More so than any other president, Trump is using tariffs for non-economic reasons, primarily for national security — but in a very, very broad sense. In fact, he utilizes that rationale for many of his whimsical goals. This is even more pronounced now than during Trump 1.0. The impact of this will not be good for either the U.S. or the global trading system.

Now, he’s imposing an export tax on chips going to China. Guess no one in this administration ever heard of  Article I, Section 9, Clause 5,  of the Constitution which states: “No Tax or Duty shall be laid on Articles exported from any State.” This means the federal government is prohibited from imposing taxes or duties on goods exported from the United States.

I guess also the Trump administration has never heard of  Article 8(1) of the 1994 GATTT which states: “All fees and charges of whatever character … imposed by contracting parties on or in connection with importation or exportation shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection to domestic products or a taxation of imports or exports for fiscal purposes.”

…………………………….

“President Donald Trump’s freewheeling use of tariffs as a tool of American power may have been more extensive than was publicly known, encompassing an array of national security goals as well as the interests of individual companies …. Administration officials saw trade talks as an opportunity to achieve objectives that went far beyond Trump’s oft-stated goal of reducing the chronic U.S. trade deficit ….  Trump views tariffs as the Swiss Army knife of diplomacy …. A list of supplemental negotiating objectives, U.S. officials acknowledged that potential accords would cover issues, including military basing.” “Trump’s Tariffs and National Security Goals.” Washington Post (Aug. 10, 2025).

“America has flourished under free trade. Don’t upend the world based on exaggerations and lies …. Massive changes in public policy that are transforming the world are being made based on a series of assumptions that are anecdotes, exaggerations and lies …. But the main point is that the churn in the American labor market is huge. These days, on average about 30 million Americans in the private sector lose their jobs annually, and a similar number gain jobs every year. During the years of the China shock, the United States actually gained more than 2 million jobs overall …. In an economy as large and diverse as the United States, there will always be places that are struggling. Part of what makes this a more pressing problem is that Americans now rarely move from places where the economy has collapsed in search of better prospects.  As Yoni Appelbaum notes in his book  Americans used to be highly mobile, always searching for better opportunities. But in recent decades, they have stayed put, hoping that better economic prospects would come to them.” “MAGA and Trade.” Washington Post (August 11, 2025).

“President Trump views tariffs as a toll that he alone gets to set for access to U.S. markets. Now he’s charging fees on U.S. companies for the purported privilege of exporting artificial-intelligence chips to China. Mark this as another step toward government control of private business …. The Commerce Department imposed restrictions on the sale of Nvidia and Advanced Micro Devices AI chips to China this spring in the name of protecting national and economic security …. In any case, this is an export tax that Congress didn’t authorize. Will AMD or Nvidia challenge the political extortion in court? ”“Trump’s Export Tax on Chips,” Wall Street Jornal (August 12, 2025).

“Trump’s zeal for dealmaking knows no bounds …. But in recent days his quid pro quo approach has taken an even more ominous turn …. Chipmakers Nvidia and AMD had agreed to give the US government 15 per cent of the revenues from chip sales in China, in order to obtain export licenses for the semiconductors. This (export tax) is unprecedented: no US company has ever agreed to pay a portion of their revenues to obtain export licensees The legally dubious arrangement underscores that, under Trump, corporate America has entered an era in which business decisions will be dictated less by the invisible hand of the market and more by the heavy hand of the White House …. The cost of Trump’s transactionalism is clear: trading an economy grounded in the rule of law for one ruled by arbitrary deals. Such a system rewards a powerful few, punishes the small and unconnected, and ultimately erodes the stable foundations on which America’s prosperity has long rested. “Trump’s Pay to Play Economy.” Financial Times (August 12, 2025).

“The president has threatened more tariffs on Russia and its trading partners and has imposed harsh ones on India and Brazil to try to sway matters of war and politics …. The Trump administration is not the first to impose tariffs on nations for reasons unrelated to trade policy. During the Napoleonic Wars, the United States wielded tariffs against Britain and France for geopolitical reasons …. And after Russia’s full-scale invasion of Ukraine in 2022, he added, the Biden administration imposed tariffs on imports of Russian aluminum …. Although U.S. courts might eventually rule against Mr. Trump’s use of emergency authorities to impose tariffs many businesses around the world have already felt the economic toll.” “Tariff Threats and Diplomacy. New York Times (Aug. 12, 2025).

“ Solicitor General John Sauer and Assistant Attorney General Brett Shumate made this week in a letter to the Court of Appeals for the Federal Circuit. The judges must give the President unilateral power to impose tariffs on any country at any time, or the end is nigh. Better buy gold and put your cash in a mattress. “If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor,” Mr. Trump wrote Friday on Truth Social. “It would be 1929 all over again, a GREAT DEPRESSION!” …. The letter to the Federal Circuit judges illustrates the Trump style: try to intimidate by exaggerating the impact of a decision he doesn’t like and suggest he’ll blame the judges. We trust the judges won’t fall for it. If they do rule against the President and he appeals, we hope the Supreme Court quickly takes the case. “Trump’s Tariff Letter.” Wall Street Journal (August 13, 2025).

“Trump’s top lawyers  filed a letter on Monday with the U.S. Court of Appeals for the Federal Circuit, which is considering a legal challenge initially brought by small businesses and states. In a letter signed by D. John Sauer, the U.S. solicitor general, the government said a ruling against tariffs would undermine the president on foreign policy, jeopardize his recent trade deals and damage the U.S. economy …. For now, at least, the Trump administration’s plea to the courts illustrated the stakes for the president’s trade strategy, which hinges on his ability to impose or threaten tariffs on a whim, and without the need to obtain the approval of Congress …. The small businesses that sued the government responded on Tuesday. Lawyers for those firms, including VOS Selections, a wine importer in New York, told the court that the president did indeed have other powers to achieve his trade goals — and could, for example, “submit agreements for congressional approval.” “Trump Warns Court on Tariff Case.” New York Times (August 14, 2025).