Andrew Harnik/Getty Images; iStock; Rebecca Zisser/BI
- Trump has indicated he wants to put tariffs in place on his first day in office.
- Trade policy experts told BI he could do so using a national emergency trade law.
- While it'll take time for tariffs to actually go into effect, Americans could see price increases quickly.
New tariffs are looming with President-elect Donald Trump about to take office — and Americans could see the impacts soon after.
Over the past few months, Trump has suggested a range of tariff proposals related to key trading partners with the US, including China, Mexico, Canada, and the BRICS nations. Trump's largest target has been China, with a 60% tariff proposal, along with a 25% tariff on imports from Canada and Mexico.
Trump has not specified which authorities he will use for tariff implementation, and it's possible that he could choose to roll them out at a smaller scale than he had initially proposed. However, he has previously said he wants to begin the process of putting tariffs in place on his first day in office, saying that he'll use his executive authority to roll them out at the beginning of his term.
"On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders," Trump wrote in a November post on Truth Social.
Some reports have suggested that Trump might use the International Emergency Economic Powers Act, which would allow a president to impose tariffs in the event of a national emergency. Some trade policy experts told Business Insider that Trump could use emergency powers to begin rolling out his tariff plans on day one.
While they would take time to actually go into effect, Americans could still quickly begin to see price increases on impacted goods.
Inu Manak, a trade policy fellow at the Council on Foreign Relations, told BI that the US would likely see an economic impact "fairly soon" after Trump makes a tariff announcement because markets could react to it before any plans actually go into effect.
"You're going to also have firms shift a lot of their production where they can, they're going to stockpile, they're going to move things around, they're going to raise prices," Manak said. "So the effect of the tariff could actually take place 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 spokesperson, told BI in a statement that Trump "has promised tariff policies that protect the American manufacturers and working men and women from the unfair practices of 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 roll out his tariffs on day one
There are a range of existing avenues within federal trade law that Trump could pursue to implement his tariffs. One route — which has never been used before for tariff implementation — is the International Emergency Economic Powers Act.
Manak said that under this act, all Trump would have to do is declare a threat outside the US that threatens national security, foreign policy, or the economy. Once he declares his intent to use tariffs to address that threat, Congress would have the ability to push back on 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 tariffs to come into effect. "There are a lot of moving parts. It's not like the tariffs would be charged on the first day that he comes into office," Manak said, adding that there's also the possibility of legal challenges from companies who the tariffs would impact. "But in the meantime, we'll probably have some sort of implementation occur in the first few months that he's in office if he chooses to do 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 Prevent Tariff Abuse Act, which would prohibit Trump from imposing tariffs using IEEPA without congressional approval.
"It's outrageous that without congressional approval, one of President Trump's first actions upon taking office could be creating what is effectively a nationwide sales tax on foreign goods that saddles working families with higher prices at the grocery store, the gas pump, and the 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 IEEPA, he could see two other trade laws — Section 338 of the Tariff Act and Section 301 of the Trade Act — as viable alternatives Trump could use to implement tariffs. They would allow Trump to impose tariffs if finds there are unfair trade practices from foreign countries.
Multiple routes are available — but Wolff said it's likely Trump is threatening tariffs as a negotiation tactic to achieve policy goals, and the scale of the tariffs may end up not being as broad as initially proposed. Trump said when proposing the tariffs on Mexico and Canada that he wanted the countries to strengthen border policy.
"My guess is he favors using tariffs as a hammer to get results that he likes," Wolff said.
The impact of tariffs on Americans
While inflation did not increase 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 greater impact.
Mary Lovely, a senior fellow at the Peterson Institute, told BI that she expects consumers will see the impact of proposed tariffs "rather quickly this time."
"We'll see businesses deciding whether they're going to absorb those extra costs or they're going to pass them through to consumers," Lovely said. "Given that consumer spending has been fairly buoyant and that the economy is doing well, we would expect them to pass a lot of it through to consumers."
Some businesses have already warned of price increases should Trump implement broad tariffs. Walmart CFO John David Rainey told CNBC in November that if Trump's tariff proposals go into effect, "there probably will be cases where prices will go up for consumers."
Manak said that some businesses might 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 around faster.
"For smaller firms and small businesses, midsize businesses, it's much more challenging," Manak said. "So for a lot of those folks, it might make sense for them just to increase prices right away because they're going to have to make up that cost."
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