Trump faces tariff red tape
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Illustration: Lazaro Gamio/Axios
Social media posts don't carry the force of law, even when they're from a soon-to-be president. That is a reality to keep in mind in assessing how and when the incoming Trump administration will enact new tariffs.
Why it matters: Presidents have expansive power over trade policy — but that power is derived from specific legal provisions that dictate multistep processes for deploying that power.
- That means that businesses may not face the overnight imposition of large-scale tariffs but instead have time to prepare their supply chains, and the opportunity to seek exclusions for goods they have no choice but to import — at least, to the extent President-elect Trump follows his first-term trade playbook.
Flashback: In Trump's previous term, authority for tariffs came from Sections 201 and 301 of the Trade Act of 1974, allowing the president to target practices by trade partners that hurt U.S. businesses, and Section 232 of the Trade Expansion Act of 1962, on national security grounds.
- Each statute describes a process for how the authority can be invoked.
For example, Section 301, which both the Trump and Biden administrations have used to target Chinese goods, requires that the Office of the U.S. Trade Representative complete an investigation that includes consultation with the foreign government involved and allows U.S. interest groups to comment.
- This detailed report from the Congressional Research Service spells it out.
- Biden announced the expansion of Section 301 tariffs on China in May, and USTR received more than 1,100 public comments, leading to several changes.
- Some of the tariffs went into effect this past September, but some are not scheduled to take effect until 2026.
Of note: Jamieson Greer, a trade lawyer and Trump's nominee for U.S. trade representative, is well-versed in the importance of following the legal processes laid out by the relevant laws, as opposed to shooting from the hip.
- Over the summer, Greer spoke to JPMorgan clients about what to expect from a Trump 2.0 trade policy, and the bank's economics team released excerpts of his comments this month.
- Greer said that "the Trump administration was very good about having public hearings, taking on comments, letting people rebut comments and going through the required process."
- "Now we are in a situation where there are a lot of legal tools to allow the President to exercise a lot of authority over import regulation," he said, according to the research note. "We also have a lot of jurisprudence now very recently saying Trump was allowed to do what he did."
The incoming administration may want to move more quickly and explore options that involve more speed — but also more legal questions.
State of play: One approach, Cato Institute trade scholar Scott Lincicome tells Axios, would be to elect not to start a new Section 232 or 301 case, but to adjust rates on existing tariffs.
- "The current measures could be quickly 'modified' to change tariff rates or product coverage — and courts have signed off on that broadly," he says, such as by increasing tariffs on Chinese products already covered by Trump-Biden policies.
- Section 232 tariffs on steel could be modified to cover Mexican imports or expanded to other steel products, he adds.
Trump could also try to use laws with fewer procedural restrictions, particularly the International Emergency Economic Powers Act, which gives the president powers over commerce in times of national emergency.
- It grants the president power in response to an "unusual and extraordinary threat."
The bottom line: Corporate supply chain managers will have a busy next four years trying to adapt to higher trade barriers — but how quickly they will have to react depends on whether Trump turns to his first-term trade playbook or pushes boundaries further.
