The letters are just one piece : NPR

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President Trump’s pricing letters to world leaders are drawing a lot of attention. But this is not the entire business strategy.

This week, he also launched the idea of pharmaceutical rates, for example.

“Pharmaceutical products will probably be priced at the end of the month,” he told journalists. “And we will start with a low rate and give the pharmaceutical companies about a year to build. And then we will make a very high price.”

In general, Trump imposes two sets of different and overlapping prices, authorized by two different laws.

A set includes the prices he announces in these country letters by country. These are known in commercial circles under the name of IEPA prices, for the international law on economic powers.

Then there are prices on various products, such as pharmaceutical products. These are known as the tariffs of article 232 – named after a part of a commercial law of 1962. These prices are not as swept as the prices of the ieepa, but they cover a large part of the imports. In addition, experts say they are more likely to resist legal challenges.

How are the prices of article 232 used?

Trump used section 232 a lot.

“I think that its use could be quite characterized as a revolutionary during his first mandate,” said Tim Keeler, a trade lawyer who served at the office of the American commercial representative under President George W. Bush. “He had really not been used much before his arrival at the office.”

The first step to impose one of these prices is a survey of the trade department. Before Trump, The last survey of this type took place in 2001. Currently, Trump has two series of 232 prices in place and Nine others in progress.

A key subject of these surveys is national security – by law, the prices of article 232 are supposed to help strengthen national security.

However, not everyone thinks that Trump’s prices will do.

“I think that the argument that it is important to have a healthy steel and aluminum industry in the United States is respectable,” said ED Grasser of the Progressive Policy Institute. “But the argument that you can create this through prices has fairly serious flaws.”

A more effective way to stimulate a national industry, he said, is through subsidies. Great, who worked for the US trade representative under President Joe Biden, also noted that, for example, ships and planes are important for national security, and 232 steel and aluminum prices make the most.

It is also possible that the taxation of global prices of 232 is actively bad for national security, according to Jake Colvin, president of the National Foreign Trade Council.

“If we can all agree that the disintegration and diversification of China are a priority of national security, then we should develop much stronger relationships with our allies,” he said. “At the same time, we now put prices on steel and aluminum of our friends and allies, with whom we should really work with to strengthen our economy.”

The Trump administration, for its part, says that national manufacturing is better for national security than counting on other countries.

What is the impact?

Great, at the progressive Policy Institute, calculates that the prices of article 232 would apply to around 30% of imports. The IEEPA prices, in comparison, would cover 70%. This could make the 232 small prices, but Grasser emphasizes that they are still considerable.

“They are always very large and they can be widened. You can deposit more of these cases,” he said.

In addition, the 232 prices could be more a safe bet, legally speaking.

Earlier this year, a federal court judged that country prices by country were illegal. The Trump administration appeals to this decision, and for the moment, these prices are still in place – set at 10% on almost all imports, with a few exceptions.

The higher prices that the president threatened in this burst of letters to other world leaders who have not concluded trade agreements with him should enter into force on August 1.

The prices of article 232, on the other hand, have already been tested, said Keeler, the business lawyer.

“They were challenged before the courts by several different facets, all of which were confirmed at the level of the federal circuit,” he said.

All this underlines a common criticism of Trump’s tariff approach: that it is too wide.

“The real challenge in the current environment is that we see prices like a hammer and each problem with our allies and adversaries – whether economical or not – like a nail,” said Colvin of the National Foreign Trade Council.