Trump's Day 1 trade tradeoff

In the disruption scenario, Trump could declare a national economic emergency, which gives the president wide latitude over international economic policy.

• Then he could move quickly on tariffs. But he'd face blowback in the form of higher consumer prices, a slumping stock market, angry CEOs and congressional Republicans, retaliation from trade partners, and legal challenges.
• There have been mixed signals in recent days over which approach is more likely — including dueling press leaks suggesting both the emergency declaration option and more limited tactics are in play.
• At dinner with House chairs at Mar-a-Lago last weekend, Trump touted tariffs as being among the "most beautiful words" in the English language — and said they'll raise a lot of revenue, a source in the room tells Axios' Marc Caputo.

What they're saying: "Markets would freak and I think the real world would freak," said Scott Lincicome, a trade scholar at the Cato Institute. "You're talking about substantial price increases that would show up quite quickly."

• "It strikes me as politically fraught for a president who won because of inflation to suddenly be sitting on top of Trumpflation 30 days into his presidency," he adds.
• "I can't imagine the president tariffing guacamole right before the Super Bowl," Lincicome said. (Most U.S. avocados are imported from Latin America.)

Flashback: Trump 1.0 relied on legal authorities that required months-long investigations and comment periods before the administration could impose double-digit tariffs on imports from China and elsewhere.

• The process allowed corporations to seek carve-outs, other countries to negotiate for changes — and, at a minimum, time for all parties to prepare.
• The tools, known as Section 232 and Section 301 for where they're found in trade statutes, allow the president to implement unilateral tariffs as long as proper procedures are followed. They have been continued by the Biden administration and held up to court challenges.
• Those provisions "have a mechanism for businesses to come in and tell the government, 'OK, this is what the impact of this is going to be,' so they can avoid unintended consequences," Michael Froman, president of the Council on Foreign Relations and a former U.S. Trade Representative, tells Axios.

The fine print: If Trump wants to move faster and more expansively, he might consider invoking the International Emergency Economic Powers Act of 1977.

• It gives the president wide-ranging powers in an emergency, but has not been used to implement tariffs before. So there is uncertainty as to whether invoking the act to apply across-the-board taxes on U.S. imports would hold up in court.

What to watch: Speedier tariffs could also mean speedier retaliation from major allies that might take a huge toll on domestic producers.

• If U.S. tariffs are broad-based, retaliation might follow suit. For instance, Canadian officials are already readying tariffs as high as 25% on nearly everything America sends to its neighbor to the north, Bloomberg reports.
• Similar across-the-board responses from other major economies would make the 2018 trade war look minuscule. Back then, countries hit back with tariffs that would hurt red-state economies, like soybeans or bourbon whiskey.
• "You could anticipate all kinds of secondary and tertiary effects as this unwinds and the U.S. trying to minimize the cost to our exporters," says Ann Harrison, a University of California, Berkeley economic professor and former World Bank official.

Editor's note: This story has been corrected to note that the International Emergency Economic Powers Act has not been used to implement tariffs before.