The Administration's Theory of American Commerce
In his inaugural address, Trump declared he would "immediately begin the overhaul of our trade system to protect American workers and families," promising to "tariff and tax foreign countries to enrich our citizens." That formulation captured the administration's governing theory: that prior trade arrangements had transferred American wealth and industrial capacity abroad, and that restoring both required using the instruments of state power—tariffs, procurement, regulatory relief, and executive direction—to tilt the playing field back toward domestic producers.
Upon returning to the White House, Trump quickly promulgated "America First" trade and investment policies, laying out roadmaps for the administration's priorities. One year in, it was clear that implementation had pushed economic statecraft to new, untested limits. The theory rejects the traditional separation between trade policy and industrial policy: in the administration's framework, tariffs are not merely revenue instruments or negotiating levers but tools for directing where production happens and which industries survive. This represents a sharper version of the mercantilist logic Trump deployed during his first term, applied with greater administrative preparation and legal creativity in the second.
Industrial Policy, Deregulation, and Executive Direction
On January 31, 2025, Trump signed an executive order titled "Unleashing Prosperity Through Deregulation," requiring federal agencies to identify at least ten existing regulations to repeal for every new one proposed. In energy, the administration aimed to boost domestic production by easing permitting requirements and loosening environmental and labor standards. The deregulatory push was intended to lower input costs for manufacturers and accelerate project timelines for new industrial facilities.
In his second term, Trump reignited his "Made in America" agenda, promising a resurgence of domestic manufacturing through aggressive deregulation, expanded access to capital, and targeted federal grants, with the stated aim of restoring American industrial dominance, reducing reliance on foreign supply chains, and creating high-paying jobs. Central to this effort was the Made in America Manufacturing Initiative, launched by the U.S. Small Business Administration in early 2025, which pledged to cut $100 billion in regulatory burdens, expand loan access, and provide infrastructure support for small manufacturers, who make up nearly 99 percent of U.S. manufacturing businesses.
The administration also used the Commerce Department as an active instrument of industrial direction. An April 2025 executive order directed the secretary of commerce to investigate "the effects on national security of imports of processed critical minerals and their derivative products," part of a broader effort to build Section 232 national-security findings into new levers of domestic industrial support. Critics noted that this approach fused genuine security concerns with economic protectionism in ways that made the two objectives difficult to disentangle.
Competition, Consolidation, and Market Power
On August 13, 2025, President Trump revoked President Biden's 2021 executive order on competition policy, marking a significant shift in federal antitrust policy and the government's approach to market regulation. The Biden-era order had directed the FTC and DOJ to take a more aggressive stance against corporate consolidation and had encouraged a broader view of antitrust enforcement that considered the effects of market concentration on workers, small businesses, and innovation—not just consumer prices. Revoking it signaled a return to a narrower, more transaction-tolerant posture.
The strategic shift toward an "America First Antitrust" policy prioritized the "pocketbook" interests of Americans and produced a more deal-friendly merger environment, with a return of structural remedies and early termination of certain review periods, though the agencies stated they remained ready to litigate where remedies might not resolve competitive concerns. Early in the second Trump administration, the new Republican chair of the FTC and the acting head of the DOJ Antitrust Division announced they would retain the Biden-era 2023 Merger Guidelines, providing some institutional continuity even as enforcement priorities shifted.
The gap between formal guidelines and actual enforcement drew criticism. The settlement of Hewlett Packard Enterprise's proposed merger with Juniper Networks became a flashpoint: the DOJ had sued to stop the deal in January 2025, but settled in June on terms that critics said did not fix the harms alleged in the complaint, and a group of thirteen state attorneys general challenged the settlement in federal court as procedurally tainted and substantively inadequate. State attorneys general and legislatures have moved to fill perceived federal gaps through independent litigation and new anti-algorithmic collusion laws, a development that underscores how enforcement responsibility has partially migrated to subnational actors.
Domestic Production and Global Supply Chains
U.S. tariff policy changed more than fifty times between January 2025 and mid-2026 as the administration imposed tariffs on nearly all U.S. trading partners using a variety of legal authorities. New tariffs applied to an estimated 54 percent of U.S. goods imports in 2026, raising the applied tariff rate to approximately 11.7 percent, up from 1.5 percent in 2022.
The legal underpinnings of the tariff regime proved unstable. The Supreme Court upheld a lower court decision invalidating two sets of IEEPA tariffs: one on imports from Canada, Mexico, and China based on declared emergencies concerning illicit drugs, and another on most other U.S. imports based on a declared emergency concerning the trade deficit. After losing at the Supreme Court, the administration rebuilt its tariff policy using different legal tactics, with experts noting it sought to replicate its initial plan through alternative statutory avenues. Section 232 tariffs of the Trade Expansion Act of 1962 remained in effect, and the administration moved to impose a 10 percent tariff under Section 122—later raised to 15 percent—while exploring additional legislative authorities.
