President-elect Trumpwho has said think “tariff” is “the most beautiful words in the dictionary,” has proposed various taxes on goods imported from other countries.
The goal is to discourage American companies from relying on parts and goods from overseas, including from China, by making them more expensive.
He also claimed that he did not need the support of Congress to implement the floated tariffs. The reality is more complicated, according to economists and foreign trade experts.
What does Trump propose?
On the campaign trail, Trump proposed tariffs between 60% and 100% on Chinese goods. They offer some additional details, such as whether the tariff will apply to all goods, or only certain product categories.
He has also proposed a sweeping tariff policy including a universal tax of between 10% and 20% on all imports, and has promised reciprocal tariffs in any country that imposes tariffs on American-made goods.
Can Trump unilaterally impose tariffs?
After he took office, President-elect Trump has several different paths through which he can try to implement the type of tariffs he has proposed.
The US Constitution gives Congress the authority to impose tariffs in Article 1, Section 8, which states that “Congress shall have Power to lay and collect Taxes, Duties… To regulate Commerce with foreign Nations.” But Congress can also vote by voting tariff-setting authority over to the President, which it has done for decades.
Trump, in his first term as president from 2017-2021, used this presidential authority to increase tariffs: Duties paid on US 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, they seem to believe they have the authority to impose tariffs,” said Jake Colvin, president of the National Foreign Trade Council, a group dedicated to advocating for US companies in international trade. “If they decide one day that they want to use their executive authority to put tariffs on Chinese goods, they might as well go ahead and do that.”
Colvin added that it will be important for the incoming Trump administration to provide businesses with more specifics so companies can plan. “Many have been proposed in the course of the campaign, so it is important for the administration to give a signal about the path to pursue, for clarity and planning goals for American businesses,” he said.
The president’s authority to impose tariffs
The president has the authority to impose some trade restrictions on foreign countries, said Inu Manak, trade policy fellow at the Council on Foreign Relations.
“It seems pretty clear that he will follow tariffs shortly after taking office. During the last term, tariffs were the tool of choice in the trade war against China and against allies, as well. So I believe that is a strategy that will be replicated in the next term,” Manak told CBS MoneyWatch.
Manak added that he would be able to do so without the support of Congress. “The president has the discretion to do what he wants,” he said.
Trump’s legal powers include Section 301 of the Trade Act of 1974, under which the president can impose retaliatory tariffs when “the conduct, policy, or practice of a foreign country … benefits the United States under any trade agreement, or … cannot apply and burden or restrict the commerce of the United States.”
Trump has relied on Section 301 to impose tariffs on China in 2018 and 2019, and he could, simply, expand the tariff actions already in place, according to Manak.
“It doesn’t require any action from Congress, because it already exists,” he 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 authority to adjust imports, including by imposing tariffs, when they are found to be a threat to national security.
A threat to national security
There is also the International Emergency Economic Powers Act (IEEPA), which has not been used to restrict trade since President Nixon took office, from 1969 until his withdrawal in 1974.
The act says “Any authority granted to the President by … this title may be exercised to address an unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States, if the President declares a national emergency about the threat.”
“The powers granted to the President … may only be exercised to deal with an unusual and extraordinary threat of national emergency…” he added.
In other words, in order to use IEEPA to impose tariffs, Trump would have to declare a national emergency through an executive order, stating that US trading partners pose an unusual and extraordinary threat.
Alan Wm. Wolff, a former deputy director-general of the World Trade Organization and distinguished visiting fellow at the Peterson Institute for International Economics (PIIE), is skeptical that Trump has the authority to impose sweeping tariffs on the IEEPA.
“Can it be used to trade with all countries, allies and friends in Europe and Asia, in America, not to mention the poorest countries in Africa? 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 authorize the president to unilaterally raise tariffs.
The rarely used act allows the president to impose duties of up to 50% of the value of products, and is triggered when the president finds that a foreign country has imposed unreasonable fees, or discriminated against US trade.
Typically, these findings must come from the US International Trade Commission (ITC). “But the language of the statute is ambiguous about what that would look like, and I would imagine they could pursue this without a final finding from the ITC, or pursue it when there is a finding,” he said.
The impact of tariffs on consumer prices
Some companies have said that is their goal moving production out of China to avoid Trump’s proposed tariffs.
Shoemaker Steve Madden, for example, said he plans to import less goods made in China to the US, and replace them with items made in other countries.
If implemented, the proposed tariffs on imports could hurt consumers a loss of between $46 billion and $78 billion in spending power annually on products including apparel, toys, furniture, housewares, footwear and travel goods, according to the National Retail Federation.
According to another estimate, a general tariff of 20% on all imported goods, combined with a 60% tariff on goods imported from China, would cost a typical US household more than $2,600 a year. If Trump imposes a 10% tariff in place, it would cost a family $1,700 more, according to PIIE.
More concrete data on how much it will cost consumers may soon become available, as experts expect Trump’s proposed tariffs to take effect soon.
“We would imagine that within a few months of his taking office, we will see the first tranche of tariffs being implemented,” Manak said.
