“The International Emergency Economic Powers Act, passed in 1977, grants the president broad authority over economic transactions, and a wide range of abilities to deal with “any unusual and extraordinary threat,” stemming in whole or in part from foreign sources.
Presidents, including Trump’s predecessor Joe Biden, have used the law to impose economic sanctions on other countries, including on Russia after it launched its 2022 war on Ukraine.
But the closest a president has come to citing a national emergency to impose tariffs was when President Richard Nixon used a different law — the Trading with the Enemy Act of 1917 — to levy a temporary universal tariff on all imports in 1971.
Trump justified his new tariffs Saturday by pointing to “the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl,” which he claims Mexico, Canada and China are not doing enough to keep from coming into the United States.
But Bill Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, said Trump’s use of IEEPA to justify his trade actions “doesn’t really pass the red-face test,” setting the stage for a company or trade association whose members have been harmed by the action to sue.
“The question will be, can you find a judge who will write an injunction to stay the tariffs from going into effect,” Reinsch said. “And my prediction is that will be hard, because you’re asking a federal judge to essentially say, ‘I know more than the President does about what an emergency is.’ And I think judges are going to be reluctant to do that.”
That won’t stop a lawsuit from proceeding, most likely all the way to the Supreme Court, Reinsch said, but it could be years before there is a conclusion to the legal battle.
“The courts have historically upheld the president’s power to take emergency actions, especially when they are related to national security. But one important question is whether they will uphold the use of tariffs. In the past, [IEEPA] has only been used to impose sanctions,” said Tim Brightbill, a trade attorney at the law firm Wiley Rein in Washington, DC.
“While it is possible that companies or industry groups would seek an injunction, they probably face an uphill battle blocking the new tariffs,” Brightbill said.”
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“the U.S. effectively killed the WTO Appellate Body during Trump’s first term by blocking the appointment of new judges, leaving it without the ability to adjudicate disputes. And there’s little to suggest the Trump administration would abide by a WTO ruling even if the organization were able to issue one.”
“Anti-American fever peaked in Canada over the weekend after Trump announced the tariffs were on the way. At a pop-up DJ show in Montreal, a digital sign read “F—K TARIFFS.” On Saturday night in Ottawa, “The Star-Spangled Banner” was booed before the Senators went on to blow out the Minnesota Wild. The jeering continued through the weekend at NHL and NBA games across the country.”
“Beijing struck back on Tuesday after U.S. President Donald Trump imposed 10 percent tariffs against China, announcing levies of 15 percent on U.S. liquefied natural gas and coal, and 10 percent on crude oil, farm equipment and some autos.
Beijing also set further export controls on rare metals, and announced an anti-monopoly investigation into Google, the search engine owned by Alphabet, and a number of other U.S. companies.
The Chinese measures will take effect on Feb. 10, leaving time for Trump to talk to President Xi Jinping about how to avoid further trade escalation.”
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“Beijing also filed a complaint to the World Trade Organization (WTO), invoking its dispute settlement procedure.”
“In exchange for the delay of these tariffs, the Mexican government agreed to send 10,000 national guard troops to its northern border while Trump vowed to stem the flow of American firearms into Mexico. Canada, meanwhile, pledged to implement its 1.3 billion border security plan (which it had already enacted in December). Trump posted on his Truth Social platform that he was “very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured.””
So far, the concessions from Mexico and Canada are: things they were going to do anyways, things you didn’t need a big tariff threat to get, and two-way deals where the U.S. made its own promises. So, rather than successful threats getting important concessions, we had economic disruption, economic fears, and acted like assholes on the world stage with nothing substantial in reward.
“President Donald Trump moved forward Saturday with his plans for tariffs on Canada, Mexico and China, ending a guessing game about how aggressively he would move to penalize America’s three largest trading partners.
The tariffs — as Trump has promised since after his election win — will be 25% duties on Canada and Mexico and 10% on China over issues of fentanyl and illegal migration.”
