Trump Increases Tariffs After Court Ruling: Economists Push Back

‎In advance of his February 2026 State of the Union address, President Trump appears poised to amplify his trade agenda once again. Known for calling himself “Tariff Man,” he continues to champion duties on imports as a defining feature of his presidency—despite overwhelming skepticism from economists across the political spectrum.

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Ahead of the 2026 State of the Union, Trump escalates tariffs after a court defeat. Economists say U.S. trade deficits are domestically driven, not foreign abuse.

‎Jabin Botsford/The Washington Post via Getty Images

‎His latest escalation follows a Supreme Court ruling that struck down a central element of his trade policy by a 6–3 vote. Reacting swiftly, Trump criticized the justices as “disloyal,” introduced a 10% tariff applied globally, and raised it to 15% within days via social media posts. He has also promised to impose what he termed “absolutely ‘terrible’ things” on foreign governments.

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‎Trump insists that while one approach was rejected, other tariff authorities remain intact and may be deployed more aggressively with legal assurance. He invoked Section 122 of the 1974 Trade Act to justify the new measures, even though that statute has never previously been applied in such a sweeping way.

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‎Support for tariffs among segments of the business community remains strong. Many executives share a mercantilist conviction that trade deficits signal wrongdoing abroad—whether through currency management, tariff barriers, intellectual property theft, or other unfair practices. From this perspective, America’s persistent negative trade balance reflects victimization by foreign actors.

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‎That belief mirrors the accounting logic of a corporation. Businesses survive by generating cash inflows greater than outflows. Without sustained positive cash flow or access to financing, insolvency looms. For some business leaders, a nation’s external deficit resembles a company’s financial shortfall.

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‎Economists counter that this analogy confuses microeconomic principles with macroeconomic realities—a textbook case of the fallacy of composition. What is accurate for an individual enterprise does not automatically apply to an entire national economy.

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‎The United States has recorded a trade deficit every year since 1976. According to economic reasoning, this imbalance results from domestic spending exceeding domestic production. Foreign exporters supply the difference, and as long as financing remains readily available—as it has for decades—the deficit is not inherently harmful.

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‎Since Adam Smith published The Wealth of Nations in 1776, the dominant view in economics has rejected mercantilism and the reliance on tariffs that accompanies it.

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‎Nevertheless, Trump argues that tariffs function as leverage. By threatening higher duties, he believes other nations can be compelled to agree to U.S. demands, even under pressure.

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‎Such tactics are absent from How to Win Friends and Influence People by Dale Carnegie. Instead, critics see parallels with The Ugly American, authored by Eugene Burdick and William Lederer, which warned of the diplomatic costs of coercive approaches abroad.