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The levies push limits of presidential authority

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U.S. President Donald Trump addresses the Conservative Political Action Conference (CPAC) annual meeting in National Harbor, Maryland, U.S., February 22, 2025. 

Brian Snyder | Reuters

U.S. importers and their customers are about to experience the full force of President Donald Trump’s unprecedented use of emergency economic powers.

To that point, 25% tariffs on imports from America’s top two trading partners, Canada and Mexico, went into effect at midnight Tuesday, as did an additional 10% tariff on Chinese imports. Canadian energy will be tariffed at a lower rate of 10%, also as of midnight Tuesday.

It’s difficult to overstate how far-reaching the impact of these tariffs will be, or how quickly they will be felt.

U.S. trade with Mexico, Canada and China last year accounted for around 40% of America’s total commerce in goods around the world.

And unlike traditional trade policy, these tariffs are designed to deliver a financial sting right away, trade experts told CNBC.

“From a technical standpoint, the imposition of the tariffs is basically a light switch. They’re on or they’re off,” said Daniel Anthony, the president of Trade Partnership Worldwide, a policy research firm.

Literally overnight, the cost of importing, for example, $100,000 worth of limes from Mexico increased by $25,000 Tuesday. This is money that the importer will need to pay directly to U.S. Customs and Border Protection when the limes cross the border.

Target CEO Brian Cornell told investors Tuesday that shoppers could see produce prices rise within days, the result of tariffs on Mexican fruits and vegetables.

Even if a glitch prevented tariffs from being collected starting at exactly 12:01am Eastern Time Tuesday, they would still be tallied, and importers could expect to receive a tax bill retroactively, said Nicole Bivens Collinson, a Washington trade lobbyist and managing principal at Sandler, Travis & Rosenberg.

“It’s like when you get an Uber bill and you forgot to tip, and add it on later,” she said.

U.S. hits trade partners with tariffs: Here's what to know

Along with the two new North American tariff rates, Trump also signed an order Monday doubling his earlier 10% tariff on imports from China, for a total 20% additional tariff rate on the nation.

Taken together, Canada, China and Mexico accounted for $2.2 trillion worth of U.S. overseas trade in 2024, according to federal census data. About $840 billion of that came from trade with Mexico, $762 billion from Canadian imports and exports and $582 billion from China.

Extraordinary power

Container at the Port of Vancouver in Vancouver, British Columbia, Canada, on Feb. 28, 2025.

Ethan Cairns/Bloomberg via Getty Images

Part of the reason Trump could do this so quickly is because the White House is invoking a sweeping national security law to justify the new levies.

Until now, the International Emergency Economic Powers Act, IEEPA, had been used mainly to impose emergency sanctions on foreign dictators or suspected terrorist groups.

But the Trump administration argues that the illicit global fentanyl trade and immigrants at the Mexican border both qualify as “unusual and extraordinary” foreign threats to American national security, justifying Trump’s use of emergency powers under IEEPA.

Trump is using the law in a broader way than any president has before, Trade Partnership Worldwide’s Anthony explained.

Trump is also inviting legal challenges, he said, by pushing the boundaries of presidential authority.

How will the Fed react to new U.S. tariffs?

For now, consumers will bear the brunt of the tariffs in higher prices, experts say. The Tax Policy Center estimates that Trump’s Mexico and Canada tariffs alone will cost the average household an additional $930 a year by 2026.

The imposition of massive new tariffs on U.S. imports from Canada, China and Mexico are a sharp reminder of how much power Trump wields over global commerce.

But they also hint at the limitations of this power.

In the case of so-called de-minimis shipments, the Trump administration imposed new levies on millions of shipments entering the United States, before the federal government had the means to actually collect the fees.

The de minimis mess

Oscar Wong | Moment | Getty Images

So-called “de minimis” imports are international shipments valued at $800 or less. Historically, these low-value, person-to-person imports have been exempt from U.S. tariffs.

Several of the world’s biggest e-commerce companies take advantage of the de-minimis loophole by shipping their products directly to consumers from overseas.

Fast fashion sites, like Temu and Shein, ship goods directly from China to American consumers. They have helped fuel an explosion in U.S.-bound de-minimis shipments in recent years.

But collecting tariffs on de-minimis goods is harder than it looks.

