- Trump has indicated he wants to impose tariffs on his first day in office.
- Trade policy experts told BI that it could do this by using a national emergency trade law.
- While it will take time for the tariffs to take effect, Americans could see price increases quickly.
The new tariffs are approaching with President-elect Donald Trump taking office — and Americans could see the impacts soon after.
In recent months, Trump has suggested a series of tariff proposals related to key trading partners with the US, including China, Mexico, Canada and the BRICS countries. Trump’s biggest target has been China, with a proposed tariff of 60%, along with a 25% tariff on imports from Canada and Mexico.
Trump has not specified which authorities he will use to implement the tariffs, and it is possible that he may choose to issue them on a smaller scale than he originally proposed. However, he has previously said he wants to start the process of setting tariffs on his first day in office, saying he will use his executive authority to set them early in his term.
“On January 20th, as one of my first of many Executive Orders, I will sign all the necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States and its borders. blatantly ridiculous,” Trump wrote in November. post on Social Truth.
Some reports have suggested that Trump could use the International Emergency Economic Powers Act, which would allow a president to impose tariffs in the event of a national emergency. Several trade policy experts told Business Insider that Trump could use emergency powers to begin implementing his tariff plans on day one.
While it would take time to take effect, Americans could still quickly begin to see price increases for affected goods.
Inu Manak, a trade policy fellow at the Council on Foreign Relations, told BI that the US is likely to see an economic impact “fairly quickly” after Trump makes a tariff announcement because markets can react to it before for any plan to take effect.
“You’re also going to have firms moving a lot of their production where they can, hoarding, moving things around, raising prices,” Manak said. “So the tariff effect can happen before the tariffs are even there.”
Trump has previously denied that his tariff plans will raise prices for Americans. Brian Hughes, a Trump-Vance transition spokesman, told BI in a statement that Trump “has promised tariff policies that protect American manufacturers and working men and women from unfair practices by foreign companies and foreign markets.”
“As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation,” Hughes said.
How Trump Can Set His Tariffs on Day One
There are a number of existing avenues within federal trade law that Trump could pursue to implement his tariffs. One avenue – which has never before been used to enforce tariffs – is the International Emergency Economic Powers Act.
Manak said that under the act, all Trump would have to do is declare a threat outside the US that threatens national security, foreign policy or the economy. Once it declares its intention to use tariffs to address that threat, Congress would have the ability to delay the executive order — but Manak said that’s unlikely to happen under a Republican-controlled Congress.
Even under that law, it would still take some time for the tariffs to take effect. “There are a lot of moving parts. It’s not like the tariffs would be put in place on the first day he takes office,” Manak said, adding that there is also the possibility of legal challenges from companies the tariffs will affect. “But in the meantime, we’ll probably have some kind of implementation in the first few months that he’s in office if he chooses to go that route.”
Some Democratic lawmakers have already introduced legislation to prevent Trump from implementing tariffs using IEEPA. On January 15, Reps. Suzan DelBene and Don Beyer introduced the Tariff Abuse Prevention Act, which would prevent Trump from imposing tariffs using the IEEPA without Congressional approval.
“It is outrageous that without congressional approval, one of President Trump’s first actions after taking office could be to create what is effectively a nationwide sales tax on foreign goods that saddles working families with higher prices at the grocery store, gas station and pharmacy counter. ,” DelBene told reporters on a press call.
Alan Wolff, a senior fellow at the Peterson Institute for International Economics and former deputy director-general of the World Trade Organization, told BI that along with the IEEPA, he could see two other trade laws — Section 338 of the Tariff Act and Section 301 of the Trade Act — as possible alternatives Trump could use to implement tariffs. They will allow Trump to impose tariffs if he finds there are unfair trade practices from foreign countries.
Multiple avenues are available — but Wolff said it’s likely Trump is threatening tariffs as a negotiating tactic to achieve policy goals, and the scale of tariffs may end up not being as broad as originally proposed. Trump said when he proposed the tariffs on Mexico and Canada that he wanted the countries to strengthen border policy.
“I think he favors using tariffs as a hammer to get results he likes,” Wolff said.
The impact of tariffs on Americans
While inflation did not rise significantly under the tariffs during Trump’s first term, some economists and trade experts expect the broader scope of Trump’s proposals this time around to have a bigger impact.
Mary Lovely, a senior fellow at the Peterson Institute, told BI that she expects consumers to see the impact of the proposed tariffs “sooner this time around.”
“We will see businesses decide whether to absorb those additional costs or pass them on to consumers,” Lovely said. “Given that consumer spending has been quite high and that the economy is doing well, we would expect them to pass some of that on to consumers.”
Some businesses have already warned of price hikes if Trump implements sweeping tariffs. Walmart CFO John David Rainey told CNBC in November that if Trump’s tariff proposals go into effect, “there will probably be times when prices will go up for consumers.”
Manak said some businesses can try to stockpile products before the tariffs are implemented, and larger firms would have an advantage because they likely have more warehouses and the ability to move things faster.
“For smaller firms and small businesses, medium-sized businesses, it’s much more challenging,” Manak said. “So for a lot of those people, it might make sense for them to just raise prices right away because they’re going to have to offset that cost.”
