Trump Tariffs On Day One: Can He Do That?
On November 25, 2024 President Elect Donald Trump promised an executive order on his first day in office which would impose a 25% tariff on all goods imported from Mexico and Canada. He also heralded an additional 10% tariff above all other tariffs for China. The economic implications of this are significant, as the executive order would impose a tax on everything from these countries, including produce, finished products, and components for products. Canadian officials have called the proposal “devastating,” Chinese officials are warning of a “trade war,” and the President of Mexico has promised to retaliate; the plan will certainly meet with considerable international opposition. That being said, as lawyers, or domain is not whether the President-Elect will put this plan into action, but rather whether he can. In short: yes he can.
What About The USMCA?
As you may well know, the USMCA is a free trade agreement between the United States, Mexico, and Canada; it replaced NAFTA. Currently, the USMCA is standing in the way of any tariffs on Mexico and Canada. However, the U.S. Constitution gives the President a panoply of foreign relations powers, including the power to make treaties. During the administration of President Jimmy Carter, a handful of congressmen asked the Supreme Court whether the President’s power to make treaties includes the power to break them as well. The Supreme Court dismissed the case, without ruling one way or the other. The practical result is that the President can withdraw from treaties without any court interference. While the USMCA is not technically a treaty, this will not save it; free trade agreements are less formal than treaties, and so would likely receive even less protection.
How Can He Do That On Day One?
The U.S. Constitution expressly gives Congress the power to impose tariffs. However, the American People have, through Congress, largely given this power away to the President. For a deeper discussion of the President’s tariff power, click here. If the President- Elect wants to impose tariffs on his first day in office, there is really one solution: the International Emergency Economic Powers Act of 1977. This law gives the President the authority to declare a national emergency and impose sanctions, including tariffs. This law requires no turn around time, and so the President-Elect could get his wish as early as January 20, 2025. Keep in mind that this is not the end of the analysis: Congress retains the power under the Act to “turn off” the national emergency.
Conclusion.
While ditching trade agreements and imposing emergency tariffs is a huge shakeup to U.S. trade policy, it seems likely that the President has the authority to do just that. Congress gave the President the reins to trade policy long ago, meaning the occupant of the oval office gets to make and remake the rules as he pleases. That being said, this power is not without limits: there will likely be significant political pressure, and Congress could very well put a stop to it. In any case, if your business needs help navigating these unfamiliar waters, our experienced trade attorneys at Liang + Mooney, PLLC would be happy to meet with you.