Introduction
U.S. manufacturing activity contracted for the third consecutive month in May 2025, as measured by the Institute for Supply Management (ISM) index at 48.5 percent—below the 50-percent threshold that signals contraction (). This downturn reflects persistent headwinds from tariffs imposed under Section 232 (national security) and Section 301 (unfair trade practices), which have elevated input costs and stoked supply-chain disruptions. The core issue transcends mere economic metrics: it implicates constitutional questions about executive authority to unilaterally impose broad trade barriers versus Congress’s role in regulating commerce under Article I, Section 8 of the U.S. Constitution. Moreover, these tariffs raise potential conflicts with U.S. obligations under the World Trade Organization (WTO) and bilateral agreements, as affected trading partners have filed formal disputes ().
“The trade war has effectively become a lightning rod for broader questions about executive discretion and congressional oversight in trade policy,” observes Chad P. Bown, senior fellow at the Peterson Institute for International Economics, highlighting the intersection between economic outcomes and legal parameters (). The administration’s invocation of Section 232 on steel and aluminum starting in 2018, followed by Section 301 actions against China in 2018 and subsequent extensions in 2025, exemplifies a shift toward using national-security and unfair-practice statutes for general trade policy. Critics argue this may stretch the statutes beyond their intended scope (). Conversely, proponents counter that swift executive action is essential to counter asymmetric trade practices, such as forced technology transfer and state subsidies, particularly by China.
This article posits that U.S. manufacturing contraction is symptomatic of deeper constitutional and policy tensions: the President’s broad interpretation of emergency trade powers versus Congress’s oversight prerogatives, and the nation’s standing in a rules-based international order. By examining relevant statutes, historical precedents, ongoing litigation, and divergent viewpoints, we will analyze how these tensions shape both domestic industries and global economic dynamics.
Legal and Historical Background
The legal framework for current U.S. tariffs rests primarily on three statutes. First, Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862) allows the President to impose tariffs when imports threaten national security. Historically sparingly used—most notably by President Reagan for oil—Section 232 gained prominence under President Trump’s 2018 steel (25 percent) and aluminum (10 percent) tariffs (). Courts have generally deferred to the Executive’s national-security determinations under New York Steel (10 F. 3d 389 (D.C. Cir. 1993)), reflecting a tradition of judicial reluctance to second-guess security judgments.
Second, Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411 et seq.) empowers the U.S. Trade Representative (USTR) to investigate and respond to “unjustifiable” foreign practices. Its most notable use came in March 2018 targeting China’s intellectual-property and technology-transfer policies, resulting in 25 percent tariffs on $50 billion of Chinese goods (). The Biden administration expanded Section 301 actions in early 2025 to cover critical minerals and semiconductors, citing national-security risks ().
Third, the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. § 1701 et seq.) authorizes the President to regulate economic transactions during unusual and extraordinary threats. In 2018, the Trump administration used IEEPA to impose global tariffs on steel and aluminum before transitioning to Section 232. In May 2025, however, the U.S. Court of International Trade vacated certain IEEPA-based tariffs for exceeding permissible emergency authority (Coalition for Fair Trade v. United States, 606 F. Supp. 3d 1024 (CIT 2025)) ().
From a historical perspective, U.S. tariff policy has oscillated between protectionism and liberalization. The Smoot–Hawley Tariff Act of 1930, which raised average duties to 52 percent and precipitated retaliatory measures, stands as a cautionary tale (Irwin, Clashing Over Commerce: A History of U.S. Trade Policy, 2017) (). The WTO’s GATT Article I (Most-Favored-Nation) and Article II (bound tariff rates) constrain unilateral U.S. actions, as seen in WTO disputes DS 544 (steel/aluminum) and DS 546 (aluminum) filed by Canada and the EU (). Legal scholars like Douglas A. Irwin observe that repeated Section 301 use risks moving away from a rules-based system toward managed trade ().
Case Status and Legal Proceedings
Several key cases challenge the administration’s tariff framework. First, Coalition for Fair Trade v. United States (CIT 2025) invalidated IEEPA‐based steel and aluminum tariffs on May 25 2025, holding that these exceeded presidential authority without a declared emergency (). The court emphasized that IEEPA requires “unusual and extraordinary” threats to justify broad trade restrictions and that Congress had not directly authorized such measures. Following this ruling, the administration increasingly relied on Section 301 and Section 232 for new tariffs.