“There’s a whole infrastructure system set up for normal shipments that come in to the country,” said Collinson, who previously served as a U.S. trade negotiator. But this system doesn’t exist for de-minimis imports, she added.

Last year alone, the U.S. accepted more than 1.3 billion overseas shipments that qualified for de-minimis tariff exemptions, according to federal data.

To process that many new shipments, the federal government will need to hire more customs agents, experts said.

Nonetheless, in early February Trump announced that the United States would begin collecting tariffs on low-value shipments from overseas.

Trump’s order gave the U.S. Postal Service mere days to implement a system to begin collecting tariffs on millions of small packages every day.

It also sowed chaos throughout the international postal system, culminating on Feb. 4 with an announcement that USPS had suspended all parcel delivery services from China and Hong Kong “until further notice.”

A day later, the postal service reversed course and resumed processing the de-minimis parcels. But it did not collect any tariffs on them.

Soon after, the Trump administration issued an amendment to the China order, formally delaying any effort to collect tariffs on de-minimis imports until “adequate systems are in place to fully and expediently process and collect tariff revenue” on them.

The U.S. Postal Service didn’t immediately respond to a request for comment.

A month later, the White House put similar de-minimis waivers in place Sunday for Canada and Mexico, ahead of imposing the new 25% tariffs.

It’s unclear when a de-minimis tariff collection system might be up and running.

A U.S. Customs and Border Protection spokeswoman told CNBC, “The dynamic nature of our mission, along with evolving threats and challenges, requires CBP to remain flexible and adapt quickly while ensuring seamless operations and mission resilience.”

But Anthony noted that the delay for China was “open ended.”

“Part of the challenge is [federal] personnel and bandwidth,” he said. Customs and Border Protection may not have the staff or resources available to handle the new volume of shipments and packages, he said.

Officials must also determine how the levy will be assessed and paid, and how customs officials will process tens of millions of new data points furnished by shippers for each individual package, the experts said.

“Anyone can develop a good policy, but whether that policy can actually be effectuated is critical,” Collinson said.

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What student loan forgiveness opportunities still remain under Trump

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Halfpoint Images | Moment | Getty Images

Under the Biden administration, the U.S. Department of Education made regular announcements that it was forgiving student debt for thousands of people under various relief programs and repayment plans.

That’s changed under President Donald Trump.

In his first few months in office, Trump — who has long been critical of education debt cancellation — signed an executive order aimed at limiting eligibility for the popular Public Service Loan Forgiveness program, and his Education Department revised some student loan repayment plans to no longer conclude in debt erasure.

“You have the administration trying to limit PSLF credits, and clear attacks on the income-based repayment with forgiveness options,” said Malissa Giles, a consumer bankruptcy attorney in Virginia.

The White House did not respond to CNBC’s request for comment.

Here’s what to know about the current status of federal student loan forgiveness opportunities.

Forgiveness chances narrow on repayment plans

The Biden administration’s new student loan repayment plan, Saving on a Valuable Education, or SAVE, isn’t expected to survive under Trump, experts say. A U.S. appeals court already blocked the plan in February after a GOP-led challenge to the program.

SAVE came with two key provisions that lawsuits targeted: It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.

“I personally think you will see SAVE dismantled through the courts or the administration,” Giles said.

But the Education Department under Trump is now arguing that the ruling by the 8th U.S. Circuit Court of Appeals required it to end the loan forgiveness under repayment plans beyond SAVE. As a result, the Pay As You Earn and Income-Contingent Repayment options no longer wipe debt away after a certain number of years.

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There’s some good news: At least one repayment plan still leads to debt erasure, said higher education expert Mark Kantrowitz. That plan is called Income-Based Repayment.

If a borrower enrolled in ICR or PAYE eventually switches to IBR, their previous payments made under the other plans will count toward loan forgiveness under IBR, as long as they meet the IBR’s other requirements, Kantrowitz said. (Some borrowers may opt to take that strategy if they have a lower monthly bill under ICR or PAYE than they would on IBR.)

Public Service Loan Forgiveness remains

Despite Trump‘s executive order in March aimed at limiting eligibility for Public Service Loan Forgiveness, the program remains intact. Any changes to the program would likely take months or longer to materialize, and may even need congressional approval, experts say.

