2025-02
EMERGENCY RESOLUTION:
Tariffs are not “worth it”
They exacerbate inflation now and will cause a recession for no potential benefit in years
Sponsored by
Rep. Fred Crespo (IL),
Sen. Teresa Ruiz (NJ), Sen. Nilsa Cruz-Pérez (NJ), Rep. Cindy Nava (NM),
Rep. Tara Lujan (NM), Rep. Louis Ruiz (KS), Rep. Patty Conteras (AZ),
Rep. Leonela Felix (RI), Rep. Homar Gomez (MA), Sen. Nitza Morán (PR),
Rep. Rosalba Domínguez (UT), Rep. Adam Zabner (IA), Rep. Angel Fourquet-Cordero (PR),
Rep. Lillian Ortiz-Self (WA), Sen. Leo Jaramillo (NM), Rep. Angela Romero (UT),
Sen. Antonio Maestas (NM), Rep. Priscilla Prado (WI), Rep. Veronica Paiz (MI),
Rep. Carlos González (MA), Rep. Danilo Burgos (PA), Sen. Luz Escamilla (UT),
Sen. Dunixi Guereca (NE), Rep. Geraldo Reyes (CT), Rep. Jose Giral (PA),
Sen. Adam Gomez (MA), Rep. Johanny Cepeda-Freytiz (PA), Sen. Carmelo Ríos Santiago (PR)
and Rep. Jose “Che” Perez (PR)
Reported to the Caucus by the
NHCSL Business, Economic Development, International Relations and Trade Task Force
Sen. Nitza Morán (PR), Chair
Unanimously approved by the NHCSL Executive Committee on behalf of the entire Caucus on April 4, 2025
I. Economic background
WHEREAS, United States consumers faced historic inflation rates from mid-2021 until mid-2023, the highest inflation since 1981; and,
WHEREAS, inflation rates have been more stable for about a year, but the price levels resulting from the high inflation period have exacerbated disparities and made key purchases, especially housing, impossible to afford for many; and,
WHEREAS, in 2024 the United States imported a total value of $3.3 trillion in goods while exporting $2.1 trillion; and imported $812 billion in services while exporting $1.1 trillion;[1] and,
WHEREAS, in 2024, imported goods ($3.3 trillion) accounted for around 12.9% of all Final Sales of goods and services to Private Domestic Purchasers ($25.5 trillion)[2] or 10.8% of Final Sales of goods and services to all Domestic Purchasers ($30.6 trillion),[3] including the public sector;[4] and,
WHEREAS, the imported content of manufactured goods purchased in the United States grew from around one third in 1997 to roughly half in 2008,[5] remaining stable since then;[6] and,
WHEREAS, in Resolution 2018-02, the National Hispanic Caucus of State Legislators (NHCSL) advocated “for the improvement of NAFTA with fair rules that benefit small businesses and labor,” while emphasizing research that underscored the free trade agreement’s broad benefit of allowing the “countries to effectively combine their individual comparative advantages into a highly competitive regional system, improving North America’s ability to compete on the global stage;” and,
WHEREAS, NHCSL’s resolution praised the fact that NAFTA substituted “tariffs between the United States, Mexico, and Canada with incentives to do business across borders;” and,
WHEREAS, later that year, many of the improvements to NAFTA that NHCSL advocated for were negotiated into the resulting USMCA, which includes updated provisions on labor rights, environmental standards and digital trade and stricter rules of origin for automotive products; and,
WHEREAS, it would take several years for highly regulated businesses to move a production facility, so even if one believed that the onshoring benefit of tariffs[7] outweighs all the other benefits of free trade, the labor benefits from tariffs would take years to materialize while the negative inflationary consequences are immediate; and,
WHEREAS, in 2024, the United States imported goods from Mexico with a value of $516 billion[8] or 15.7% of the value of all US imported goods, and imported $420 billion in goods from Canada or 12.6% of the value of all US imported goods; and,
II. President Trump’s tariff threats and impositions
WHEREAS, tariffs are essentially taxes on imported goods and services paid by consumers through higher prices and designed to discourage importation; and,
WHEREAS, immediately upon returning to office this year, President Trump proposed a 25% tariff on all imports from USMCA countries,[9] defeating the purpose of the trade deal his own prior administration had negotiated; and,
WHEREAS, later that same week, President Trump proposed a 25% tariff on worldwide imported computer chips and pharmaceuticals, and threatened Colombia with blanket 25% tariffs, later dropping that last threat when Colombia started accepting deportation flights; and,
WHEREAS, on January 31, President Trump threatened BRICS countries with a 100% blanket tariff if they moved away from the U.S. dollar as a reserve currency; and,
WHEREAS, on February 2, President Trump threatened the European Union with a 25% blanket tariff; and,
WHEREAS, on February 4, President Trump enacted a 10% tariff on all Chinese imports;[10] and,
