Decoding the President’s Trade Toolkit

Under the Constitution, Congress is afforded the power to regulate commerce within and outside of the United States. To streamline the process, Congress has delegated authority to the President to investigate alleged violations of existing trade agreements and U.S. law and authorizes the President to negotiate future trade agreements.

On Capitol Hill, the House Ways & Means and Senate Finance Committees maintain oversight of all international trade matters. Several laws were enacted that grant import and export control powers to the President under special circumstances. Currently, the most relevant are:

International Emergency Economic Powers Act (IEEPA)

  • If the President declares a national emergency, then sweeping economic powers related to tariffs and sanctions are granted and can be applied to multiple target products or countries and take effect almost immediately. 

  • While IEEPA provides the most immediate and simple route to presidential tariffs, the administration opens itself up to litigation with less protection than other authorities. 

IEEPA Process:

President declares a national emergency and issues a written justification to Congress 

An executive order or proclamation is published outlining the duty targets, rates and effective date 

Review of the emergency on an annual basis for relevancy 

Section 232 of 1962 Trade Expansion Act

Once the Commerce Department has completed an interagency investigation and determined that imports of a specific product pose a threat to national security, the President can impose tariffs and/or quotas as deemed necessary. 

Section 232 Process:

A stakeholder, domestic manufacturer, the President or a government agency (including Commerce) submits a complaint regarding a specific country. 

Commerce initiates its investigation and posts a Federal Register notice. 

Within 270 days, Commerce publishes a final report. If it reaches a… 

Negative determination: the President is informed that no further action is required. 

Positive determination: the President is informed and has up to 90 days to determine appropriate recourse. 

Congress is notified of the President’s decision, which must be implemented within 15 days. 

Commerce can decide whether to open an exemption process. 

Section 301 of 1974 Trade Act

If a foreign country is suspected of engaging in unfair trade practices or violating a free trade agreement, the United States Trade Representative (USTR) will lead an interagency investigation. Upon completion of the report, the President can levy tariffs based on their recommendations. 

Section 301 Process:

A stakeholder, domestic manufacturer, the President or a government agency (including USTR) submits a complaint regarding a specific import. 

USTR initiates an investigation within 30 – 45 days that can take anywhere between 6 – 18 months. An interim report is published with preliminary findings.

A final report is published including recommendations for appropriate actions to be taken by the President, who can then determine whether they want to move forward. 

If tariffs are imposed, USTR can choose to open an exclusion process. 

GBA TARIFF TRACKER

Utilize the GBA Tariff Tracker to help navigate the numerous announced and threatened tariff developments.

Key Definitions

Tariff

Tariff

A tax levied on imported goods and services. Important characteristics include the authority (or statute) used to justify the tariff, scope (country vs product vs sector), rate and timeline

Exemption

Exemption

People, company or country-specific tariff reprieve

Exclusion

Exclusion

Product-specific tariff reprieve

Tariff Rate Quota (TRQ) Systems

Tariff Rate Quota (TRQ) Systems:

Allows for a lower tariff rate (or none) on a given product from a specific country until a pre-determined import quota is reached

De Minimis

De Minimis

Eligible products with a value less than the threshold set by a given country are considered tax and duty-free

Sectoral

Sectoral

Action taken on a specific sector (e.g. semiconductors, aerospace, pharmaceuticals)