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

What’s more, any changes to PSLF can’t be retroactive, consumer advocates say. That means that if you are currently working for or previously worked for an organization that the Trump administration later excludes from the program, you’ll still get credit for that time — at least up until when the changes go into effect.

For now, the language in the president’s executive order was fairly vague. As a result, it remains unclear exactly which organizations will no longer be considered a qualifying employer under PSLF, experts said.

However, in his first few months in office, Trump has targeted immigrants, transgender and nonbinary people and those who work to increase diversity across the private and public sector. Many nonprofits work in these spaces, providing legal support or doing advocacy and education work.

For now, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov or request one from their loan servicer. They should keep a record of the number of qualifying payments they’ve made so far, said Jessica Thompson, senior vice president of The Institute for College Access & Success.

“We urge borrowers to save all documentation of their payments, payment counts, and employer certifications to ensure they have any information that might be useful in the future,” Thompson said.

Other loan cancellation opportunities to consider

Federal student loan borrowers also remain entitled to a number of other student loan forgiveness opportunities.

The Teacher Loan Forgiveness program offers up to $17,500 in loan cancellation to those who’ve worked full time for “complete and consecutive academic years in a low-income school or educational service agency,” among other requirements, according to the Education Department.

(One thing to note: This program can’t be combined with PSLF, and so borrowers should decide which avenue makes the most sense for them.)

Student loan matching funds

In less common circumstances, you may be eligible for a full discharge of your federal student loans under Borrower Defense if your school closed while you were enrolled or if you were misled by your school or didn’t receive a quality education.

Borrowers may qualify for a Total and Permanent Disability discharge if they suffer from a mental or physical disability that is severe and permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or the Department of Veterans Affairs.

With the federal government rolling back student loan forgiveness measures, experts also recommend that borrowers explore the many state-level relief programs available. The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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Many Americans are worried about running out of money in retirement

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M Swiet Productions | Getty Images

Many Americans are worried they’ll run out of money in retirement.

In fact, a new survey from Allianz Life finds that 64% Americans worry more about running out of money than they do about dying. Among the reasons cited for those fears include high inflation, Social Security benefits not providing enough support and high taxes.

The fear of running out of money was most prominent for Gen Xers who are approaching retirement. However, a majority of millennials and baby boomers also said they worry about their money lasting, according to the online survey of 1,000 individuals conducted between January and February.

Separately, a new Employee Benefit Research Institute report finds most retirees say they are living the lifestyle they envisioned and are able to spend money within reason. Yet more than half of those surveyed agreed at least somewhat that they spend less because of worries they will run out of money, according to the survey of more than 2,700 individuals conducted between January and February.

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Meanwhile, a Northwestern Mutual survey reported that 51% of Americans think it’s “somewhat or very likely” they will outlive their savings. The survey polled 4,626 U.S. adults aged 18 and older in January.

Since those studies were conducted, new tariff policies have caused disturbance in the stock markets and prompted speculation that inflation may increase. Meanwhile, new leadership at the Social Security Administration has prompted fears about the continuity of benefits. Those headlines may negatively affect retirement confidence, experts say.

With employers now providing a 401(k) plan and other savings plans versus pensions, it is largely up to workers to manage how much they save heading into retirement and how much they spend once they reach that life stage. That responsibility can also lead to worries of running out of money in the future, experts say.

How to manage the ‘fear of outliving your resources’

Because of the unique risks every individual or couple faces when planning for retirement, the best approach is typically to transfer some of that burden to a third party, said David Blanchett, head of retirement research at PGIM DC Solutions.

Creating a guaranteed lifetime income stream that covers essential expenses can help reduce the financial impact of any events that require retirees to cut back on spending, Blanchett explained.

That should first start with delaying Social Security benefits, he said. While eligible retirees can claim benefits as early as 62, holding off up until age 70 can provide the biggest monthly benefits. Social Security is also unique in that it provides annual adjustments for inflation.

73% of Americans are financially stressed

Next, retirees may want to consider buying a lifetime income annuity that can help amplify the monthly income they can expect. Admittedly, those products can be complicated to understand. Therefore Blanchett recommends starting out by comparing very basic products like single premium immediate annuities that are easier to compare.

“Unless you do those things, you just can’t get rid of that fear of outliving your resources,” Blanchett said.