WHEREAS, on February 7, President Trump announced a future policy of unspecified reciprocal tariffs on all countries that tariff U.S. imports;[11] and,
WHEREAS, on February 10, President Trump also enacted a 25% global tariff on steel and aluminum;[12] and,
WHEREAS, on February 11, President Trump threatened a 25% worldwide tariff on imported cars; and,
WHEREAS, on February 25, President Trump announced an investigation into establishing an unspecified worldwide tariff on copper;[13] and,
WHEREAS, on March 1, President Trump announced an investigation into establishing an unspecified worldwide tariff on lumber and agricultural products;[14] and,
WHEREAS, on March 3, President Trump enacted a further 10% tariff on all Chinese imports on top of the one he had enacted on February 4,[15] bringing the total tariff to 45%; and,
WHEREAS, also on March 4, President Trump enacted the Canada and Mexico (USMCA countries) tariffs he had threatened on January 20, but on March 6 he carved out the auto industry, all USMCA-certified goods and Mexican steel and aluminum, and lowered his threatened 25% tariff on Canadian energy and fertilizer to 10%;[16] and,
WHEREAS, on March 7, President Trump threatened Russia with an unspecified blanket tariff over its invasion and ongoing war in Ukraine; and,
WHEREAS, on March 12, President Trump enacted the 25% global tariff on steel he had threatened on February 9; and,
WHEREAS, on March 13, President Trump threatened the European Union with a further 100% tariff on alcoholic beverages if it enacted retaliatory tariffs in response to his threatened 25% blanket tariff; and,
WHEREAS, on March 24, President Trump authorized the Secretary of State to, at his discretion, impose an extra 25% tariff on all goods imported from any country that buys oil from Venezuela;[17] and,
WHEREAS, in all, as of March 21, President Trump had imposed tariffs on around $800 billion dollars in imports from China, Mexico and Canada;[18] and,
WHEREAS, on March 26, President Trump announced that, starting on April 3, he would impose an additional 25% tariff on imported automobiles, including the non-US content of USMCA cars, and, starting no later than May 3, he would impose an additional 25% tariff on imported automobile parts, excepting USMCA parts unless a process to tax only the non-US content of the parts is devised in the future;[19] and,
WHEREAS, on April 2, a day he had marketed as “Liberation Day,” President Trump announced[20] that, starting on April 5, he would impose the new “reciprocal”[21] tariff he had threatened on February 7, applicable at a minimum rate of 10% to the non-U.S. content[22] of most goods,[23] including food and clothing, imported from all trading partners for which he had not already enacted specific tariffs, except Canada and Mexico which would be subject to a residual 12% tariffs on non-USMCA goods;[24] and,
WHEREAS, concurrently and also alleging a reciprocity basis, President Trump imposed, starting on April 9, a higher individual punitive import tax[25] equivalent to half the relative goods trade deficit with each of the 86 countries or trade blocks with which the United States has an annual goods trade deficit greater than 20%,[26] including:
- a 20% tariff on the 27 countries of the European Union which in 2024 accounted for $609 billion[27] or 18.5% of the value of US imported goods;
- a 34% tariff on China (including Hong Kong and Macau) which in 2024 accounted for $440 billion[28] or 13.5% of the value of US imported goods;
- a 24% tariff on Japan which in 2024 accounted for $150 billion[29] or 4.5% of the value of US imported goods;
- a 46% tariff on Vietnam which in 2024 accounted for $137 billion[30] or 4.1% of the value of US imported goods;
- a 25% tariff on South Korea which in 2024 accounted for $133 billion[31] or 4% of the value of US imported goods; and,
- a 26% tariff on India which in 2024 accounted for $87.5 billion[32] or 2.7% of the value of US imported goods; and,
WHEREAS, in all, President Trump imposed these special punitive tariffs on well over half the goods imported to the United States; and,
WHEREAS, the White House disclaimed that the punitive tax was based on the size of the trade deficit with each country or trade block, claiming instead that it was based on half the tariff imposed on US goods by the targeted country or trade block, but none of the variables, in the the equation it published to prove that,[33] are related to the tariff framework of the other country or trade block;[34] and,
WHEREAS, because of the determination of the punitive tariffs is unrelated to any actual tariff on US goods imposed by any foreign government or trade block, those governments could not reduce their tariffs to provoke a “reciprocal” reduction from the United States; and,
III. The disastrous impact of President Trump’s proposed tariffs
