Oct. 3, 2024, 7:22 p.m.
On the campaign trail, tariffs have taken on the role of panacea for the sky-high price tag of Donald Trump’s economic policy proposals.
“Tariffs are the greatest thing ever invented,” the former president and current GOP nominee told a crowd in Flint, Michigan, on Sept. 17.
Trump broke with Republican orthodoxy on free trade in 2016, running his campaign on a broadly protectionist platform. He followed through while in the White House, imposing tariffs on solar panels, washing machines, steel, aluminum, and other products while renegotiating the country’s free-trade agreement with Mexico and Canada. The Biden administration kept the tariffs on Chinese goods, adding a 100 percent tariff on Chinese-made electric vehicles.
But Trump’s tariff proposals for a potential second term are of a different order, analysts say. The president has made a host of expensive policy promises: eliminating taxes on Social Security benefits and tipped wages, renewing popular household tax breaks, and funding in-vitro-fertilization treatments. The proposals could cost trillions of dollars, and to pay for it all Trump says he would implement a 20 percent tariff on all imports and an additional 40 percent tariff on Chinese goods. Trump recently proposed a 200 percent tariff on John Deere tractors made in Mexico as well.
It’s an across-the-board increase in the cost of imported goods not seen in decades, and one that experts say could have inflationary effects that reverberate through the economy.
“Any company or firm in the United States that sells products abroad would almost certainly be hit with a retaliatory tariff,” said Clark Packard, research fellow at the libertarian-leaning Cato Institute.
Trump said that foreign suppliers would shoulder the cost. Tariffs, though, are typically paid by the importers, who often pass those costs on to the consumer. Trump’s opponent, Vice President Kamala Harris, has said his tariff proposals would cost the average middle-class family as much as $4,000, a number that tracks with several analysts’ estimates.
The Constitution gives Congress the authority to levy tariffs, though over the years legislation has ceded more power to the White House. On Capitol Hill, some key Republicans have been cool to the idea of Trump’s sweeping tariffs on imported goods, which could negate some of the economic benefits from Trump’s tax cuts.
"I'm not a fan of tariffs,” outgoing Senate Minority Leader Mitch McConnell told reporters in late September. “They raise the prices for American consumers. I'm more of a free-trade kind of Republican that remembers how many jobs are created by the exports that we engage in, so I'm not a tariff fan."
It’s not a given that a GOP-controlled Congress would reject Trump's proposal, though. A president-elect Trump could influence GOP congressional leadership elections later this year, potentially opening the door to more support for his tariff plan.
Congress is set to write a major tax bill next year, and Trump has identified the tariffs as a way to pay for much of the cost of the breaks he’s proposing. Depending on how Republicans attempt to move that bill through Congress, the legislation is not allowed to increase the deficit beyond a 10-year window. For Trump’s tariffs to count as paying for his proposed tax breaks, they would need to be passed as part of that legislation, not done through executive order.
Trump likely still has an uphill climb on a massive tariff package that could raise costs for average consumers. He has acted unilaterally before, however, employing rarely used statutes in his first term to push through the tariffs on steel and aluminum.
The Trump campaign hasn’t said how a potential second administration would implement his tariff proposals, but he has options. Experts differ on whether the tariffs would survive the courts.
Packard said using tariff statutes on national security grounds might escape an inevitable court challenge.
The International Emergency Economic Powers Act (IEEPA) grants the president the authority to react to “unusual or extraordinary threats” to national security, foreign policy, or the economy originating outside of the United States. Presidents have used IEEPA in the past to implement embargoes and sanctions, but never tariffs. Trump did briefly threaten to use the statute to impose tariffs against Mexico in response to border and immigration issues in 2019.
“The only real procedural limitation under IEEPA is that the president must declare an emergency under the National Emergencies Act,” Packard said.
Packard said he believed it’s increasingly unlikely that a court would strike down tariffs imposed in the name of an emergency or national security.
Alan Wolff, distinguished visiting fellow at the nonpartisan Peterson Institute for International Economics, said IEEPA is vulnerable to the same issue as many other potentially relevant statutes—that it is written too narrowly for Trump’s broad proposal.
“It wasn’t intended to say, ‘Everybody is threatening the United States,’” said Wolff, who says he doesn’t believe Trump’s across-the-board tariffs would survive a court challenge.
The other major national security tariff provision is Section 232 of the Trade Expansion Act of 1962, which Trump used to implement his tariffs on steel and aluminum imports. That statute must be used to target specific products.
Section 301 of the Trade Act of 1974, which Trump used to impose tariffs on Chinese goods, could see an expansion, Packard said. That statute, though, must be targeted at a particular country, so it may be limited to the expanded tariffs on China.
Under Section 122 of the Trade Act of 1974, a president has authority to impose up to 15 percent tariffs, but the measures are limited to a period of 150 days before Congress must approve them.
“I think it’s more likely that that would be struck down by a court because it’s grounded in the balance of payments, that 'the trade deficit is so large that we have to do this,'” Packard said.
Another potential candidate would be Section 338 of the Smoot-Hawley Tariff Act of 1930. That authority grants the president the ability to impose tariffs of up to 50 percent on imports from countries that have discriminated against U.S. commerce in certain situations.
But to apply many of those statutes to an across-the-board tariff, Trump would have to argue that every U.S. trading partner has discriminated against American products—a difficult proposition, said Wolff, who recently wrote about Trump’s potential tariff authority on the Peterson Institute’s website.
If Trump does choose unilateral action and it’s challenged in the courts, a resolution of the issue from the Supreme Court could come quickly, Wolff said.
“When Truman nationalized the steel mills during the Korean War, it took the Court two months to say, ‘You can't do that,’” he said. “My feeling is they'd be pretty quick on this, too.”
