With inflation surging, the Trump Administration’s August 1 tariffs hit already reeling American businesses. This round of tariffs – touching some $1.6 trillion in goods from 90 countries – layers on top of levies on steel, aluminum, copper, cars and auto parts, and a host of other goods from select countries. Will additional tariffs land on the dozens if not hundreds of products currently under ‘Section 232’ national security investigations, including semiconductors and downstream consumer technology products? Will the trade deal frameworks the U.S. brokered become real trade deals, or will they collapse under more tariff threats? Will every spat with a foreign leader prompt new tariff threats or orders? The sad answer is we just don’t know.
That uncertainty is deadly for American business, especially in the technology sector. Predictable trade rules let American innovators think big. When our businesses can plan, they invest deeply, build boldly, and invent and ship transformative tech fast. Instead, CEOs and business leaders are so focused on trying to adapt to an ever-changing tariff landscape that they have little time to focus on the innovation necessary to compete globally. That’s one reason CEOs are feeling renewed anxiety about the business climate.
Tariffs upend nearly every business, forcing leaders to pivot constantly to keep up. As one small business owner put it, “It’s really hard to focus on innovation and creativity when you’re consumed with this day-to-day of how we’re just going to balance the books and deal with the changing rate.” While many business leaders are reluctant to publicly criticize the Administration, the damage is real and growing. Everyday Americans are worried about the fallout as well, with more than half of respondents to a recent Pew survey saying they will “personally be negatively affected” by the Administration’s tariff policies.
There is still an off-ramp. The Trump Administration’s tariff strategy brought every U.S. trading partner to the negotiating table, and early deals show the value of U.S. market access. The Trump Administration should use this leverage to axe the tariffs and non-tariff barriers that make it harder for American businesses to compete abroad. Those wins can fuel a zero-for-zero tariff approach, creating opportunities for more tariff-free trade with our partners and allies. In short: we should pivot from an approach that views tariffs as a trade sledgehammer, to tariffs as last-resort precision tools.
As part of that precision approach, the Administration should also pivot to trade policies that support the President’s vision of a vibrant American industrial base. That could include tariff exclusions for the inputs needed to make things here in the United States, which make up nearly a third of all imports. To support American innovation, we should also avoid ‘stacking’ tariffs to reduce the complexity and allow tariff deductions for U.S.-made or designed content. The administration could also green light ‘duty drawbacks’ across every tariff action –allowing U.S. exporters to request refunds of tariff payments they make when importing inputs, which they then include in exported manufactured goods.
We should also recognize the important role of trade with friends and allies. Not everything can be made in the United States, and not everything should be. The Administration has already set a positive precedent by allowing tariff exemptions for goods covered under Trump-negotiated U.S.-Mexico-Canada Agreement (USMCA). Our trade policy should build on that approach by allowing qualified exemptions for goods that meet the rules of origin of other U.S. free trade agreements with South Korea, Australia and more.
Tariff uncertainty is bad, but the Administration can take steps to avoid making