WHEREAS, economists oppose the tariffs proposed by President Trump because they would raise prices for American consumers accelerating inflation and triggering interest rate hikes, they would damage global trust in America, they make US firms less competitive, stymie job creation, increase unemployment, trigger retaliation from other countries, and specifically destabilize the Mexican economy, triggering more economic-induced immigration;[35] and,
WHEREAS, Nobel laureate economist Paul Krugman called the Liberation Day tariffs “crazy,” “even worse than expected” and based on “complete falsehoods;”[36] and,
WHEREAS, other economists called the tariff hikes “a self-inflicted economic catastrophe for the U.S.”[37] warning that core inflation could rise to 3.9%[38] or even 5%[39] and that they could provoke a recession which almost doubles “unemployment next year to 7.5%, up from its current rate of 4.1%,”[40] a possibility that would disproportionately impact Hispanics; and,
WHEREAS, the AFL-CIO called President Trump’s announced tariffs “unnecessary economic pain for America’s working families,”[41] echoing a prior statement from the SEIU;[42] and,
WHEREAS, the UCLA Latino Policy and Politics Institute recalled that “these tariffs act as regressive taxes—raising the cost of everyday goods while offering no corresponding relief to families already facing high inflation and stagnant wages,” and warned that many “Latino-owned businesses operate on thin margins in industries that are highly sensitive to price fluctuation—such as construction, retail, and food services,” underscoring that their business models limit “their ability to absorb sudden cost increases or navigate supply chain disruptions;”[43] and,
WHEREAS, in the 24 hours following President Trump’s Liberation Day announcements, the S&P 500 lost 4.84% of its value and the broader Russell 3000 index lost 5.06% of its value and the Dow Jones Industrial Average lost 3.98% of its value; and,
WHEREAS, President Trump has admitted there will be an economic “period of transition” as his tariffs take effect and that he can’t rule out the possibility of a recession. Commerce Secretary Howard Lutnick said tariffs are “worth it” even if they cause a recession. And Treasury Secretary Scott Bessent said the economy may need a “detox period.”[44]
IV. Conclusion
THEREFORE, BE IT RESOLVED, that the National Hispanic Caucus of State Legislators (NHCSL), for the reasons developed above, opposes the tariffs currently proposed, implemented or authorized by President Trump and all substantially similar tariffs.
IN ITS MEETING OF MARCH 26, 2025, THE NHCSL BUSINESS, ECONOMIC DEVELOPMENT, INTERNATIONAL RELATIONS AND TRADE TASK FORCE UNANIMOUSLY ORDERED THIS RESOLUTION BE BROADLY AMENDED AND RECOMMENDED IT, AS AMMENDED, TO THE EXECUTIVE COMMITTEE FOR APPROVAL AS AN EMERGENCY RESOLUTION.
AT THE REQUEST OF THE NHCSL BUSINESS, ECONOMIC DEVELOPMENT, INTERNATIONAL RELATIONS AND TRADE TASK FORCE, AND IN ACCORDANCE WITH THE IMMEDIATE NEEDS PROCEES OUTLINED IN THE BYLAWS, THE EXECUTIVE COMMITTEE UNANIMOUSLY APPROVED THIS RESOLUTION, ON BEHALF OF THE CAUCUS, ON APRIL 4, 2025, AT ITS MEETING IN WASHINGTON, DC.
[1] On a Balance of Payments (BOP) basis. See US Census Bureau, Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 1 (Part A, Exhibit 1) (Release Number: CB 25-34, BEA 25-07).
[2] U.S. Bureau of Economic Analysis, Final Sales to Private Domestic Purchasers [LA0000031Q027SBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; April 3, 2025.
[3] U.S. Bureau of Economic Analysis, Final Sales to Domestic Purchasers [FSDP], retrieved from FRED, Federal Reserve Bank of St. Louis; April 3, 2025.
[4] We do not use the Final sales of domestic product number published by the U.S. Bureau of Economic Analysis as a basis for interpretation because the Bureau admits that “source data are not available to distinguish the portion of imported goods that flows into inventories from the portion that is sold directly, so the measure does not, strictly speaking, identify the sales from domestic product.”
[5] The proportion could be lower (meaning products could be more domestic) because the analysis of imports does not include reimported US content. “For example, U.S. exports may return to the United States as imported intermediate or final goods, e.g. U.S. -grown cotton is exported to Vietnam and imported back into the United States from Vietnam as a t-shirt.” See Allison Derrick and William Hawk, Purchased in America, 2023: Are Americans Buying American-Made Goods?, p. 9 (U.S. Dept of Commerce, Jan. 17, 2025).
[6] Ibid. at p. 5.
[7] Economists strongly dispute the onshoring benefit of tariffs. For example, Steve Hanke said Americans pay for tariffs, and they don't increase employment. See Ibid.
[8] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[9] He later paused them on February 3.