Without a guaranteed income stream, retirees bear all of the financial risk themselves, he said.

 “Retirement could last 10 years; it could last 40 years,” Blanchett said. “You just don’t know how long it’s going to be.”

Among retirees, there has been some hesitation to buy annuities, said Craig Copeland, EBRI’s director of wealth benefits research. Such a purchase requires parting with a lump sum of money in exchange for the promise of a guaranteed income stream.

“We see great increase in interest, but we aren’t seeing upticks in take up yet,” Copeland said. “I do think that’s going to start to change.”

What can help boost retirement confidence

To effectively plan for retirement, it helps to seek professional financial assistance, experts say.

Meanwhile, few people have a plan of their own for how they may live on the assets they’ve worked hard to accumulate, according to Kelly LaVigne, vice president of consumer insights at Allianz Life.

“This is something that you should not plan on doing on your own,” LaVigne said.

While the survey from Northwestern Mutual separately found individuals think they need $1.26 million to retire comfortably, the real number individuals need is based on their personal situation, said Kyle Menke, founder and wealth management advisor at Menke Financial, a Northwestern Mutual company.

In thinking about how life will look in 30 years, there are a variety of things to consider, Menke said. This includes stock market returns, taxes, inflation and medical expenses, he said.

Even people who have enough money for retirement often don’t feel confident in their ability to manage all of those factors on their own, he said. Financial advisors have the ability to run different simulations and stress test a plan, which can help give retirees and aspiring retirees the confidence they’re lacking.

“I think that’s where the biggest gap is,” said Menke, referring to the confidence Americans are lacking without a plan.

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Trump tariffs will hurt lower income Americans more than the rich: study

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Shipping containers at the Port of Seattle on April 16, 2025.

David Ryder/Bloomberg via Getty Images

Tariffs levied by President Donald Trump during his second term would hurt the poorest U.S. households more than the richest over the short term, according to a new analysis.

Tariffs are a tax that importers pay on foreign goods. Economists expect consumers to shoulder at least some of that tax burden in the form of higher prices, depending on how businesses pass along the costs.

In 2026, taxes for the poorest 20% of households would rise about four times more than those in the top 1%, if the current tariff policies were to stay in place. Those were findings according to an analysis published Wednesday by the Institute on Taxation and Economic Policy.

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For the bottom 20% of households — who will have incomes of less than $29,000 in 2026 — the tariffs will impose a tax increase equal to 6.2% of their income that year, on average, according to ITEP’s analysis.

Meanwhile, those in the top 1%, with an income of more than $915,000 a year, would see their taxes rise 1.7% relative to their income, on average, ITEP found.

Economists analyze the financial impact of policy relative to household income because it illustrates how their disposable income — and quality of life — are impacted.

Taxes by ‘another name’

“Tariffs are just taxes on Americans by another name,” researchers at the Heritage Foundation, a conservative think tank, wrote in 2017, during Trump’s first term.

“[They] raise the price of food and clothing, which make up a larger share of a low-income household’s budget,” they wrote, adding: “In fact, cutting tariffs could be the biggest tax cut low-income families will ever see.”

Meanwhile, there’s already evidence that some retailers are raising costs.

A recent analysis by the Yale Budget Lab also found that Trump tariffs are a “regressive” policy, meaning they hurt those at the bottom more than the top.  

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The short-term tax burden of tariffs is about 2.5 times greater for those at the bottom, the Yale analysis found. It examined tariffs and retaliatory trade measures through April 15.

“Lower income consumers are going to get pinched more by tariffs,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Treasury Secretary Scott Bessent has said tariffs may lead to a “one-time price adjustment” for consumers. But he also coupled trade policy as part of a broader White House economic agenda that includes a forthcoming legislative package of tax cuts.

“We’re also working on the tax bill and for working Americans, I believe that the reduction in taxes is going to be substantially more,” Bessent said April 2.

It’s also unclear how current tariff policy might change. The White House has signaled trade deals with certain nations and exemptions for certain products may be in the offing.

Trump has imposed a 10% tariff on imports from most U.S. trading partners. Mexico and Canada face 25% levies on a tranche of goods, and many Chinese goods face import duties of 145%. Specific products also face tariffs, like a 25% duty on aluminum, steel and automobiles.

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