Trump advisers explore vast new legal powers for global trade war
Trump advisers explore vast new legal powers for global trade war
Donald Trump’s economic advisers are eyeing aggressive new legal justifications to impose tariffs on all imports, seeking to buttress a second-term plan that would reshape the U.S. economy, according to public and private comments by top aides.
On the campaign trail, Trump has repeatedly promised to enact a “ring” around the U.S. economy by enacting a tariff of at least 10 percent on goods imported from any other nation. Trump’s plan would target more than $3 trillion in annual imports and risks sending inflation soaring in what would likely prove the biggest escalation of trade hostilities in decades, ratcheting up the standoffs that marked his first term.
But the Constitution gives power over both taxation and regulation of foreign commerce to Congress, which complicates the extent to which the president can impose tariffs through executive action. Robert E. Lighthizer, Trump’s top trade counselor, has said publicly that the former president could invoke one of two legal theories to justify a “universal” tariff on all U.S. trading partners. Some Trump allies are concerned these efforts would not pass legal scrutiny, though, and have in recent weeks tried to find other bases for the plan, according to GOP policy analyst Doug Holtz-Eakin, as well as four additional people familiar with the matter, who spoke on the condition of anonymity to describe private conversations.
“Trump said it, and so now his advisers are all trying to figure out how to make it work legally,” said Holtz-Eakin, president of the American Action Forum, a conservative think tank. Holtz-Eakin said he has spoken to several Trump advisers over the last several weeks about their efforts to design a framework for implementing the new tariff policy in the face of legal challenges. “It’s a live option. … Some of his advisers think it’s a great idea, and some just say, ‘He’s the boss, and we’ll have to figure out a way to do this.’”
Trump spokesman Jason Miller denied that any Trump officials or advisers are working on a legal strategy to implement his trade agenda, expressing confidence the former president would have plenty of legal tools available if he wins. There is no evidence Trump has personally signed off or reviewed any of the plans under discussion.
“The claim that President Trump’s advisers have been working recently to craft a legal strategy to implement his trade agenda is false, and anyone stating otherwise does not speak for President Trump or his campaign,” Miller said in a statement. “President Trump and his team have a wealth of experience on this issue, and they are already confident that President Trump will have a wide range of tools, options, and authorities at his disposal.”
Miller also referred to a December 2023 campaign statement noting that “no aspect” of policy statements could be considered official unless they came from Trump or from authorized spokespeople.
Although most economists believe the cost of tariffs is borne by U.S. consumers because companies typically raise prices to match them, Trump declared the import duties of his first term an unmitigated success and has vowed to expand the policy massively in a second term.
Trump’s advisers have divergent views on the purpose of his aggressive trade proposals. GOP allies on Wall Street and among the business elite see his rhetoric as a negotiating tactic aimed at winning concessions from trading partners, such as more favorable conditions for U.S. exports. Other Trump advisers believe more lasting trade restrictions are necessary to achieve a fundamental rebalancing of the U.S. economy, as the key to revive domestic manufacturing and insulate production from unfair foreign practices.
The former president has given hints of holding both worldviews in his interviews, but there is little doubt his plans would prove extremely disruptive to the global economy. President Biden has largely left Trump’s tariffs intact thus far, and Democrats supported many of Trump’s trade initiatives during his first term.
In addition to the 10 percent “universal” tariff, Trump has proposed pushing import duties on China as high as 60 percent. That could raise prices on more than $5 trillion in goods between 2026 and 2035, while also bringing in an additional $2 trillion in government revenue, according to the Committee for a Responsible Federal Budget, a Washington think tank.
Asked about the 10 percent tariff proposal, Trump told Time in an interview published last week: “It may be more than that.” He added: “I call it a ring around the country. We have a ring around the country. … A lot of people say, ‘Oh, that’s going to be a tax on us.’ I don’t believe that. I think it’s a tax on the country that’s doing it.”
The Center for American Progress, a center-left think tank, has found the 10 percent tariff would cost roughly $1,500 each year for the typical U.S. household.
Trump has also threatened a 100 percent tariff on any imports of electric vehicles made in Mexico by Chinese firms, despite the trade agreement he reached with Mexico and Canada in 2018.
Much of Trump’s economic agenda requires congressional approval, including his plan to expand the 2017 tax cuts enacted during his first term. But there is little doubt he could substantially raise tariffs on China, or place aggressive tariffs on specific imported products like steel, without fear of judicial intervention.
His plan for a “universal tariff” on all imports, however, rests on shakier legal ground.
Lighthizer, the Trump trade adviser, previously told the New York Times that he believes two separate laws could form the basis of Trump’s universal tariff idea. But experts, including many former Trump officials, see problems with both, prompting advisers to mull the best approach.
One option, based on a 1977 law, gives the president power over international commerce if the chief executive determines the existence of an “unusual and extraordinary threat” to national security, the economy or foreign policy. Trump could declare the U.S. trade deficit to represent a national emergency, although it’s unclear how courts would assess that claim.
The other option cited by Lighthizer is a 1930 law that allows presidents to impose duties on countries that “have discriminated against the commerce of the United States.” Trump could argue that every country in the world has discriminated against U.S. commerce by pointing out most countries have far higher tariff rates, but that could also prompt litigation.
A third option discussed by some Trump advisers is to cite a 1974 law that gives the executive branch authority to act in retaliation against foreign trade practices, which was the power Trump relied on for tariffs against China in his first term. But, this, too would require a sweeping finding that every foreign country had acted to undermine the U.S. economy.
President Richard Nixon also imposed a 10 percent across-the-board tariff in 1971, when the United States went off the gold standard, but the legality of such a move remains unsettled.
“The vast majority of legal experts agree that none of these laws were intended to impose an across-the-board tariff on all our trading partners,” said Scott Lincicome, director of general economics at the Cato Institute, a think tank that typically supports free trade. “The president doesn’t, or shouldn’t, have the power to simply bypass Congress and put tariffs on everything we import.”
Trade experts, including Lincicome, note that courts have proved so deferential to presidential powers on questions involving national security that the limits in the law may not matter.
Erica York, a policy analyst at the Tax Foundation, a conservative think tank, said that it is likely the former president’s team would be able to find some legal justification for his trade plans, regardless of the merits.
“We saw in the first Trump administration that they were not hesitant to use very obscure sections of trade law to impose strange trade restrictions,” York said. “I’m sure there would be ways for them to try here.”