The swearing-in of Donald Trump as the 47th President of the United States on Jan. 20, 2025, will alleviate the “tax uncertainty” that’s gripped businesses with the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) at next year’s end. Trump’s inauguration and Republican control of Congress means the TCJA will be extended and some provisions made permanent perhaps by the end of summer.
As such, tax uncertainty has been replaced by “tariff uncertainty” for the housewares industry and other industries, too. This is attributable to the Sec. 301 tariffs Trump imposed on products from China in his first term, and his threats during the 2024 campaign and thereafter to raise them and add across-the-board tariffs on all imported items.
Specifically, Trump says he’ll hike tariffs on Chinese products, which are now 25% for items on U.S. Trade Representative (USTR) Lists 1, 2 and 3 and 7.5% for List 4a, to 60% and then add another 10% until China cracks down on fentanyl distribution. Trump has also talked about imposing general tariffs of 10% – 20% on imports from all countries, and is threatening a 25% tariff on Mexican and Canadian goods if they don’t adopt stricter border policies to stop illegal immigration and drug smuggling into the U.S.
The authority by which Trump could initiate the entirety of his tariff threats is debatable and here are statutes and their sections that might be used:
- The International Emergency Economic Powers Act (IEEPA) gives the broadest authority to the President with minimal requirements. Trump could regulate imports where he declares a national emergency exists, but across-the-board tariffs would prompt legal challenges.
- The Tariff Act of 1930, Sec. 338, gives the President discretion for tariffs up to 50% when a foreign country has taken actions that disadvantage U.S. commerce, but the statute has been mostly unused and never been subject to legal challenge.
- The Trade Act of 1974, Sec. 122, empowers the President to impose tariffs of up to 15% to address balance-of-payment issues, but only for 150 days unless extended by Congress.
- The Trade Act of 1974, Sec. 301, and Trade Expansion Act of 1962, Sec. 232, were used in the first Trump Administration but the USTR must investigate before 301 tariffs can be imposed and the Dept. of Commerce must do the same for 232 tariffs, and the process for both can take months to complete.
With the 301 tariffs on Chinese products still in effect, raising them to 60% could be done rather quickly because USTR would not have to conduct investigations. However, the extent to which Trump imposes these tariffs and others is an open question since he uses the threat for concessions, such as his threat of 100% tariffs on nations belonging to the BRIC alliance (Brazil, Russia, India, China, etc.) if they act to undermine the U.S. dollar.
Also, Trump’s nominee for Treasury Secretary, Scott Bessent, does not support indiscriminate tariffs. Bessent has suggested that President-elect Trump’s threats to impose major tariff hikes are part of his negotiating strategy, describing it succinctly as, “It’s escalate to de-escalate.”
