President-elect Assetwho stated that he thought the “tariff” was “the most beautiful word in the dictionary,” proposed various taxes on goods imported from other countries.
Its goal is to deter U.S. companies from using parts and goods from abroad, including China, by making it more costly for them.
He also said he did not need congressional support to impose the tariffs he had initiated. The reality is more complicated, according to economists and foreign trade experts.
What did Trump propose?
During the election campaign, Trump proposed tariffs of between 60% and 100% on Chinese products. However, he provided few additional details, such as whether the tariffs would apply to all products or only certain categories of products.
He also proposed a radical tariff policy including a universal tax of between 10 and 20 percent on all imports, and promised reciprocal tariffs on any country that imposed tariffs on products made in the United States.
Can Trump impose tariffs unilaterally?
Once he takes office, President-elect Trump will have several different avenues to 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: “The Congress shall have power to lay and collect taxes, duties…To regulate commerce with foreign nations. » But Congress can also selectively delegate rate-setting authority to the President, which it has done for decades.
Trump, during his first presidential term from 2017 to 2021, used this presidential authority to increase tariffs: duties paid on U.S. imports doubled from approximately $37 billion in 2015 to $74 billion in 2020, according to the Congressional Research Service.
“Looking at his last four years in office, he seems to believe he has the power to impose tariffs,” said Jake Colvin, president of the National Foreign Trade Council, a defense group. American companies in international trade. “If they decide on day one to use executive power to impose tariffs on Chinese products, they could probably do it.”
Colvin added that it will be important for the new Trump administration to provide businesses with more details so they can plan accordingly. “Many proposals were proposed during the campaign, so it is important that the administration provides a signal on the path it intends to take, for the purposes of clarity and planning for American businesses,” he said. -he declared.
Presidential power 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 would keep the tariffs in place shortly after taking office. During his last term, tariffs were a tool of choice in the trade war against China and against its allies as well. So I think that this is a strategy he will replicate in his next term,” Manak told CBS MoneyWatch.
Manak added that he would likely be able to do so without Congressional support. “The president has complete freedom to do whatever he wants,” she said.
The legal powers available to Trump include Section 301 of the Trade Act of 1974, under which the president can impose retaliatory tariffs when “a political act or practice of a foreign country…violates 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 United States commerce.
Trump has already relied on Section 301 to impose tariffs on China throughout 2018 and 2019, and he may simply expand existing tariff measures he has already taken, according to Manak.
“This would not require any action by Congress because these measures are already in place,” she said.
During 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 power to adjust imports, including imposing tariffs, when they are found to pose a threat to national security.
National security threats
There is also the International Emergency Economic Powers Act (IEEPA), which was not used to restrict trade since President Nixon took office in 1969 until his resignation in 1974.
The law states that “Any authority granted to the President by…this title may be exercised to address any unusual and extraordinary threat…to the national security, foreign policy, or economy of the United States, if the President declares a national emergency in the face of such a threat.
“The powers granted to the President (…) may only be exercised to address an unusual and extraordinary threat such as a national emergency…” it adds in part.
In other words, to use IEEPA to impose tariffs, Trump would have to declare a national emergency through an executive order, asserting that the United States’ trading partners pose an unusual and extraordinary threat.
Alan Wm. Wolff, former deputy director general of the World Trade Organization and a distinguished visiting scholar at the Peterson Institute for International Economics (PIIE), is skeptical that Trump has the authority to impose drastic tariffs in the framework of the IEEPA.
“Can it be used against trade with all countries, our allies and friends in Europe and Asia, in the Americas, not to mention the poorest countries in Africa? It would simply be too big a power grab for be consistent with the intentions of Congress,” he wrote in a recent blog post.
Discrimination against American commerce
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 duties of up to 50 percent of the value of a product and is triggered when a president finds that a foreign country has imposed unreasonable fees or engaged in discrimination against American trade.
But generally, findings must come from the U.S. International Trade Commission (ITC). “But the language in the statute is ambiguous as to what that would look like, and I imagine he could pursue this case without a final finding from the ITC, or pursue it while a finding is pending,” she declared.
Impact of tariffs on consumer prices
Some companies have already announced their intention to move production out of China to avoid the tariffs proposed by Trump.
Shoemaker Steve Madden, for example, says he plans to import fewer Chinese-made products into the United States and replace them with items made in other countries.
If imposed, the proposed tariffs on imports could lead consumers to lose between $46 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.
Another estimate is that a 20 percent blanket tariff on all imported products, combined with a 60 percent tariff on products imported from China, would cost typical American households more than $2,600 a 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 the cost to consumers may soon be available, as experts expect Trump’s proposed tariffs to be implemented relatively quickly.
“We imagine that a few months after he takes office, we would see the first tranche of tariffs come into effect,” Manak said.
