Last updated: September 11, 2026 · Reviewed and improved in place, not re-published as a new post
Where things stand. Washington is using trade, finance and state ownership as instruments of national power under a doctrine it calls "America First." The 2025 National Security Strategy says "economic security is fundamental to national security" and names tariffs and reciprocal trade agreements as "powerful tools." On February 20 the Supreme Court closed one route: in Learning Resources v. Trump it held that the International Emergency Economic Powers Act (IEEPA) "does not authorize the President to impose tariffs." The White House said the same day that the "overall direction of travel" would not change, and it has rebuilt the tariff regime law by law. A 10% surcharge under Section 122 of the Trade Act, imposed for 150 days from February 24, was set to expire on July 24. On July 23 the US Trade Representative (USTR) imposed Section 301 duties of 10% or 12.5% on 60 economies, tied to bans on goods made with forced labor. Section 232 national-security duties keep widening: up to 100% on drones from September 3, and 15% on polysilicon derivatives from December 4. Under Section 338, 50% duties on nearly $20 billion of Canadian imports took effect on August 22. The state is also taking equity: on August 31 the White House announced a 35% Department of War stake in the parent of a private oil company holding 100-year concessions on 17 Venezuelan fields.
First, Canada. USTR says Canada "walked away from a near-final trade deal"; Canada then placed retaliatory tariffs on about $20 billion of US exports. On September 8 the President imposed import bans on certain Canadian alcohol, dairy and other products, effective September 29. The USMCA, the North American trade agreement, was not renewed on July 1 but "remains in force." Second, the fiscal cost of the court ruling. The Congressional Budget Office (CBO) puts the effective tariff rate at 10%, against 2% in 2024. It expects most of the $166 billion collected under IEEPA to be refunded in fiscal 2026. Treasury recorded $125.2 billion in customs refunds in the eleven months to August, leaving net receipts of $167.3 billion. CBO projects that trade-policy changes through July 31 add $0.9 trillion to deficits over 2027–2036. Third, interest rates. On July 29 the Federal Reserve, chaired by Kevin Warsh, held its target range at 3.5% to 3.75%; three members dissented, preferring a rise. The minutes record that "many participants" judged tightening "would likely be necessary if inflation did not decline." The rate-setting committee meets again on September 15–16.
The executive holds the initiative; USTR says the United States currently has 19 framework or reciprocal trade deals covering 32% of world output. Washington's stated case is a "$1.2 trillion trade deficit" and an industrial base "too atrophied to support our national security." Institutional research finds costs at home: New York Fed economists found that nearly 90% of the economic burden of the 2025 tariffs fell on US firms and consumers. In January, Pew found that 60% of Americans disapproved of the tariff increases. The courts are a further check: the Congressional Research Service notes that earlier Section 301 actions "typically addressed conduct by a single foreign country," and that challengers may call a 60-economy use "transformational." Congress also uses trade as a sanctions tool: on August 7 the Senate passed a Russia sanctions bill 86–11, after rejecting, 64–32, an amendment to strike its duties on countries that buy Russian crude oil or natural gas.
Employers added 162,000 jobs in August, and unemployment held at 4.1%. Consumer prices rose 3.4% over the year to August; energy prices rose 16.3%. The Fed links elevated inflation partly to "supply shocks" in sectors "including energy." The economy grew at a 1.5% annual rate in the second quarter, down from 2.1% in the first. A stopgap law signed on September 2 funds the government through December 11, which moves the next funding deadline past the election. USTR hosts G20 trade ministers in Milwaukee on September 30 and October 1. On November 3 voters choose all 435 House members and one-third of the Senate. Republicans hold 218 House seats to 214 for Democrats, and 53 of 100 Senate seats. Control of each chamber will decide who writes the next budget and whether Congress revisits the tariff powers it has delegated to the President.
Issues Focus is compiled from primary official statements and institutional research, cross-checked against reputable reporting. It describes how power, capital, and institutions are moving. Entries are corrected and improved in place as the picture changes, rather than re-published as new posts. — See all Issues Focus segments