California has become the first US state to sue President Donald Trump over Trump's increased tariffs on foreign goods. This is reported by the American media outlet Politico. The state, led by Governor Gavin Newsom, believes that Trump's increased tariffs were adopted on an illegal basis.
- President Trump's illegal tariffs are wreaking havoc on California families, businesses and our economy - pushing up prices and threatening jobs, says Gavin Newsom in a statement.
The new tariffs were adopted using an emergency law and without the approval of Congress. Trump does not have the necessary authority to implement the tariff changes, believes Newsom, who is a Democrat. The increased tariffs have created great uncertainty in financial markets and fears that international trade will be significantly slowed down.
If so, it will greatly affect California, which is the world's fifth largest economy and is home to several of the world's largest technology companies. In addition, the state has a large agricultural sector, which includes wine producers who are highly dependent on foreign trade.
On April 2, Trump announced that he would impose "reciprocal tariffs" of varying magnitude on goods from a wide range of US trading partners. At the same time, he introduced a base tariff of ten percent. While others threatened to impose tariffs on US goods in response, China responded promptly by increasing tariffs on products from the US.
This prompted Trump to respond by further increasing tariffs on Chinese goods, and for the time being the tariff rate on Chinese goods is 145 percent. China's tariff on US goods is now 125 percent.
For other countries affected by increased tariffs, the increased tariffs have been temporarily paused, but the base tariff of ten percent still applies. At current tariffs, Trump's tariff policy is expected to negatively impact global trade this year with a decline of at least 0.2 percent. This is according to the World Trade Organization's annual report, published on Wednesday.
If or when the increased tariffs come into effect, a decline in world trade of 1.5 percent in 2025 can be expected, the WTO estimates.
jel /ritzau/
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