“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.”
“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.”
“If minimum wage increases were a drug, governments would have to conduct trials and monitor adverse effects afterward. That’s what happened in Seattle when it raised the minimum wage in 2014. The city called for proposals to study the impact on actual workers earning below the minimum before the law. The Evans School of Public Policy and Governance at the University of Washington was the only volunteer. Its researchers found that the law didn’t cause an increase in layoffs among workers who had previously earned below minimum wage, but it did reduce their hours by an average of 7 percent. That was partly offset by a 3 percent increase in hourly pay for the hours they did work. On net, the law cost these workers an average of $888 per year.
That amount is significant in itself, but it’s important to consider that it accounts for only the short-term effects. As mentioned above, some layoffs and hour reductions will happen immediately, but others—such as more businesses closing and fewer opening, or automation and other changes reducing employment—can take years. Another point is that the workers who benefited from higher pay were the ones most likely to have risen out of the minimum wage ranks to the middle class even without a mandated increase, while the workers who lost much more than $888 per year are more likely to be the ones blocked forever from economic advancement. In fact, the paper found that the workers who benefitted net were the most experienced and highest paid among the group–earning more than the old minimum but less than the new–while the less-experienced workers earning the old minimum or close to it, lost considerably more than the average.
Seattle legislators must have been unhappy with those findings because they cut funding for the Evans School and reached out to the same group at U.C. Berkeley that did the California minimum wage study to do its own distorted analysis, which was rushed out a week before the Evans study was made public. Eventually, Seattle raised the minimum wage again.”
Despite producing tons of oil, the U.S. still imports a lot of oil. The stuff we produce can’t be refined by our refineries, so we ship it out to be refined and import foreign oil to refine here.
“An increase in tariffs of 10 percent on all imports would reduce America’s gross domestic product (GDP) by about 0.3 percent, while 60 percent tariffs on all imports from China would knock GDP down by another 0.3 percent, the CBO projects.
Meanwhile, the tariffs would “make consumer goods and capital goods more expensive, thereby reducing the purchasing power of U.S. consumers and businesses,” the CBO found. The productivity of American businesses would decline due to “limiting competition from imports and causing resources to be used less efficiently than they otherwise would have been used.”
The higher tariffs would lower the budget deficit by about $2.7 trillion over the next 10 years, the CBO also estimated. In other words, American consumers would be paying $2.7 trillion more in federal taxes over the next 10 years if Trump’s tariff plans are implemented”
“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 study this month by Warwick McKibbin and Marcus Noland of the Peterson Institute for International Economics concluded that the 25% tariffs on Canada and Mexico and 10% tariffs on China “would damage all the economies involved, including the U.S.’’“
For Mexico,’’ the study said, “a 25% tariff would be catastrophic. Moreover, the economic decline caused by the tariff could increase the incentives for Mexican immigrants to cross the border illegally into the U.S. — directly contradicting another Trump administration priority.’’
Cutler, now vice president at the Asia Society Policy Institute, said the extent of the economic damage will depend on how long the tariffs are in effect.
If it’s just a few days, “that’s one thing. If they are in place for weeks onto months, we’re going to see supply chain disruptions, higher costs for U.S. manufacturers, leading to higher prices for U.S. consumers,’’ she said. “It could have macroeconomic impacts. It could affect the stock market. Then internationally it could lead to more tension with our trading partners and make it harder for us to work with
“The U.S. economy grew at a 2.3% annualized rate in the final three months of 2024, the Commerce Department said on Thursday — closing out a year of strong growth.”
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“The fourth-quarter growth figures are aslowdownfrom the 3.1% rate in the previous three-month period.”
“The current average credit card interest rate is 21 percent, but it didn’t get there overnight. In 2008, the average rate was 14 percent, at a time when the savings rate was much lower and consumers were overextended. In 2009, a Democratic supermajority in Congress passed the CARD Act, bringing a bevy of new regulations for credit card companies, such as requiring advance notice of any rate increases and limitations on fees for late payments.
Interest rates began rising immediately following the passage of the CARD Act and continued to rise as the risk-free rate—the Federal Reserve’s overnight lending rate, currently about 4.75 percent—fell to 0 percent throughout most of the 2010s. Objectively, credit card interest rates are high today, but they are arguably high as a direct result of legislation passed at the end of the 2000s. Capping credit card interest rates is simply an intervention to correct the results of previous interventions.”
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“There is a reason that credit cards carry a higher average interest rate than mortgages (7 percent) or car loans (8 percent). Mortgages and car loans are secured lending—the bank has collateral in the event of a default which increases recovery rates. Credit card borrowing is unsecured lending—lenders rely on nothing more than trust in the borrower. When losses occur, they are total and catastrophic. Credit card lending is inherently risky.
The vast majority of borrowers are unprofitable at a 10 percent interest rate. If credit card interest rates were capped at 10 percent, it wouldn’t just disrupt individual finances—it could destabilize the entire credit system. Major credit card lenders, such as Capital One Financial, would likely terminate the accounts of millions of their less creditworthy customers, which could mean anyone with a credit score of 780 or lower. To the extent possible, they might introduce new fees to make up for the loss of interest revenue, but the Consumer Financial Protection Bureau is already taking a hard look at late fees, which can be large relative to small credit card balances.
Customers who lose access to credit would have to resort to cash or debit cards—and find that it is hard to function in modern society without a credit card. Even renting a car or getting a hotel room are activities that require a credit card.”
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“Interest rates are prices—the price of money—and all prices are signals. Capping credit card rates might sound like a win for consumers, but in practice, it’s a lesson in unintended consequences. Policymakers must tread carefully, weighing the broader economic impacts before introducing well-intentioned but potentially devastating reforms.”
We should care about the economy. The economy is people’s lives.
We should think about where markets work best and where the government works better. We should consider the structure and incentives of a particular market.