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“tariffs on crucial energy imports from Canada will be lower, with 10% duties on those products. The carveout was an acknowledgment of US and Canadian energy interdependence.
Trump said the drug and migration issues constituted a national emergency and moved forward on the duties using authority in the 1977 International Emergency Economic Powers Act (IEEPA).”
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“”Tariffs are simply taxes,” wrote Sen. Rand Paul, who is a vocal Trump advocate on other fronts. “Taxing trade will mean less trade and higher prices.”
The Canadian Chamber of Commerce added its own blistering statement that called Trump’s move “profoundly disturbing” and added that it “will have immediate and direct consequences on Canadian and American livelihoods.””
“a one percentage point increase in imports from China caused a 1.9 percent decline in U.S. consumer prices, saving a representative American household roughly $1,500 a year”
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“prices are not just about prices. When consumers have more purchasing power, they use it to buy goods and services in other, more high-productive sectors. Higher tariffs would lead to lost jobs, and inputs would become more expensive for American producers.
Some research suggests that competition from international trade can lead to better wages in new roles for U.S. workers. A 2017 paper by the economist Ildikó Magyari estimates that the American companies most exposed to Chinese imports expanded employment 2 percent more per year than other companies did. Some of these were manufacturing jobs—with higher wages, because they are in the stages of production where workers add more value—and some were complementary service jobs, in such areas as engineering, design, research and development, and marketing.
Apple offers a fascinating example. Trump has often complained that China is the biggest beneficiary of the iPhone, just because the devices are often assembled there. But when researchers Kenneth L. Kraemer, Greg Linden, and Jason Dedrick disassembled an iPhone 7 in 2018, they found that almost all of its value was captured by Western producers of parts, including hundreds of thousands of American researchers, designers, programmers, salespeople, marketers, retailers, and warehouse workers. China just got 1.3 percent of the price paid for an iPhone, and that offshoring made it possible to move U.S. labor to the more value-added parts of the supply chain.”
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“more than a million American jobs depend directly on exports to Chinese consumers. About 0.5 percent of the U.S. work force would lose their jobs if the U.S. lost access to its third-largest goods exporting market.”
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“more opportunities would be lost in the future, since protectionism reduces competition and innovation. If the United States shuts its doors to the best manufacturers of, say, electric cars, that may save some jobs in the short term, but it will turn the U.S. into a fenced-off auto show for more expensive and less efficient vehicles. American consumers will have to pay much more, and foreign consumers will be much less interested.”
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“A United States bent on decoupling from China risks pushing many more innovators and entrepreneurs to the Far East. On paper there are good reasons to stop the export of sensitive technologies to geopolitical rivals, but what good does it do to fence in a geopolitical rival if cutting-edge producers feel the need to join that rival behind the fence?
One German producer of lasers and chip toolmakers, Trumpf, has faced increased obstacles and costly delays after the U.S. government pushed Germany to restrict its exports to China. In response, Trumpf moved some of its 3D-laser-cutting production to China.”
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“This comes from a company in one of America’s closest allies, a country dependent on America’s security guarantees. Imagine how countries diplomatically closer to China will react if forced to choose between Beijing and Washington.”
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“When economies slow, governments have a harder time keeping the populace satisfied. That often leads them to crack down on dissent. China is now doing the bare minimum to fit into the global order, and it has an awful human rights and civil liberties record at home. There is a great risk that a declining, more isolated, and less interdependent China could be much worse on both fronts.”
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“If a rising power can see a future in which it prospers and is allowed to take its place in the established world order—or become so dominant that it can easily replace that order—it makes sense to hide its strengths and bide its time, as Deng Xiaoping encouraged the Chinese to do. But delay is defeat if further rapid growth seems impossible: if it suffers demographic decline, or if geopolitical rivals decide to starve it of resources or markets. Then the country must either accept that it will never realize its grand ambitions, or lash out.”