The effect on supply chains has been significant and uneven. Some trading partners announced retaliatory tariffs on U.S. exports, increasing costs for American agricultural producers and capital-goods manufacturers who depend on foreign buyers. Manufacturers dependent on foreign-sourced components faced pressure to identify alternative suppliers, while tariffs on critical inputs drove up production costs, forcing companies to choose between absorbing expenses or passing them to consumers.
Effects on Businesses, Workers, and Consumers
From April 2025 to April 2026, tariff revenue surged to roughly $20 billion to $30 billion per month, up from approximately $7 billion per month in the year before Trump's second term began. In May 2026, tariff revenue fell sharply as refunds outpaced collections; analysts described this as likely temporary, lasting as long as refunds from the legal reversals were being paid out.
According to analysis by the New York Fed—whose findings align with most mainstream economists—nearly 90 percent of the tariffs' economic burden fell on U.S. firms and consumers. Yet while many economists predicted that tariffs on imports would drive up inflation, those price increases largely failed to materialize in 2025. According to reporting on Morgan Stanley's research unit on U.S.-based industrial businesses, Trump administration tariff policies led more manufacturers to invest in their U.S. operations.
The manufacturing job picture is more complicated. In 2025, Trump's first year back in office, the U.S. manufactured goods trade deficit increased by $63 billion and the country lost 89,000 additional American manufacturing jobs. The manufacturing sector did record the first positive manufacturing job growth in three years during the first quarter of 2026, which the White House highlighted as evidence of a turning point. Other trade and manufacturing indicators show minor gains, with U.S. shipments of durable goods growing consistently, albeit modestly, throughout 2025 and continuing to rise slowly in the first half of 2026.
Critics argue that market volatility and higher prices for consumer goods have hit working Americans in their paychecks and pocketbooks. Senate opponents of the administration's merger policy have described enforcement as "a dead letter," enabling a wave of consolidation that they contend has hurt workers, raised prices, and threatened small businesses. The administration and its supporters dispute this framing, pointing to deregulatory savings and new domestic investment announcements as offsetting benefits.
The Test of Commercial Resilience
The administration's theory held that prior policy had optimized American commerce for efficiency and cost at the expense of resilience—and that accepting short-term disruption was the necessary price of reversing that condition. Eighteen months in, the record offers partial support for that argument alongside significant unresolved concerns.
What appears established is that the tariff regime has redirected some production and investment decisions toward the United States, particularly in steel and selected manufacturing sectors. Domestic production has started to scale in some sectors: in January 2026, a leading indicator based on surveys of U.S. manufacturers signaled that factory activity expanded for the first time in over two years, and shipments of core capital goods reached a record high in multiple months of late 2025. These are real data points, even if they come partly from an administration source.
What remains genuinely disputed is whether the gains in domestic production justify the costs imposed on consumers, export-dependent industries, and firms embedded in global supply chains. Businesses, governments, and consumers throughout the world found themselves on the front lines of significant uncertainties and challenges throughout 2025, and the legal instability of the tariff framework has complicated long-term investment planning. What has not yet been tested is whether the administration's blend of tariff pressure, deregulation, and selective enforcement produces durable industrial capacity—or whether it creates protected enclaves that require indefinite policy support to survive. The Supreme Court's intervention, the continuing reliance on alternative legal authorities, and the fragmented state of antitrust enforcement all suggest that the structural foundations of this commercial policy remain contested and incomplete.
Sources
Congressional Research Service, "Presidential 2025 Tariff Actions: Timeline and Status" (2025)
PolitiFact, "After Supreme Court loss, Trump tariffs have bounced back" (Aug. 2026)
Ballotpedia, "Donald Trump's executive orders and actions on trade and tariffs, 2025-2026" (2026)
Tax Foundation, "Trump Tariffs Tracker: Rates, Revenue, and Impact" (Aug. 2026)
Office of the United States Trade Representative, "The President's 2026 Trade Policy Agenda" (2026)
Rethink Trade, "Did Trump's Manufacturing Promises Work?" (Aug. 2026)
The White House, "Trump Effect: American Manufacturing Is Roaring Back" (Apr. 2026)
Reed Smith, "President Trump Walks Back Biden-Era Competition Policy" (Aug. 2025)
Further Reading and Listening
Learning Resources, Inc. v. Trump (No. 24-1287)
Supreme Court of the United States, February 20, 2026
The landmark 6–3 ruling authored by Chief Justice Roberts holds that IEEPA does not authorize the president to impose tariffs, invalidating both the "Liberation Day" reciprocal tariffs and the fentanyl-related duties on Canada, Mexico, and China — the central legal event reshaping trade and commerce policy in Trump's second term. Readers interested in the constitutional logic behind the court's separation-of-powers conclusion, including its treatment of the Major Questions Doctrine and Congress's exclusive tariff authority under Article I, should read the opinion directly.
