Trump’s Tariff, Round 2? (Part 4)

Based on the examples discussed in previous blogs, we can now start to flesh out what tariff changes may look like under the incoming Trump Administration.

TIMELINE GOING FORWARD

          First things first, the President-Elect will take office on January 20, 2025. Because the appointed USTR must be confirmed by the Senate, the appointment process will be the first significant time commitment. The same is true for the Secretary of Commerce. This could take several weeks; during the first Trump Administration, it took over a month. For our hypothetical, let’s say that all officers are confirmed and take office by February 20, 2025.

          Once the agency heads are confirmed, work can begin in earnest. Assuming first that the Administration decides to adjust existing Section 301 duties, it will likely hold a period for notice and comment by the public. When the Biden Administration increased Section 301 tariffs on China, the notice and comment period lasted from November 15, 2022 to the publication of the four-year review in May 2024, about 18 months; over 1500 entities commented. The notice and comment period on the Trump Administration’s initial Section 301 actions lasted from around April 2, 2018 to July 6, 2018, about two months. If we assume that the incoming Trump Administration gets started right away and holds a short comment period, increases to existing Section 301 tariffs could be seen as early as April 2025. Note that this could potentially achieve a 60% tariff on goods from China, but cannot likely be used to change the general duty rate, or impose a tariff on any other country: the action taken must be tied to the original Section 301 investigation of China.

          If, however, the Administration decides to conduct a new Section 301 investigation, or to use Section 232, a longer process would ensue. This process would certainly be required for any new Section 232 tariff on other goods, and for Section 301 tariffs on countries other than China.

During the Trump Administration, Section 301 investigations did not begin until August 24, 2017, almost seven months after the newly appointed USTR took office. Then, recall that, once a Section 301 investigation is started, the USTR has about one year to complete it. In the case of the Trump Administration’s investigation into China, the investigation ended on April 6, 2018, lasting approximately seven months. Recall also that, after the determination was made, a two-month notice and comment period followed. Therefore, using the previous Section 301 investigation as an example, it could take over a year for new Section 301 tariffs to arrive; with our hypothetical timeline, that would be around April 20, 2026.

          In the case of Section 232, the Trump Secretary of Commerce did not begin investigations until April 20, 2017, about two months after taking office. The investigation did not conclude until January 11, 2018, about eight months later. After the determination was made, President Trump took almost two more months to impose tariffs, doing so on March 8, 2018. Therefore, in our case, we could expect a Section 232 tariff to come out around the same time on our hypothetical timeline, about March, 2026.

          As you can see, Sections 301 and 232 could be used to fulfill the campaign promises of 60% tariff on China and 100% tariff on Mexico as early as April 2025 and March 2026, respectively. However, these laws likely cannot be used to raise a general tariff of 10–20% on all imported goods. These laws have never been used to apply a general tariff, and they likely cannot be used to do so; it is outside the scope of the authority given to the President. That is not to say that there is no way for the President-Elect and Republicans to fulfill this promise: Congress certainly has the power to impose such a tariff. That being said, to understand how long such a tariff would take to arrive would require a separate discussion on the legislative process.

CONCLUSION

          As a final note, there is little cause for alarm: there is nothing new under the Sun, including tariffs. In conducting her four-year review of the Section 301 tariffs imposed on China, which extended and increased them, U.S. Trade Representative Katherine Tai found that: “Economic analyses generally find that tariffs (particularly [retaliation by the People’s Republic of China) have had small negative effects on U.S. aggregate economic welfare, positive impacts on U.S. production in the 10 sectors most directly affected by the tariffs, and minimal impacts on economy-wide prices and employment…Negative effects on the United States are particularly associated with retaliatory tariffs that the PRC has applied to U.S. exports.”

          Moreover, USTR Tai found that “The Section 301 actions have been effective in encouraging the PRC to take steps toward eliminating some of its technology transfer-related acts, policies, and practices and have reduced some of the exposure of U.S. persons and businesses to these technology transfer-related acts, policies, and practices”, and that “…the Section 301 tariffs have contributed to reducing U.S. imports of goods from the PRC and increasing imports from alternate sources, including U.S. allies and partners, thereby potentially supporting U.S. supply chain diversification and resilience.”

          All that is to say that new tariffs are no reason to panic. In these series of blogs, we’ve discussed what vehicles the President may use to impose tariffs outside of the legislative process, what kind of tariffs the incoming Trump Administration may have in mind, and how both the Trump and Biden administrations have handled tariffs in the past. From there, we’ve discussed a timeline of when we could expect tariff changes, based on the processes taken by the previous two administrations. Though this is all hypothetical, you could reasonably expect changes in tariff rates for China as early as April of 2025, and for Mexico as early as March of 2026. As for a general duty rate of 10-20%, this likely cannot be achieved by future President Trump without Congressional action, because it is outside the scope of the President’s authority to change tariffs.

          Importantly, don’t forget that you have a voice in all of this. Any tariff changes whatsoever will most certainly be subject to a period of notice and comment. At that time, you can address your concerns with proposed changes, which will play a role in the final form these changes take. If you believe you or your business will be impacted, either positively or negatively, by new tariffs and you would like to learn more about notice and comment, please reach out to us.