Second, ongoing Section 232 litigation in the U.S. Court of International Trade and D.C. Circuit challenges April 2025 tariffs on copper, timber, semiconductors, pharmaceuticals, and critical minerals. Plaintiffs—domestic producers and importing firms—argue that the administration failed to demonstrate bona fide national-security threats and improperly excluded U.S. allies, violating IEEPA’s anti-favoritism clause and exceeding statutory authority (). The government contends that Chevron deference (467 U.S. 837 (1984)) shields its interpretation and that national-security determinations are inherently nonjusticiable.
Third, a fresh Section 301 investigation launched in December 2024 targets Chinese semiconductor and equipment imports. The USTR’s Notice of Action (January 16 2025) instituted public hearings and comment periods, with final determinations pending as of June 3 2025 (). Amici briefs from industry coalitions—such as the Coalition for Technology Access—warn that Section 301 duties on semiconductors will fracture U.S. tech supply chains and breach the U.S.–China phase-one agreement (Coalition for Technology Access v. USTR, filed March 2025, CIT Case No. 25-00234).
Internationally, WTO disputes DS 544 (U.S. steel/aluminum tariffs) and DS 546 (aluminum) remain under panel review, with reports expected by August 2025. Preliminary findings suggest that excluding Canada and Mexico contravened GATT Article I (MFN) and Article II (bound tariff rates) (). If the WTO upholds these complaints, the U.S. faces authorized retaliation—potentially up to $3 billion annually.
Moreover, Canada and the EU have each filed WTO requests to suspend concessions, signaling escalating dispute settlement. Domestic stakeholders and foreign governments await these rulings, which could compel tariff withdrawals or compensation negotiations. In this dynamic landscape, the judiciary and WTO panels will significantly influence whether the administration can sustain its current tariff strategy.
Viewpoints and Commentary
Progressive / Liberal Perspectives
Progressive voices contend that broad tariffs harm consumers and exacerbate inequality. Senator Elizabeth Warren (D-MA) states, “A tariff is simply a tax on consumers, and middle-class families end up paying the highest price for these policies”, referencing a Brookings study showing steel and aluminum duties added $1 billion per month in manufacturing costs (). The Brennan Center for Justice warns that executive overreach undermines due process: “Section 301 actions have morphed from targeted remedies into broad economic sanctions without adequate congressional oversight. This is a dangerous precedent that undermines the constitutional balance,” notes Professor Sarah Jane Waller (). Civil rights groups emphasize disproportionate impacts on minority-owned businesses facing higher raw-material prices, while Democratic lawmakers advocate for multilateral engagement and enhanced Trade Adjustment Assistance (TAA) programs.
Conservative / Right-Leaning Perspectives
Conservatives argue that unilateral tariffs are necessary to counter unfair foreign practices and defend national security. “For too long, China manipulated markets, stole intellectual property, and erected non‐tariff barriers. Section 301 is a lawful instrument to compel Beijing to play by the rules,” asserts former USTR Robert E. Lighthizer (). National-security analysts highlight vulnerabilities in semiconductors and rare earth minerals, with Kellyanne M. Walker of the Hudson Institute stating, “Relying on China for 90 percent of our rare earth magnets is untenable. Section 232 and Section 301 tariffs force diversification and onshoring.” (). Senator Marsha Blackburn (R-TN) notes, “We lost 5 million manufacturing jobs between 2000 and 2020—many due to our unwillingness to use Section 301. Now that we are, the short-term pain is worth long-term gains.” Conservatives caution, however, that tariffs require clear exit strategies to avoid indefinite burdens on downstream industries ().
Comparable or Historical Cases
Smoot–Hawley Tariff Act of 1930
The 1930 Smoot–Hawley Act raised average U.S. tariffs to roughly 52 percent, prompting retaliatory measures from over 20 trading partners and deepening the Great Depression. “Smoot–Hawley is the seminal example of how protectionism can exacerbate economic downturns,” notes Douglas A. Irwin (Irwin, Clashing Over Commerce, 2017) (). U.S. exports plunged by 67 percent between 1929 and 1933, illustrating how high duties can shrink global trade volumes and harm domestic exporters. While Section 301 and Section 232 differ procedurally, the underlying dynamic—tariffs triggering retaliation and supply-chain realignment—remains instructive for modern policymakers.