Are Trump's "Fallback" Tariffs Legal?
Lawfare, February 25, 2026
Written by Georgetown Law visiting scholar and sanctions expert Peter Harrell within days of the Supreme Court's IEEPA ruling, this detailed legal analysis assesses whether the administration's pivot to Section 122 of the Trade Act of 1974 — and its longer-term reliance on Section 232 and Section 301 — can survive judicial scrutiny, walking through the statutory text, balance-of-payments requirements, and the 150-day durational cap that constrain the replacement tariff regime.
Lawfare Daily: The Tariffs Decision and What Comes Next
Lawfare Daily (Lawfare), March 4, 2026
Senior Editor Scott R. Anderson convenes Georgetown Law professors Kathleen Claussen and Marty Lederman and visiting scholar Peter Harrell to dissect the Supreme Court's opinion in Learning Resources v. Trump — covering its implications for the Major Questions Doctrine, foreign relations law, and the legal durability of the Section 122 and Section 232 tariff authorities the administration is now deploying to sustain its trade agenda.
From rules to discretion: How Trump reconfigured US tariff policy
Brookings Institution, June 9, 2026
Kari Heerman and Asha Patt provide a granular, data-driven account of how the administration's successive use of IEEPA, Section 122, and Section 232 shifted the trade-weighted average tariff rate from 2.6 percent in January 2025 through multiple peaks and partial retrenchments after the Supreme Court ruling — documenting the defining shift from a rules-based international trade order to discretionary, executive-driven tariff policy.
Tariffs in 2025: Short-run impacts on the US economy
Brookings Papers on Economic Activity (Brookings Institution), Spring 2026
Part of the leading peer-reviewed BPEA series, this paper rigorously measures the aggregate macroeconomic effects of the 2025 IEEPA tariff escalation — finding muted GDP impacts in the short run while documenting the distributional costs borne by importers and consumers — and provides the empirical baseline for evaluating the administration's manufacturing and reshoring claims.
Tariffs as Fiscal Policy
Cato Institute (Research Briefs in Economic Policy No. 470), February 11, 2026
Economists Kimberly Clausing (UCLA/PIIE) and Maurice Obstfeld (Berkeley/PIIE) evaluate Trump's tariffs against standard tax-policy criteria — revenue adequacy, distributional equity, and economic efficiency — finding that even revenue-maximizing tariff rates near 45 percent would produce efficiency losses nearly equal to the revenue raised, while the simultaneous enactment of income-tax cuts in the One Big Beautiful Bill Act represents a regressive fiscal swap.
Supreme Court Rules Against Tariffs Imposed Under the International Emergency Economic Powers Act (IEEPA)
Congressional Research Service (congress.gov), 2026
This concise CRS Legal Sidebar explains the Court's holding in Learning Resources, Inc. v. Trump for a congressional audience — summarizing the two sets of invalidated tariffs, the statutory interpretation question at the core of the case, and the immediate legal and legislative implications, including the limits of IEEPA authority that remain intact for non-tariff trade actions.
Section 122: The Trump Administration's Illegal Stopgap
Cato Institute (Briefing Paper No. 199), May 14, 2026
Published one week after the Court of International Trade ruled Section 122 tariffs unlawful, this Cato briefing paper argues that the administration's 10 percent global import surcharge relies on a statutory provision — designed to address Bretton Woods-era balance-of-payments crises — that the modern U.S. economy cannot satisfy, and maps the legal vulnerabilities of each remaining tariff authority the administration is deploying.
Geopolitics of Trump Tariffs: How U.S. Trade Policy Has Shaken Allies
Council on Foreign Relations, September 10, 2025
Four CFR fellows — Edward Alden, Matthias Matthijs, Sheila A. Smith, and Joshua Kurlantzick — assess the geopolitical fallout of the administration's tariff agenda on five of America's closest partners (Canada, the EU, Japan, Australia, and New Zealand), documenting how the subordination of alliance relationships to bilateral tariff diplomacy has restructured U.S. commerce and foreign policy simultaneously.
Is Trump's aggressive trade policy reshoring factory jobs?
Marketplace (APM), July 28, 2026
Reported from the ground in Michigan — a state central to the administration's manufacturing revival narrative — this piece examines official employment and trade data against the White House's reshoring claims, finding that the U.S. economy shed 75,000 manufacturing jobs since January 2025 and situating the auto industry's deeply integrated North American supply chains as a key test case for whether tariff-driven industrial policy can deliver on its promises.
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