Trump Tariff Strategy: When and How Duties Can Be Imposed

President Donald J. Trump, when sworn into office on January 20, 2025, is returning to power as the most experienced, prepared, and arguably, the most powerful president in American history. This is due to recent clarifications of the limits of presidential power given to him by a Supreme Court and having wielded tremendous tariff which previously went unused by past presidents.

President Trump should be expected to fulfill campaign promises to increase tariffs in his term in office. Although he has expressed a desire to use them as a negotiating tactic, it is a negotiating tactic that has tremendous staying power and a feeling of permanence, especially considering that the Section 301 tariffs against China have been in place since 2018. Therefore, importers should plan on a virtually permanent increase in tariffs, likely across the board. A plan for reduced or “temporarily” increased tariffs, like planning for reduced income taxes or only temporary tax increases, is a fool’s errand. It’s time to get real.

When will Trump impose tariffs?

The question of when Trump will impose tariffs is on everyone’s mind. President’s Trump will impose tariffs (also known as duties) when he foresees them as increasing his leverage for negotiations.

During his first term in office, his proposal and imposition of tariffs was unpredictable. At some times, a tariff was proposed and slowly implemented. Then, another proposal would come and be implemented much faster. Even other times, a tariff was proposed at one rate, and then implemented at a different rate. Only President Trump knows when tariffs will be imposed, at what rates, and against what country.

What tariffs will Trump impose or increase?

Everything is on the table, at any amount. For sure, his campaign promises of a 60% (on the low side) tariff against China, his post-election threats of 25% tariffs against Canada and Mexico, and a 20% universal tariff on other countries should be taken seriously. These tariff threats are very credible and should be taken seriously by anyone importing goods.

How can Trump impose tariffs?

President Trump has many different sources of authority for increasing tariffs even aside from new legislation that could be passed by Congress, these include authority under the following existing laws:

Section 301 of the Trade Act of 1974 (19 USC § 2411)

Section 301 is now infamous as the source of authority behind the current tariff regime against China. Under Section 301 of the Trade Act of 1974, the U.S. Trade Representative (USTR) can act to eliminate unreasonable or discriminatory acts, policies, or practices of foreign countries that burden or restrict U.S. commerce. These actions include imposing duties or creating other import restrictions. President Trump also has broad authority to modify the existing China Section 301 actions, which can involve raising duty rates, just as the outgoing Biden administration recently set in motion.

Section 232 of the Trade Expansion Act of 1962 (19 USC § 1862)

Section 232 is probably the second-most infamous source of aurhotiy which Trump used in his first term to impose tariffs on steel and aluminum. Under Section 232 of the Trade Expansion Act of 1962, the Secretary of Commerce can begin an investigation to assess the impact of imported articles on national security. This law also gives the President has the authority to negotiate a trade agreement to limit imports that threaten national security.

Section 122 of the Trade Act of 1974 (19 USC § 2132)

Section 122 of the Trade Act of 1974 allows the President to impose, without investigation, increased tariffs of up to 15% for a period not exceeding 150 days (and longer, with Congressional approval) to address “large and serious” trade-deficits. The US currently has trade deficits with China, Mexico, Vietnam, Ireland, Japan, Taiwan, and Germany.

Section 201 of the Trade Act of 1974 (19 USC § 2251)

Section 201 of the Trade Act of 1974, the U.S. International Trade Commission (USITC) can determine that an article is being imported into the U.S. in such increased quantities that it may harm a domestic industry producing a similar article.

Section 125 of the Trade Act of 1974 (19 USC § 2135)

Section 125 of the Trade Act of 1974, President Trump has retaliatory powers. In this case, he will have the authority to impose additional duties if a benefit to the U.S. provided under an existing trade agreement is modified or withdrawn.

Section 338 of the Tariff Act of 1930 (19 USC § 1338)

Section 338 of the Tariff Act of 1930, President Trump can impose new or additional duties on imported foreign articles if a country imposes any unreasonable charge, exaction, regulation, or limitation on U.S. goods that is not equally enforced on similar articles from other foreign countries. This also applies if the country discriminates against U.S. commerce in a way that places it at a disadvantage compared to the commerce of any other foreign country.

International Emergency Economic Powers Act of 1977 (50 USC § 1702)

The International Emergency Economic Powers Act (IEEPA), President Trump has the authority to regulate the importation or exportation of any property under U.S. jurisdiction. Although the IEEPA does not explicitly authorize the imposition of duties, President Trump previously used this law to impose duties on Mexican imports for a short time in 2019.

Section 404 of the Trade Act of 1974 (19 USC § 2434)

Under Section 404 of the Trade Act of 1974, President Trump has authority to “suspend or withdraw” any extension of nondiscriminatory treatment to any country at any time, resulting in all products from that country being subject to increased “Column 2” duty rates. The Column 2 duty rates are currently present in the HTSUS and apply only to countries that we do not have normal trade relations with (very few – North Korea, Cuba).

How can Trump tariffs be avoided?

Trump tariffs are difficult to avoid, but not impossible. First, the tariff has to be imposed before it can be avoided. Here’s a few ideas that everyone can benefit from:

Budget for tariff increases

  • Make sure prices allow to absorb new duties without making the business insolvent
  • Ensure that you have favorable purchase and supply contracts that provide flexibility in the event of price increases, or maybe even an escape clause.

Ensure Valuation is Correct and Favorable

  • Deduct freight, insurance, and finance charges where possible and allowed
  • Utilize the “first sale” doctrine when you can
  • Take advantage of deducting certain commissions

Ensure Classification is Correct

  • Are you sure classification under the HTS is correct? If tariffs are targeted to certain HTS codes, it will matter how goods are classified

Consider Other Duty Reduction Strategies

  • Foreign Trade Zones
  • Bonded warehouses
  • Drawback
  • Temporary Importation under Bond (TIB)

How can I get in touch for more information?

Great Lakes Customs Law was established in 2010 as a law firm for importers. We have helped hundreds of clients in the last 15 years avoid and lower tariffs. Contact us at our Michigan office at 734-855-4999 or call our Chicago office at 773-920-1840.