[10] Executive Order 14195 of February 1, 2025
[11] He ordered the investigation into such via Memorandum of February 13, 2025
[12] Presidential Proclamation 10895 of February 10, 2025 and Presidential Proclamation 10896 of February 10, 2025
[13] Executive Order 14220 of February 25, 2025
[14] Executive Order 14223 of March 1, 2025
[15] Executive Order 14228 of March 3, 2025; he later terminated the normal de minimis exemption of $800 for any imports from China. See Executive Order ___________ of April 2, 2025, entitled Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports.
[16] Executive Order 14231 of March 6, 2025 and Executive Order 14232 of March 6, 2025.
[17] Executive Order 14245 of March 24, 2025
[18] Alyssa Fowers, Leslie Shapiro and Amaya Verde, See all the tariffs Trump has enacted, threatened and canceled (The Washington Post, March 26, 2025).
[19] Presidential Proclamation 10908 of March 26, 2025.
[20] Executive Order ____________ of April 2, 2025, entitled Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.
[21] As discussed below, “reciprocal” is a misnomer because the tariff is not truly based on reciprocity.
[22] Provided at least 20% of the value of the good is US content.
[23] Aside from personal use items, the exceptions are information, publications, informational materials, artworks, film, and music and the like (50 U.S.C. § 1702); pharmaceuticals; semiconductors and circuits and their parts; certain critical minerals; and other items the President had independently targeted as explained in prior paragraphs.
[24] Canada and Mexico retain the previous tariffs President Trump had imposed along with previous exemptions, including the USMCA goods exemption. But if any of those previous orders are terminated or suspended, “articles not qualifying as originating under USMCA shall be subject to an ad valorem rate of duty of 12 percent”, except energy or energy resources or potash.
[25] Applicable to the same goods subject to the 10% “reciprocal tariff,” and with the same broad exceptions.
[26] For the list of countries, see Annex I to Executive Order ____________ of April 2, 2025, entitled Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.
[27] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[28] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[29] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[30] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[31] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[32] On a Balance of Payments (BOP) basis. See US Census Bureau and U.S. Bureau of Economic Analysis, U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, JANUARY 2025, p. 27 (Part C, Exhibit 20a) (Release Number: CB 25-34, BEA 25-07).
[33] Office of the U.S. Trade Representative, Reciprocal Tariff Calculations (April 2, 2025)
[34] In the White House’s equation, the change in tariffs equals the difference between the total exports and imports of goods to/from a country (i.e. the trade deficit in goods with a country), divided by the product of the total imports of goods from that country, times the passthrough rate from tariffs to import prices (which they claim is 0.25) and the price elasticity of import demand (which they “set at 4”). Since 0.25 * 4 = 1, the denominator collapses to the value of imported goods; leaving the equation: goods trade deficit/value of imported goods. For example, at the White House announcement, President Trump claimed that the EU is charging a 39% tariff to United States goods “including currency manipulation and trade barriers”). But the EU makes no such charge. Conversely, the 2024 US trade deficit in goods with the European Union was $ -236.748 billion while imports were $609.190 billion. Dividing those numbers 38.8%. That’s where President Trump got the 39% figure. Which they then divided in half to arrive at the punitive reciprocal tariff of 20%. The same applies to Vietnam where our goods trade deficit is $-123.475 billion and we import $136.578 billion, for a formula quotient of 90.4%. The President falsely claimed it imposes a 90% tariff on US goods and imposed the 46% punitive “reciprocal tariff” on it.
[35] Theron Mohamed, Here's what top economists are saying about Trump's 'dangerous' tariffs on Canada and Mexico (Business Insider, February 3, 2025).
[36] Paul Krugman, Trump Goes Crazy on Trade (April 2, 2025)
[37] Morningstar Chief US economist Preston Caldwell. See Aimee Picchi, Here's why experts think Trump's tariffs could hurt the U.S. economy (CBS News, April 3, 2025).
[38] Ryan Sweet, chief U.S. economist Oxford Economics. See Aimee Picchi, Here's why experts think Trump's tariffs could hurt the U.S. economy (CBS News, April 3, 2025).
[39] UBS warns that Trump’s tariffs could pose large risks to economic growth (Seeking Alpha, April 3, 2025).
[40] Mark Zandi, chief economist at Moody's Analytics. See Aimee Picchi, Here's why experts think Trump's tariffs could hurt the U.S. economy (CBS News, April 3, 2025).
[41] AFL-CIO President on Tariff Announcement (April 2, 2025).
[42] SEIU Statement on Donald Trump’s Day One Executive Actions (Jan 20, 2025)
[43] Silvia R. González, How Tariffs Limit Economic Mobility for Latino Communities (UCLA LPPI)
[44] Ben Casselman, Trump Says a Recession Would Be Worth It, but Economists Are Skeptical (The New York Times, March 18, 2025). Auzinea Bacon, Trump says tariffs on Mexico and Canada ‘could go up,’ declines to rule out possible recession (CNN, March 9, 2025)