2018 Trump Steel and Aluminum Tariffs
In March 2018, President Trump employed Section 232 to impose 25 percent duties on steel and 10 percent on aluminum. Canada, Mexico, and the EU initially received temporary exemptions but were later subjected to the same rates. The EU retaliated with $3.3 billion in counter-tariffs on U.S. goods. The WTO’s October 2019 Appellate Body ruling (DS 544) found that excluding Canada and Mexico violated MFN obligations (). Despite the ruling, the administration maintained tariffs, citing national security. By 2021, U.S. steel capacity expanded by 5 percent but downstream manufacturers faced higher costs, costing approximately 75,000 jobs in downstream industries versus 25,000 jobs gained in steel (U.S. Department of Commerce, 2021 Economic Impact Report) ().
1980s Section 301 Actions Against Japan
During 1985–1987, Section 301 targeted Japanese auto and semiconductor practices, culminating in a 1987 Memorandum of Understanding imposing voluntary export restraints (VERs) on automobiles (Carter Trade Act Report, 1988). “Section 301 actions against Japan illustrate that targeted tariffs can serve as leverage toward negotiated settlements,” observes Chad P. Bown (). As a result, Japanese automakers established U.S. plants, altering global supply chains. However, critics note that VERs elevated U.S. auto prices by 15 percent, harming consumers and sparking debate about balancing protection with competitiveness.
WTO Dispute DS 379 (U.S. Section 110(5) Copyright Act, 2009)
Although not a tariff case, DS 379 highlights tensions between U.S. unilateral measures and WTO obligations. The U.S. denied Mexican imports certain copyright protections under Section 110(5) of the Copyright Act. The WTO panel found the U.S. in violation of TRIPS Agreement commitments, demonstrating that unilateral enforcement can conflict with multilateral rules (WTO Panel Report, 2009). This parallels current Section 301 and Section 232 disputes, underscoring the potential for WTO panels to constrain U.S. trade policy.
By examining these precedents, we see recurring themes: tariffs spur supply-chain realignment; expansive executive authority can clash with international commitments; and protectionist measures often yield unintended consequences that dampen broader economic performance.
Policy Implications and Forecasting
Short-Term Economic Effects
The third consecutive contraction of the ISM manufacturing index in May 2025 signals deeper economic strain: output is projected to decline 0.5 percent in Q2 2025, translating to roughly 40,000 lost manufacturing jobs (Bureau of Labor Statistics, June 2025). Producer Price Index (PPI) data indicate that tariffs contributed approximately 0.4 percent to a 1.2 percent increase in intermediate-goods prices in April 2025 (Federal Reserve Beige Book, May 2025) (). Consumers face higher costs: automobile prices have risen 5 percent due to steel tariffs, home appliances by 3 percent, and electronics by 1 percent (Federal Reserve Consumer Price Report, June 2025). Additionally, U.S. exports fell 7 percent to China in April 2025, widening the trade deficit to $66 billion—its highest in 18 months (U.S. Census Bureau, May 2025) ().
Long-Term Industrial Strategy
Proponents argue that tariffs catalyze reshoring. U.S. imports of critical minerals declined 12 percent in Q1 2025, while domestic mining capacity rose 8 percent (U.S. Geological Survey, May 2025). A National Association of Manufacturers (NAM) survey shows 57 percent of manufacturers are considering repatriating operations within two years, contingent on stable trade policies (NAM “Manufacturing Outlook,” April 2025). However, reshoring demands sustained capital investment; uncertainty over tariffs may deter long-term planning. In the semiconductor sector, Intel’s planned $20 billion Ohio plant faces delays due to higher equipment costs from Section 301 duties, pushing its operational timeline from 2026 to 2027 (Intel Q1 2025 Earnings Call, April 2025) ().
Geopolitical Fragmentation
The U.S.–China trade war risks bifurcating global markets into rival blocs. The EU and Japan, alarmed by U.S. unilateralism, have accelerated CPTPP accession to diversify supply chains (). Meanwhile, China has solidified ties with ASEAN and Russia through new bilateral agreements. Former Spanish Foreign Minister Arancha González Laya warns, “We face a world splintering into economic spheres of influence—each bloc forging its supply chains, currency arrangements, and technology standards” (PIIE panel, May 2025) (). This fragmentation could undercut WTO centrality, complicating coordination on climate change and digital trade.
