President Donald Trump’s proposed tariffs on some of the U.S.’s largest trading partners could go into effect as soon as this Saturday, but there are still many questions about what importers and supply chain managers should anticipate.
During his first week back in office, Trump confirmed that February 1 was the target date for implementing a 10% tariff on imports from China and a 25% tariff on goods from Canada and Mexico. This came after his administration set an April 1 deadline for a trade review led by federal agencies. The review aims to assess U.S. trade policies and offer recommendations on tariffs and other measures.
With Trump’s anticipated tariffs now seemingly on the horizon, international trade experts share what we know so far.
1. How Can the President Issue Tariffs?
There are several ways the U.S. can impose tariffs, many of which require Congressional involvement or trade reviews by the U.S. Trade Representative, such as the Section 301 duties on Chinese imports under former President Joe Biden. However, under the International Emergency Economic Powers Act, the president can immediately impose tariffs to address national emergencies or threats to national security or domestic industries, according to experts. Trump has signaled his intention to use this power to levy tariffs on China, Canada, and Mexico, building on actions taken during his first term. His administration previously declared national emergencies related to immigration and the importation of fentanyl, which could serve as justification for these tariffs, according to John Brew, former chair of the international trade group at Crowell & Moring law firm.
2. How Quickly Would Tariffs Take Effect?
If Trump issues an executive order to implement tariffs, U.S. Customs and Border Protection (CBP) could begin collecting duties quickly, according to Alexander Schaefer, a partner at Crowell & Moring. =
“I don’t think it takes a lot for CBP to implement, whether it’s on a country, product, or regional basis,” Schaefer said.
The implementation could start within a few days of the order being signed, though there might be a specific start date, like 15 or 30 days later. Exemptions could also be made for goods already in transit or under contract. For example, in 2018, the first Trump administration gave importers three weeks’ notice before imposing 25% duties on $34 billion worth of Chinese imports.
3. Could the Executive Order Be Challenged Legally or Legislatively?
An executive order can be overturned by Congress, as outlined by the American Bar Association. Tariffs imposed by an executive order might also face legal challenges, particularly from U.S. importers, according to Jonathan Todd, vice-chair of the transportation and logistics practice at Benesch Friedlander Coplan & Aronoff law firm. However, challenging such tariffs in court can be difficult.
“The burden on plaintiffs to get temporary relief is much higher than in typical cases,” said Brew. “Successful lawsuits would need to show the tariffs were egregiously mishandled”.
This lesson was learned by the steel industry when the U.S. imposed tariffs on steel imports in 2018, and the Supreme Court declined to hear a case challenging them. Even if the case is heard, legal proceedings could take years to resolve, and importers would likely still need to pay the tariffs while waiting for a decision. Schaefer noted that “historically, the success rate for such challenges is low.”
4. Will There Be an Exemption Process?
Both Trump and Biden have previously offered tariff exemptions for specific products and industries. In his first term, Trump allowed exemptions for products like medical devices and personal protective equipment. While it’s unclear what the exemption process will look like for new tariffs, importers may need to prove that paying the additional duties would harm U.S. production or supply chains. For example, when Trump imposed steel tariffs in 2018, companies had to demonstrate that certain steel or aluminum products were unavailable domestically. Even if exemptions are granted, the process could take time, leaving importers liable for duties on high-volume shipments until an exemption is approved. If granted, exemptions might be retroactive to the goods’ entry date or provide other means for recovering the paid duties.
5. How Does Trump’s Trade Review Fit Into the Plan?
There is some inconsistency between Trump’s trade policy review and his intention to implement tariffs by February 1, according to Todd. The trade review is more about evaluating whether the U.S. should consider imposing broad tariffs beyond those targeted at specific countries like China, Canada, and Mexico. In recent weeks, Trump has also threatened tariffs on the European Union and Colombia.
Schaefer noted, “If you’re going to impose tariffs on herring from Denmark, you need a strong justification for why it makes sense, whether it’s due to economic or security concerns.”