On April 2, the Trump Administration imposed global tariffs that are supposed to reduce trade deficits that allegedly constitute an “unusual and extraordinary” threat to the United States. The measures include a 125% tariff on most imports from China and a general 10% tariff on most imports from the rest of the world. The Senate will soon vote on S.J. Res. 49, introduced by Sens. Ron Wyden (D-OR) and Rand Paul (R-KY). The resolution would terminate the national emergency that serves as the basis for global tariffs.
The Senate should pass S.J. Res. 49. Goods trade deficits averaging about 4% of annual U.S. gross domestic product (GDP) are neither unusual nor extraordinary, and they’re not a threat.
Figure 1:
In its Executive Order, the White House alleged that trade deficits have hollowed out our manufacturing base and left our defense-industrial base dependent on foreign adversaries.
This raises three questions:
If trade deficits hollowed out our industrial base, how is it possible that real annual manufacturing output reached a record high last year? According to Bureau of Economic Analysis data, U.S. real manufacturing value added was 45% higher in 2024 than in 2000.
If the Administration is concerned about reliance on foreign adversaries like China, why did the administration impose tariffs on the 93% of imports that come from countries other than China?
If the Administration intends to protect our defense-industrial base from China, why did it also impose massive tariffs on Chinese goods that have no security application, including toys, furniture, t-shirts, and hair dryers?
The evidence is clear: trade deficits have not undermined our economic security. Since 2000, annual real disposable personal income per capita grew by more than $16,000, a 48% increase, as the net worth of the United States measured in 2017 dollars doubled.
But, by imposing tariffs based on a spurious national emergency, the White House has created a real economic emergency. Tariffs, not trade deficits, constitute an unusual and extraordinary threat to the U.S. economy. They undermine our economic growth, they increase the cost of goods subject to tariffs, and they subject U.S. exporters to the threat of foreign retaliation.
By ending the spurious national security emergency based on trade deficits, the Senate can take a step toward ending the legitimate economic threat resulting from global tariffs.