Understanding the Trade Landscape
Tariffs, and their potential impact on the trade economy, have been a strong topic of conversation for several months. With the incoming Trump administration, and proposed economic plan, importers are grappling with a key question: What will happen to tariffs in 2025 and what can businesses and consumers expect?
More specifically,
- What tariff increases are anticipated?
- Does the President have the legal power to impose new tariffs?
- When can we expect these tariffs to be implemented?
Though many uncertainties continue to loom over the new global trade landscape, here’s what we do know. President-elect Trump has outlined several potential tariff increases, including:
- Significant hikes on Chinese goods
- Broad-based tariff increases on imports from various countries
- Imposition of tariffs on countries that abandon the U.S. dollar
- Substantial tariffs on Mexican imports, particularly automobiles
Although yet to be confirmed, President-elect Trump has stated that he wants to do the following:
- Increase Chinese tariffs to 60%
- Increase tariffs on all countries by 10—20%
- Initiate 100% tariffs on all countries that leave the U.S. dollar
- Place 25-75% tariffs on Mexico
- Add 100% tariffs on automobiles made in Mexico
- Remove China’s Permanent Normal Tariff Rate (PNTR)
Presidential Authority to Impose Tariffs
The U.S. President possesses several tools to implement tariffs, each with its own timeline:
- Section 301 of the Trade Act of 1974
Key Provision: Authorizes the President to impose retaliatory tariffs on foreign countries that engage in unfair trade practices.
Timeline: A previous investigation was completed in 2018, so any new actions under Section 301 could be implemented more quickly, potentially by spring 2025.
- Section 232 of the Trade Expansion Act of 1962
Key Provision: Enables the President to impose tariffs on imports that threaten national security.
Timeline: Requires a 270-day investigation. If affirmative, the President could act within 90 days.
- Section 201 of the Trade Act of 1974
Key Provision: Allows for the imposition of tariffs to protect domestic industries from unfair import competition.
Timeline: Requires a 120-150 day investigation. The President must act within 180 days of receiving the recommendation.
- Section 338 of the Tariff Act of 1930
Key Provision: Imposes tariffs on countries that discriminate against U.S. products.
Timeline: Requires consultation with and notification of Congress, with no specific time limits.
- Section 111 of the Trade Act of 1974
Key Provision: Grants the President authority to negotiate bilateral trade agreements.
Timeline: Requires consultation with and notification of Congress, with no specific time limits.
Preparing for Impact
Vanguard Safety continues to monitor the situation closely and is prepared to adapt to any new tariff procedures or requirements. While the exact impact of the change remains uncertain, 2025 will certainly be a pivotal year for global trade. There will be very few industry immunities to the proposed tariffs.