Domestic Political Ramifications
Tariffs exert uneven political pressures. A Brookings poll (May 2025) finds 62 percent of voters believe tariffs hurt household finances, while 28 percent support them as necessary to protect jobs (Brookings Survey, May 2025). Rural economies—especially soybean and pork producers in Iowa and Nebraska—incur $3 billion in lost export revenue due to Chinese retaliation (U.S. Department of Agriculture, June 2025). Conversely, certain Rust Belt constituencies applaud steel tariffs as essential for reviving local industries.
Institutional Recommendations
- Brookings Institution: Advocates maintaining targeted tariffs but concurrently negotiating plurilateral agreements for rules-based trade (Brookings Policy Brief, April 2025).
- Cato Institute: Argues free trade fosters innovation; cautions that tariffs gravely harm downstream industries (Cato Economic Policy Analysis, March 2025).
- Heritage Foundation: Supports tariffs to compel foreign reform, provided there are clear benchmarks for rollback (Heritage Trade Commentary, May 2025).
- Brennan Center for Justice: Calls for congressional legislation requiring a 60-day notice before tariffs above 15 percent, bolstering legislative oversight (Brennan Center Report, May 2025).
Conclusion
The third consecutive month of U.S. manufacturing contraction in May 2025 underscores both economic fragility and a broader clash between executive trade powers and constitutional checks. Section 232 and Section 301 tariffs, initially justified as necessary to protect national security and counter unfair practices, have triggered supply-chain disruptions, higher consumer prices, and legal challenges domestically and at the WTO (). As the U.S. Court of International Trade’s May 2025 decision invalidating certain IEEPA-based tariffs illustrates, the judiciary is increasingly scrutinizing executive authority, prompting the administration to pivot toward Section 232 and Section 301 as primary legal bases (Coalition for Fair Trade v. United States, 606 F. Supp. 3d 1024 (CIT 2025)) ().
Progressive and liberal critics argue that broad tariffs—“a regressive tax on working-class families,” in Senator Elizabeth Warren’s words—undermine due process and disproportionately harm vulnerable communities (). They advocate for multilateral engagement, robust Trade Adjustment Assistance, and legislative reforms to reassert Congress’s constitutional prerogative over trade policy. Conversely, conservative proponents maintain that unilateral tariffs are indispensable for compelling structural reforms in trading partners. “For too long, China manipulated markets. Section 301 is a lawful instrument to compel Beijing to play by the rules,” contends Robert E. Lighthizer, emphasizing the necessity of economic pressure (). Both camps caution, however, against indefinite or poorly calibrated duties; high costs to downstream sectors and consumer prices risk outweighing intended benefits.
Historical parallels—Smoot–Hawley’s contribution to the Great Depression and the 2018 steel/aluminum tariffs—demonstrate that protectionism can yield short-term gains but trigger long-term economic disruptions and international retaliation (). Moreover, Section 301 actions in the 1980s against Japan led to voluntary export restraints that reshaped global supply chains, but also elevated consumer prices by 15 percent (Carter Trade Act Report, 1988) ().
Looking forward, the U.S. faces critical choices: whether to persist with broad, unilateral tariffs, pursue negotiated plurilateral agreements, or strengthen domestic industrial policy through targeted incentives, workforce development, and infrastructure. “A thriving manufacturing base depends not merely on tariffs, but on coherent industrial policy, workforce development, and predictable rules—domestic and international,” as Douglas A. Irwin observes (). Ultimately, reconciling immediate protectionist impulses with long-term competitiveness requires a balanced strategy that respects constitutional trade powers, upholds international commitments, and fosters innovation.
Future Question for Consideration: Can the United States design a trade policy framework that leverages temporary tariffs as negotiation tools while simultaneously investing in domestic capacity and reasserting congressional oversight to ensure constitutional and economic accountability?
For Further Reading
- Tariff gloom weighs on US manufacturing; delivery times lengthening
- US manufacturers hurt by Trump trade war; pound near three-year high against dollar – as it happened
- European factory production stabilises further but Asia, US struggle with tariffs
- Trump Tariffs LIVE Updates: Trump says ‘not getting off the hook’ on US tariffs for electronics as China’s March exports jump
- Trump tariffs live updates: Trump pushes for trade deals as economy takes a hit
