WASHINGTON (AP) – In January, President Donald Trump returned to the White House with the intent of reversing long-standing American policies and erecting a tariff barrier around the US economy, which had been relatively open to foreign goods.
In realizing this goal, he has unsettled financial markets and left consumers anxious with a frequently shifting array of import duties. This pattern involves announcing new tariffs, suspending them, and then introducing additional ones. This uncertainty has paralyzed businesses unsure of what to anticipate, and economists express concern that these tariffs could raise prices and hinder economic growth.
Trump asserts that tariffs will safeguard American industries, attract factories to the US, and generate revenue for the federal government.
However, this week’s developments have raised questions about the extent of his authority regarding import duties.
The Associated Press sought your inquiries about Trump’s tariffs, and here are some of the responses:
Can Trump impose tariffs without Congressional approval?
The US Constitution grants Congress the power to levy taxes, which includes duties, or taxes on imports. However, over time, Congress has delegated this authority to the President through various legislations.
For instance, Section 232 of the Trade Expansion Act of 1962 permits the president to impose tariffs on imports considered a national security threat. Trump invoked Section 232 to impose tariffs on imported steel and aluminum during his first term. This section, however, mandates a lengthy investigation by the Department of Commerce.
Similarly, Section 301 of the Trade Act of 1974 allows the President to tax imports from nations engaged in unfair trade practices following an investigation by the US Trade Representative. Trump exercised Section 301 to impose tariffs on China amid conflicts regarding its aggressive tactics to undermine US technological supremacy.
Upon his return to the White House in January, Trump aimed for expedited action on tariffs. He sought the authority to impose them unilaterally, turning to the International Emergency Economic Powers Act (IEEPA) of 1977. He claimed a national emergency, permitting tariffs to be enacted to address it.
In February, he declared an emergency regarding illegal immigration and drugs, using this justification for tariffs against Canada, China, and Mexico. Last month, he further declared a state of emergency over the country’s longstanding trade deficit, resulting in tariffs imposed on nearly every nation worldwide.
At least seven lawsuits have challenged his authority in this matter. Recently, the US International Trade Court blocked Trump’s IEEPA tariffs, determining he had overstepped his boundaries.
The court, consisting of a three-judge panel, ruled against the implementation of global tariffs and noted that they did not adequately address the president’s stated concerns. The Trump administration is appealing the ruling, and on Thursday, a federal appeals court allowed the government to continue collecting IEEPA tariffs while the appeal is ongoing.
Congress has attempted to assert its authority as well. Notably, Republican Senators Chuck Grassley from Iowa and Maria Cantwell from Washington have proposed legislation requiring the president to provide justification for new tariffs to Congress. Lawmakers would then have 60 days to approve the tariffs, or they would lapse.
However, the likelihood of this proposal becoming law appears minimal, considering the loyalty most Republican lawmakers hold towards Trump and the potential for a presidential veto.
Can Trump utilize other laws to impose tariffs?
Yes, and some of his top advisors have quickly offered to pursue this route. Yet, legally doing so may take time and might not allow for the revival of all tariffs he previously enacted or threatened to implement.
Indeed, the court provided a roadmap, indicating that if Trump wished to impose tariffs to reduce the US trade deficit, he would need to utilize a different law specifically crafted for that purpose, particularly Section 122 of the Trade Act of 1974.
The ruling underscored that Congress has the constitutional authority to impose tariffs, and consequently, can delegate that power to the president under specified laws that the president must adhere to.
Trump has several potential routes available to him, including Section 301 of the Trade Act 1974, although it necessitates an investigation into the trade practices of other countries to substantiate claims of trade agreement violations or unfair practices.
Another option is Section 338 of the Trade Act of 1930, allowing for tariffs of up to 50% against countries that discriminate against US imports, which does not require a government investigation. Additionally, Section 201 of the Trade Act of 1974 permits duties of up to 50% but only after a study confirms that imports have harmed specific US industries; this law was utilized in 2018 to impose tariffs on certain solar products.
Where is the revenue generated from tariffs going?
If the court’s ruling is upheld and the import tax is discontinued, the funds will be refunded to the US companies that paid it.
Otherwise, it will be directed to the US Treasury, similar to personal and corporate income taxes, to cover government expenses. Recently, customs revenue collection has surged, with projections reaching about $22 billion by May, up from $6 billion in February prior to most tariff implementations. Economists at Nomura Securities estimate that tariffs reduced by the court have so far generated between $40 billion to $60 billion.
Source: apnews.com