President Donald Trump did not initiate tariffs on trade partners at the onset of his second term, but he did issue a warning of potential new tariffs on Canada and Mexico by February 1st. Instead, he signed an executive order mandating a review of US trade relationships with Canada, China, and Mexico, alleviating immediate concerns of trade disruptions that had been highlighted during his campaign against former-President Joe Biden.
During an educational session at the Winter Fancy Food Show in Las Vegas, Mario A. Torrico, an associate attorney at the law firm ArentFox Schiff, discussed the potential impact of tariffs proposed by President Trump. Initially, universal tariffs ranging from 10% to 20% were suggested, which would have widespread implications across all industries. However, the focus shifted towards imposing tariffs specifically on China, ranging from 60% to 100%, and later revised to 10% to 20%. Subsequently, attention turned to Mexico and Canada, with proposed tariffs ranging from 10% to 25%.
One of the main challenges facing businesses potentially affected by tariffs is the authority that the president may utilize to enact them. Torrico pointed out the International Emergency Powers Act (IEPA) as a potential tool that Trump could employ to swiftly implement tariffs, should he declare a national emergency. This act grants the president significant authority with minimal congressional oversight, making it a powerful tool for imposing tariffs.
In addition to the IEPA, the president has access to other tools such as Section 301, which allows for tariffs on countries violating fair trade practices, and Section 232, which enables tariffs on specific goods. The process for implementing tariffs under Section 232 involves an investigation by the Department of Commerce, which could take up to 270 days before tariffs are enforced. On the other hand, Section 301 requires findings from the US Trade Representative regarding unfair trade practices, which could take about six months to determine.
Torrico accurately predicted that the new administration would adopt a cautious approach towards trade and tariffs initially, opting to observe how other countries would react. He also foresaw the potential use of IEPA to craft tariffs according to the president’s preferences. However, he emphasized that much of the discussion surrounding tariffs may be a negotiating tactic, with the final outcome dependent on the responses of countries like Canada, China, and Mexico.
Regarding the US-Mexico-Canada Agreement, Torrico highlighted the possibility of its revision in 2026, as President Trump expressed interest in renegotiating the terms. Ultimately, the outcome of trade negotiations and the imposition of tariffs will hinge on how various governments respond to the evolving trade landscape.
As the trade landscape continues to evolve, businesses must stay informed about potential tariff implications and be prepared to adapt to changing trade policies. The uncertainty surrounding tariffs underscores the importance of proactive planning and a thorough understanding of the legal framework governing international trade relations. By staying abreast of developments and engaging with legal experts, businesses can navigate the complexities of trade policy changes and mitigate potential risks to their operations.