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“Xi knows an invasion of Taiwan would result in an economic war with the West that would cause China tremendous pain. But what if China had already been deprived of those lucrative markets and had already lost access to investments and technologies it needs?”
“Any new tariffs imposed by the incoming Trump administration will function the same way as every other tariff: It will drain wealth from American consumers and businesses to enrich the U.S. Treasury. That’s what tax increases do, even when they are proposed by a Republican president and cheered by a crowd of Republican lawmakers, donors, and administration officials.
Indeed, study after study after study has found that the tariffs Trump levied during his first tenure were paid nearly entirely by American consumers and businesses.”
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“The big change Trump is proposing this time around is the creation of a new “External Revenue Service” that will collect tariff revenue. The exact contours of that new agency are still unclear, but it is probably best thought of as a public relations maneuver rather than a meaningful policy change. After all, there’s already a governmental entity that handles tariff collection—that’s the “customs” in U.S. Customs and Border Protection. Changing the name won’t change anything about the transactions that occur.”
“On the campaign trail, Trump pledged to put a tariff of between 10 percent and 20 percent on all imports to the United States, along with a 60 percent tariff on Chinese goods and a 25 percent import surcharge on Canadian and Mexican wares — at least, until our neighbors choke off the flow of all migrants and drugs across America’s northern and southern borders.
This protectionist agenda is far more radical than anything Trump attempted during his first term. It threatens to hamper American tech companies by increasing the cost of semiconductors, depress stock valuations by reducing economic growth and fueling a global trade war, and disrupt the US auto industry, whose supply chains were built around the presumption of duty-free trade with Mexico.
Thus, American investors, executives, and entrepreneurs watched Trump’s first day in office with bated breath: Would his inaugural address and initial executive orders prioritize corporate America’s financial interest in relatively free global exchange — or his own ideological fixation on trade deficits?
Trump’s Day 1 actions did not fully clarify his priorities on this front. In his inaugural speech, the president reiterated his broad commitment to protectionism. Meanwhile, his administration prepared to launch federal investigations into America’s trade deficit in general, as well as the trade practices of China, Mexico, and Canada in particular.
Nevertheless, Trump did not actually establish any new tariffs on his first day in office, as his administration’s arch-protectionists had hoped that he would.
Investors interpreted Trump’s caution as a sign that he would be heeding his advisers’ push for a more limited and incremental tariff policy; stocks rose Monday while the US dollar fell (stiff tariffs would increase the value of America’s currency).
Wall Street’s relief may be premature. Trump appears as ideologically perturbed by America’s trade deficit as ever.”
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“Imposing even a 10 percent tariff on all imported goods would not only harm various business interests, but would also likely increase costs for consumers. Thus, such a duty would harm both Trump’s donors and voters.
If Trump’s first term is any guide, his universal tariff would not even redound to the benefit of American manufacturers, who would be vulnerable to higher costs and retaliatory tariffs from foreign nations. Generally speaking, presidents seek to avoid enacting policies that harm the bulk of their coalition, to the benefit of a narrow band of ideologues. And this is what implementing Trump’s grandest visions for trade policy would likely entail.
Second, the imposition of a universal tariff would roil stock markets. During Trump’s first term in office, he monitored the markets’ performance obsessively, tweeting about it incessantly and suggesting that stock values were a barometer of sound policy, warning in 2018, “If Democrats take over Congress, the stock market will plummet.”
Finally, Trump has recently shown some sensitivity to the interests of his newfound friends in tech, even when those interests conflict with the tenets of rightwing nationalism. Over the holidays, Elon Musk feuded with their co-partisans over the desirability of high-skill immigration and the H-1B visa, which help American tech companies to hire foreign talent. Trump ultimately expressed support for Musk’s position.”
“This is not only unfair but uniquely so. The United States is the only developed nation that taxes based on citizenship rather than residency. We are in terrible company. As the Cato Institute’s Adam Michel writes, “Eritrea’s brutal dictatorship is the only other country to come close, imposing a 2 percent levy on all expatriates.””