strategy—rapid compliance over confrontation—mirrors the calculation Brussels and Tokyo have made: in Trump’s trade war, the path of least resistance is submission dressed up as negotiation.
The Bigger Picture
What emerges is a tariff regime less coherent than durable—legally patched together, economically costly to American consumers, and psychologically anchored in Trump’s determination to avoid history’s judgment even as he risks repeating it. Whether it ultimately “works” depends on whose ledger you’re reading: the US Treasury’s, which is undeniably fatter, or the global trading system, which grows more fragmented, uncertain and coercive with every new letter Trump sends.
(The writer is a New Delhi-based senior commentator on national, international, defence and strategic affairs, environmental issues, an interfaith practitioner, and a media consultant. Ideas are personal.)
