president-elect Trumpwho has said he thinks “tariff” is “The most beautiful word in the dictionary” has proposed a variety of taxes on goods imported from other countries.
His goal is to discourage American companies from relying on parts and goods from foreign countries, including China, by making it more expensive for them to do so.
He also claims he doesn’t need Congress’ support to impose the tariffs he has proposed. According to economists and foreign trade experts, the reality is more complicated.
What has Trump proposed?
During his campaign, Trump proposed tariffs on between 60% and 100% on Chinese goods. However, he offered few additional details, such as whether the tariffs apply to all goods, or only certain product categories.
He has also proposed sweeping tariff policies, including a universal tax of between 10% and 20% on all imports, and has promised reciprocal tariffs on any country that imposes tariffs on U.S. goods.
Can Trump unilaterally impose tariffs?
Once he takes office, President-elect Trump has a number of different avenues through which he could try to implement the types of tariffs he has proposed.
The U.S. Constitution gives Congress the power to impose tariffs in Article 1, Section 8, which states that “Congress shall have power to lay and collect taxes and duties…for the purpose of regulating commerce with foreign nations .” But Congress can also selectively delegate the authority to set tariffs to the president, which it has done for decades.
Trump used this presidential authority to raise tariffs during his first term as president from 2017-2021: Taxes on U.S. imports doubled from about $37 billion in 2015 to $74 billion in 2020, according to the Congressional Research Service.
“Looking at the last four years in office, he seems to believe he has the authority to impose tariffs,” said Jake Colvin, chairman of the National Foreign Trade Council, a group dedicated to advocating for U.S. companies in international trade. “If they decide on day one that they want to use executive power to impose tariffs on Chinese goods, they can probably do that.”
Colvin added that it will be important for the incoming Trump administration to provide companies with more details so companies can plan accordingly. “Much has been proposed over the course of the campaign, so it is important that the administration signals the path it intends to take for clarity and planning purposes for American businesses,” he said.
Presidential authority to impose tariffs
The president has the authority to impose a range of trade restrictions on foreign countries, said Inu Manak, a trade policy fellow at the Council on Foreign Relations.
“It seems pretty clear that he will pursue tariffs shortly after taking office. During his last term, tariffs were a tool of choice in the trade war against China and also against allies. So I think this is a strategy he will repeat. his next term,” Manak told CBS MoneyWatch.
Manak added that he could probably do this without support from Congress. “The president has quite a bit of discretion to do whatever he wants,” she said.
Trump’s legal powers include Section 301 of the Trade Act of 1974, which allows the president to impose retaliatory tariffs when “a policy or practice of a foreign country … conflicts with, or is inconsistent with, the provisions of, or otherwise denies benefits to, the United States under any trade agreement, or … is unjustifiable and burdens or restricts commerce in the United States.”
Trump has already relied on Section 301 to impose tariffs on China in 2018 and 2019, and according to Manak, he could simply expand existing tariff actions he has already taken.
“That wouldn’t require any action from Congress because it already exists,” she said.
In his previous term as president, he also used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on steel and aluminum imports. It gives the president the authority to adjust imports, including by imposing tariffs, if they are found to pose a threat to national security.
Threats to national security
There is also the International Emergency Economic Powers Act (IEEPA), which has not been used to restrict trade since President Nixon was in office, from 1969 until his resignation in 1974.
The law says: “Any authority vested in the President by…this title may be exercised to meet any unusual and extraordinary threat…to the national security, foreign policy, or economy of the United States, if the President declares a declaration of national emergency with respect to such a threat.”
“The powers vested in the President… may be exercised only to meet an unusual and extraordinary threat requiring a national emergency…” it adds in part.
In other words, to use IEEPA to impose tariffs, Trump would have to declare a national emergency via executive order, claiming that the US’s trading partners pose an unusual and extraordinary threat.
Alan Wm. Wolff, a former deputy director general of the World Trade Organization and a leading visiting scholar at the Peterson Institute for International Economics (PIIE), is skeptical that Trump has the authority to impose sweeping tariffs under IEEPA.
“Can it be used against trade with all countries, our allies and friends in Europe and Asia, in America, not to mention the poorest countries in Africa? That would simply be too great a power grab to stay within the bounds of what Congress intended. this statute,” he wrote in a recent blog post.
Discrimination against US trade
Manak said Section 338 of the Tariff Act of 1930 could also give the president the power to unilaterally increase tariffs.
This rarely used law allows the president to impose tariffs of up to 50% of a product’s value, and is triggered when a president determines that a foreign country has imposed an unfair burden on or discriminated against U.S. commerce.
Typically, however, the finding must come from the U.S. International Trade Commission (ITC). “But the language of the statute is ambiguous as to what that would look like, and I imagine he could pursue this without a final finding from the ITC, or could pursue this while a finding is being made done,” she said.
Impact of tariffs on consumer prices
Some companies have already indicated that they want this move production out of China to avoid Trump’s proposed tariffs.
For example, shoemaker Steve Madden says it plans to import fewer goods made in China to the U.S. and replace them with products made in other countries.
If imposed, the proposed tariffs could hurt consumers lose between $46 billion and $78 billion in purchasing power each year on products such as clothing, toys, furniture, appliances, shoes and travel items, according to the National Retail Federation.
According to another estimate, a blanket tariff of 20% on all imported goods, combined with a 60% tariff on goods imported from China, would cost average American households more than $2,600 per year. If Trump instead imposed a 10% tariff across the board, it would cost families $1,700 more, according to PIIE.
More concrete data on costs to consumers may be available soon, as experts expect Trump’s proposed tariffs to be implemented fairly quickly.
“We can imagine that within a few months of his taking office we would see the first tranche of tariffs come into effect,” Manak said.
