The White House's tariff revamp this past week represents yet another bend in President Trump's continuing tariff saga. Beneath the headlines, the move likely means more of what businesses and shoppers have already learned to live with: sudden policy shifts, scrambled supply chains and higher prices on imported goods.
Eighteen months into Trump's second-term trade war, tariffs have shown up mainly in higher prices, with goods inflation running well above its prepandemic pace. The new levies have neither dragged down the $30 trillion U.S. economy nor delivered what Trump promised they would do: cut the trade deficit and boost domestic manufacturing.
What is changing?
The broad outlines of Trump's trade war are mostly staying the same. The changes are largely aimed at sustaining a tariff agenda that has run into legal trouble.
The Supreme Court struck down a broad set of global levies in February. Trump replaced them with a new 10% global tariff using a different legal authority, but that levy was limited by law to 150 days -- a period that ended Friday.
On Thursday, the president rolled out new tariffs of 10% to 12.5% against more than 80 countries, including most of the U.S.'s biggest trading partners, using a different legal authority. That means most imports will continue to face tariffs similar to those incurred over the past five months.
What legal authority is Trump relying on?
The latest tariffs rely on Section 301 of the Trade Act of 1974 -- used broadly during Trump's first term on hundreds of consumer and industrial items from China that the U.S. said were unfairly traded.
The Section 301 tariffs, viewed as more legally durable than other duties struck down by the courts, are aimed at countering loss of U.S. business from the use of forced labor in the materials or production of goods exported to the U.S.
All of this reshuffling might matter less than it looks. Analysts estimate the effective tariff rate on U.S. imports will stay near 10% -- similar to most of this year so far. "We think we won't see more of a drag than we've already seen on the economy," said Thomas Ryan, an economist at the research firm Capital Economics.
How are companies handling the shift?
American businesses have navigated Trump's trade war nimbly, said Rich Lesser, chair of Boston Consulting Group. Recent experiences such as the onset of the pandemic and the inflation surge that followed have made companies more flexible and improved their ability to respond to economic shocks, he said. That has enabled managers to make fast supply-chain adjustments and well-informed pricing decisions.
This past week, General Motors said it expects gross tariff costs of $2.5 billion to $3.5 billion for the year, but Chief Executive Mary Barra described better than expected profitability estimates. "We haven't made excuses," Barra said. "We've just continued to perform."
Still, some U.S. business executives said they are bewildered by the legal justification for the new global tariff.
"The U.S. has not proven that forced labor is causing us to lose business," said Rick Woldenberg, chief executive of the educational-toy maker Learning Resources and the learning-material company hand2mind. Learning Resources was the lead plaintiff in the legal challenge that torpedoed the earlier batch of tariffs, and this week filed suit over the new tariffs.
"This is just a pretext to tax me without going through Congress," he said.
Woldenberg's Illinois-based company imports toys manufactured in China, India and elsewhere in Asia. Woldenberg said the latest 10% to 12.5% tariffs under Section 301 are "incontrovertibly inflationary" for the U.S. economy.
How have Trump's tariffs affected the economy so far?
The clearest consequence of Trump's tariffs has been higher prices for physical goods, from clothing to televisions and furniture. Tariff costs have added anywhere between $1,600 and $9,000 to new-car prices this year, according to Kelley Blue Book.
Federal Reserve economists estimate that through February, the levies broadly lifted the cost of core goods -- those excluding volatile food and energy categories -- by about 3.1%. That is a sizable shift given that goods prices mostly fell during the decade leading up to the Covid-19 pandemic.
But most U.S. consumer spending goes to services -- everything from housing and medical care to entertainment and airline tickets. So the increases in prices of goods caused by tariffs have overall had a far smaller effect on overall inflation. All told, the Fed economists put the tariff effect on core consumer inflation at about 0.8 percentage point.
Steven Arenzon, the owner of Wisconsin Knitwear in Milwaukee, said he has raised prices on the company's knitted caps and beanies by 35% to 40% in the past year and a half to counter higher costs for yarn imported from Brazil.
The yarn is subject to a recent 25% U.S. tariff on most Brazilian imports. The forced-labor tariff will push duties on the yarn to 37.5%.
"I don't have the money to pay for these extra duties," said Arenzon. "We're a small company caught in a clog of tariffs."
What about other economic impacts?
Outside of inflation, tariffs haven't placed the economy under much strain. The economy grew an inflation-adjusted 2.7% between the first three months of 2025 and the same stretch of 2026, propelled by solid consumer spending and the artificial-intelligence investment boom. The broad S&P 500 stock index is up about 31% since Trump rolled out his first big batch of tariffs.
But so far, the tariffs haven't done much to advance two of the administration's central goals for them: closing the trade deficit and reviving factory jobs. Through the first five months of 2026, the U.S. trade deficit totaled $297.91 billion, down about 10% from the same stretch of 2024.
And although factory output is up 3.1% since Trump returned to office, the sector employs fewer people. Roughly 75,000 fewer Americans worked in manufacturing in June than in January 2025.
What else is the administration doing on trade?
Trump's trade team is selectively stepping up tariff pressure elsewhere. The administration has outlined steep tariffs on a range of Canadian goods beginning next month, a threat widely read as leverage ahead of renegotiation of a key trade pact, the U.S.-Mexico-Canada Agreement.
The administration is also working to impose another broad tariff in response to excess production capacity overseas that drives down prices for products made in America. And on Friday, Trump said in a social-media post that his team was exploring new tariffs against the European Union in retaliation for fines against U.S. tech companies.
The 25% tariff on Brazilian imports imposed earlier this month cites as justification a Brazilian digital-payment system that the Trump administration argues has put U.S. companies such as Visa and Mastercard at a disadvantage, as well as other complaints.
The administration is further threatening prohibitive tariffs on generic drugs, though they wouldn't go into effect for two years.
Write to Matt Grossman at matt.grossman@wsj.com and Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
July 25, 2026 12:00 ET (16:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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