President Donald Trump's plan to add a 25% tariff on goods from Mexico and Canada by Feb. 1 has started a big argument about whether it's legal and how it could hurt the economy.
Former New York prosecutor Tristan Snell said there was “one small problem” with Trump’s announcement. “The president does NOT have unilateral power to change tariff rates,” he said on X on Tuesday and also raised a critical question: “Will GOP representatives and senators vote to destroy their local economies?” According to him, significant changes to trade policy require Congressional approval.
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Can Trump Legally Impose These Tariffs?
While the president has some executive tools, like the International Emergency Economic Powers Act (IEEPA) and sections of the Trade Acts of 1930 and 1974, these measures are subject to legal constraints per law firm Buchanan Ingersoll & Rooney. For instance:
- Although IEEPA permits tariffs in times of national emergency, it is unprecedented to use it to apply tariffs all at once and doing so would probably be challenged in court.
- Section 122 of the Trade Act of 1974 permits a temporary 15% import surcharge to address balance-of-payment deficits, but it is limited in scope and duration.
- Article 1, Section 8 of the U.S. Constitution grants Congress, not the president, the power to impose taxes and duties. While Trump could try to leverage a Republican majority, bypassing Congress altogether would be legally questionable.
Economists and trade experts question whether Trump will follow through with his tariff threats. Goldman Sachs economist Alec Phillips noted that similar proposals in Trump's first term often fizzled out before implementation.
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"Despite Trump’s comments, we continue to believe the odds of a 25% tariff on Canada and Mexico are low at 20%. We are lowering our odds of a universal tariff this year to 25%," Phillips said in a note.
How Could Tariffs Impact Neighboring States?
Trump’s proposal may greatly impact states in the United States that rely on commerce with Canada and Mexico. Supply chain interruptions could occur in border areas like Texas, California and Michigan, which depend on imports for sectors like the automobile industry.
Similarly, agricultural states such as Iowa, which export heavily to Mexico, might face retaliatory tariffs that harm farmers. Everyday goods, including groceries and beverages, could become more expensive, exacerbating inflation.
Furthermore, businesses involved in cross-border commerce may face difficulties due to rising production costs, which could lead to job losses in the retail, industrial and agricultural sectors.
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Canada and Mexico Push Back
Canadian Prime Minister Justin Trudeau criticized the tariff threat, promising that Canada would fight back with equal tariffs if necessary. "Canada will respond and everything is on the table," Trudeau said, emphasizing Canada’s critical role in providing resources like steel, aluminum and energy. He also warned that alienating Canada could force the U.S. to source goods from adversarial nations like China or Russia.
Mexican President Claudia Sheinbaum took a calmer approach, emphasizing the importance of diplomacy while defending Mexico's independence. She pointed out that both countries would face economic harm if the tariffs were enforced.
President Donald Trump argues that the proposed tariffs on Mexico and Canada are necessary to protect American workers and industries. He believes these measures will curb illegal immigration and drug trafficking, which he ties to cross-border trade issues. Trump has also stated that tariffs will generate revenue for the U.S. while encouraging domestic production, reducing reliance on foreign goods.
As Trump's administration doubles down on its aggressive trade agenda, all eyes are on Congress. Will GOP lawmakers back these tariffs, knowing the potential damage to local economies? With legal hurdles and economic risks mounting, the debate over Trump's tariff policy is far from over.
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