The little-known legal trick Trump is using to doom the economy: Nobel economist

U.S. President Donald Trump salutes, during the annual National Memorial Day Observance in the Memorial Amphitheater, at Arlington National Cemetery in Arlington, Virginia, U.S., May 26, 2025. REUTERS/Ken Cedeno

The Trump administration hasannounced its latest attempt at levying extensive tariffs on countries around the world. This time, it is justifying the move by taking advantage of a little-known section of the 1974 Trade Act that allows the application of tariffs against countries accused of being too lenient on trading goods produced with forced labor. While this round of tariffs is more likely to hold up in court than previous efforts, Nobel-winning economist Paul Krugman warns that it is just another of President Donald Trump’s “legal tricks and lies” that will continue to hurt American pocketbooks.

When Trump launched his tariff program at the beginning of his second term, writesKrugman, “his move caused shock waves, and not just because of the economic impact. The Trump tariffs were clearly illegal — taxes imposed not via proper legislation, but by invoking an obscure existing law intended to deal with economic emergencies, even though no emergency existed. Also, by imposing these tariffs unilaterally, Trump was violating many decades’ worth of solemn U.S. agreements with other nations, including our closest allies.”

Rather than delivering on Trump’s promise to boost the economy, the tariffs contributed to the inflation crisis. While the Supreme Court eventually ruled that the majority of Trump’s tariffs were illegal, many were kept in place using another obscure law, which allowed him to apply the fees under certain emergency situations. As Krugman notes, no such emergency exists, so because Trump’s pretext is legally limited to 150 days, he needed another scheme.

“Yesterday it came in the form of ‘Section 301’ tariffs on 60 trading partners, including the European Union and Japan,” writes Krugman. “Section 301 is titled ‘Relief from Unfair Trade Practices.’ So what are the unfair practices the Trumpists say the whole world is engaging in? The answer is that the Trump administration is accusing other countries of ‘failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.’ Notice the wording. They aren’t accusing the European Union itself of employing slave labor. Even the Trumpists aren’t willing to lie that shamelessly (yet). No, the claim is that the EU isn’t doing enough to stop countries that do employ slave labor from selling their goods in Europe.”

According to Krugman, “Everyone, and I mean everyone, understands that the alleged justification for these tariffs is a lie.” As he notes, there is no reason to believe that the EU is better about opposing slave labor than the U.S., or that the Trump administration actually cares about the issue. Rather, “this is nothing but a transparently, one might say sneeringly, bogus rationale for continuing to flout both US law and international agreements.”

“Why do Trump’s minions keep using legal tricks and lies to impose tariffs?” Krugman writes. “There is, after all, no reason they couldn’t simply ask Congress to impose tariffs through normal legislation. But doing so would run into three problems, from Trump’s point of view. First, Congress might balk. Second, at minimum an attempt to pass legislation would require hearings, in which the weakness of the administration’s arguments would become obvious. Third, one of the reasons Trump loves tariffs is that he gets to issue decrees at will, none of this pesky nonsense of consulting with the legislative branch; having to follow the Constitution would spoil his fantasies of omnipotence.”

For Krugman, this raises another question: why does Trump keep trying at tariffs at all? Not only have they failed to achieve their suggested goals, but they are “also deeply unpopular, with an overwhelming majority of Americans believing, rightly, that they have raised prices.” According to the Joint Economic Committee, tariffs have cost the average American family an extra $2,500 over the past year. They’ve also complicated supply lines, increased production costs, and slowed overall economic growth, all while hurting relationships with key trade partners.

With all this in mind, Krugman asserts that there is no economic logic to the financial doom the president is willing to inflict with his program. Says Krugman, “For Trump, backing off on the tariffs would amount to admitting failure. And if you believe he’s going to do that, I have a quick, easy victory over Iran you might want to buy.”

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