In a surprising move, Donald Trump has pledged to impose a substantial 25% tariff on imports from Canada and Mexico starting on the first day of his prospective presidency. This promise, alongside a 10% increase in tariffs on Chinese goods, presents a significant shift in trade relations with key partners, potentially instigating a trade war.
The United States relies heavily on imports of gas from Canada and produce from Mexico. Consequently, a tariff increase would likely lead to heightened prices at gas stations and grocery stores. This proposed policy contradicts the expectation of many voters who anticipated more affordable goods post-election, indicating a potential rise in costs for everyday items such as groceries, electronics, and automobiles. Moreover, the tariffs may contravene existing trade agreements negotiated by Trump during his first term, particularly the US-Mexico-Canada Agreement.
The power to impose tariffs typically lies with Congress, as explicitly stated in the Constitution, which assigns the regulation of commerce with foreign nations to the legislature. However, Trump’s ability to enact these tariffs without congressional input raises questions about this constitutional provision. According to Doug Irwin, an economics professor at Dartmouth College, the shift in power dynamics began with the Smoot-Hawley Act during the Great Depression. This legislation illustrated the potential negative consequences of tariff imposition, exacerbating economic downturns through trade wars.
Historically, Congress has gradually delegated tariff authority to the presidency, especially starting from the 1930s. This delegation became apparent with the Reciprocal Trade Agreements Act of 1934 that authorized the president to adjust import duties in alignment with trade agreements. Further extensions of this authority occurred in the 1960s and 1970s, allowing presidents to impose tariffs for national security reasons or negotiate trade agreements without requiring congressional amendments. Such powers were utilized by Trump in his first term for dealing with China, Europe, Canada, and Mexico, as well as by President Biden who maintained some of Trump’s tariffs.
Trump’s administration justified these tariffs under the pretext of national security, citing the 1962 law which allows tariff imposition based on national security threats without congressional approval. There is apprehension that a similar justification might be used again to impose new tariffs on Canada and Mexico, a move echoed by some of Trump’s aides who view prior tactics as templates for future strategies.
The Mexican response, led by President Claudia Sheinbaum, highlights the contentious nature of these proposed tariffs. Sheinbaum asserted that such measures, including reciprocal tariffs, would not address the root issues of migration and drug consumption, pointing out a crucial disagreement between the nations on effective solutions.
This unfolding scenario underscores a profound shift in trade policy execution, prompted by evolving interpretations of constitutional authority. As international relationships face potential reconfigurations, careful consideration of the long-term economic impacts of these tariffs remains pivotal.
Source: CNN
