Trump could impose tariffs without Congress, experts say. Here’s how it could work

President-elect Donald Trump intends to make tariffs — which he has called “the most beautiful word in the dictionary” — a cornerstone of his economic agenda.

In recent months, he’s proposed a variety of different tariffs, including a 10% to 20% across-the-board rate on all foreign imports, a 25% to 75% rate on Mexican imports and a 60% rate on Chinese imports.

Upon assuming office in January, he’ll be able to make good on these promises without the help of Congress, experts told McClatchy News.

“The president has a whole range of authorities he could use to impose tariffs,” Edward Alden, a senior fellow at the Council on Foreign Relations, told McClatchy News.

Presidential power to impose tariffs

The U.S. Constitution gives Congress the power to set tariffs — which are taxes applied to imported or exported goods.

During the early years of the country, tariffs were extremely important as they were “used to raise money for the government and infant industry protection,” Judy Goldstein, a professor of international communication at Stanford University who studies trade politics, told McClatchy News.

However, over time, tariffs became a smaller source of federal revenue, and they “have increasingly become an instrument of U.S. international trade and foreign policy,” Goldstein said.

Because of this, Congress delegated some of its authority to set tariffs to the Executive Branch, according to a Congressional Research Service (CRS) report.

As a result, today there are dozens of different statutes under which the president can levy tariffs.

For example, the Trade Expansion Act of 1962 — specifically Section 232 — “gives the president the authority to set tariffs for national security reasons,” Pamela Starr, a professor of political science at the University of Southern California, told McClatchy News.

Similarly, Section 301 of the Trade Act of 1974 authorizes the Office of the United States Trade Representative — which is within the Executive Branch — to impose tariffs in order to “remedy a foreign trade practice.”

During his first term, Trump utilized both of these statutes to impose tariffs — with Section 301 being used to levy tariffs on Chinese imports, and Section 232 being used to establish tariffs on steel and aluminum imports, Alden said.

“Those are possibilities again,” Alden said.

Further, the International Emergency Economic Powers Act (IEEPA) passed by Congress in 1977, delegates to the president the ability to impose across-the-board tariffs during times of emergency or war.

The act “gives the president more or less unlimited authority to impose tariffs or other sanctions if he declares an ‘emergency,’” Alden said.

Establishing this type of sweeping tariff is “unusual,” Goldstein said. “The last time we saw this was with (President Richard) Nixon.”

In 1971, Nixon — using the Trading with the Enemy Act, a precursor to the IEEPA — levied a 10% tariff on all U.S. imports.

Additionally, there’s yet another statue that the president could use to justify tariffs: the World Trade Organization’s “national interest exception,” Goldstein said.

This allows a WTO member country to restrict trade practices in order to protect their “essential security interests,” according to the CATO Institute.

Further, Congress has also authorized Executive Branch agencies to levy tariffs “to offset injurious unfair trade practices,” according to CRS.

In sum, there are a plethora of levers that Trump could pull to enact his tariff agenda once he takes office.

With that being said, Congress alone has the power to make permanent changes to tariffs, while the president can only make temporary changes, Alden said.

Though, he noted that President Joe Biden has kept in place many of the tariffs imposed during the first Trump administration — including those on Chinese imports.

“So, temporary can be a long time,” Alden said.

What economists say about tariffs

Trump has contended that tariffs will be a boon for the economy and that they will help bolster American manufacturing.

But many economists and experts have expressed caution about his tariff plans, arguing that they will raise costs for consumers, contribute to inflation and shrink the economy.

Broad-based tariffs will increase prices that individuals and businesses alike pay, according to an analysis from the Peterson Institute for International Economics.

“Tariff increases also result in more unemployment, higher inequality” and they have “only small effects on the trade balance,” according to an International Monetary Fund report.

Further, tariffs “result in less efficient production, leading to reduced economic output and lower incomes over the long run,” according to an analysis from the Tax Foundation. “This is the standard analysis of tariffs going back to Adam Smith and the classical economists, who recommended keeping tariffs as low as possible.”

This story was originally published November 19, 2024 at 10:27 AM with the headline "Trump could impose tariffs without Congress, experts say. Here’s how it could work."