Donald Trump
US President Donald Trump arbitrarily carried a whip of tariff on big countries of the world. After coming to power, he not only surprised the world with his decision but also put the global economy in danger. But the purpose of Trump does not seem to be fulfilled. Because Trump adopted aggressive policies to reduce the country’s increasing deficit. Which the court also did not justify it. There is a legal threat to change the tariff’s decision. Due to which the financial situation of the country will be worse. America’s trade deficit will continue to grow.
Trump and his top associate Finance Minister Scott Besant say that the tax deduction of Republican, low regulation and large investment of companies and foreign countries will accelerate the economy. This will increase the federal revenue and the government will have to borrow less in the coming years. But many economists suspect this. Nevertheless, most believe that the Treasury department is getting new money due to increasing tariffs.
Increase in custom duty
Treasury data showed that custom duties reached $ 165 billion in the financial year of 2025, which is 95 billion more than the previous year. Bloomberg Economics says that this increase is due to the tariff imposed under Trump’s International Emergency Economic Power Act (IEEEPA). But on August 29, a Federal Appeal Court has questioned the validity of the move. The Supreme Court will look at this case but if the verdict goes against Trump, Besant has warned that the government may have to refund a lot of money. Nevertheless, Besant is confident that the court will give a decision in favor of the White House.
Challenge for America
This year’s extra tariff revenue is still less than the budget deficit 2 trillion dollars. But Economists believe that tariffs can bring $ 300 billion annually, which is 1% of the US GDP. Since the deficit is more than 6% of GDP, this amount can help in moving 3% of Besant towards deficit target. If the tariffs are removed, Bond Investors and Economists will only have to depend on the optimistic estimates of growth and productivity. Lu Crandal, Economist of Rightson ICAP, said that this is a wild card, which will have to be dealt with later. If the court gives a verdict against the Treasury and avoid the deficit, then some new policy will have to be brought. Currently, Bond Investors are focusing on the possibilities of cutting interest rates of Federal Reserve. Also, the team of Trump can retire the tariff system using other autorities like Section 232 and 301.
Tobin Marcus of Wolf Research said that bond markets should ignore the cost of tariff refund. We hope that if Trump loses in court, he will re -implement the tariff in other ways. Besant said on Fox Business that the backup plan of the tariff will be more complex and can limit the President’s options. This can increase the excesses on business and economy, which will increase the cost, slow growth and weaken the labor market. This can increase the deficit further.
America will suffer heavy losses
Illinois company Hand 2 Mind Marketing Executive Alan Rafman is troubled by Tariff Changes. His company gave $ 5.5 million in tariff this year, while in 2024 it was just 2.3 million. If the company had not stopped production, then this bill would have been more. Yale Budget Lab estimates that if the IEEPA tariffs are removed, the $ 1.5 trillion revenue will be reduced in 10 years. If the Supreme Court invalidates the tariff, then the need for refund may remind Bond Investors of America’s fiscal problems.