Presidential Authority to Impose Tariffs
At Advanced Purchasing Dynamics (APD), we’ve consistently provided insights into how tariffs impact purchasing teams, helping you navigate the complexities of global trade.
Recently, a purchasing leader in our network asked, “What gives the President the authority to impose tariffs?” Let’s explore the legal foundations of this authority and examine real-world applications that have directly affected procurement strategies.
Presidential Authority to Impose Tariffs
While the U.S. Constitution grants Congress the power to regulate commerce and impose tariffs, over time, Congress has delegated certain authorities to the President through specific legislation. This delegation allows the President to act decisively in response to national security concerns, unfair trade practices, and other economic challenges.
Key Legislative Authorities and Their Applications
1. Trade Expansion Act of 1962 (Section 232)
– Purpose: Empowers the President to adjust imports, including imposing tariffs, if the Department of Commerce finds that specific imports threaten national security.
– Application Example: In 2018, President Trump invoked Section 232 to impose tariffs of 25% on steel and 10% on aluminum imports, citing national security concerns.
This action aimed to protect domestic steel and aluminum industries but led to increased costs for manufacturers relying on these materials.
2. Trade Act of 1974 (Section 301)
– Purpose: Allows the President to take action, including imposing tariffs, against foreign countries that engage in unfair trade practices, such as violations of trade agreements or discriminatory actions that burden U.S. commerce.
– Application Example: In 2018, following an investigation under Section 301, the U.S. imposed tariffs on $50 billion worth of Chinese goods in response to China’s unfair trade practices related to technology transfer and intellectual property.
This move escalated trade tensions and affected supply chains dependent on Chinese imports.
3. International Emergency Economic Powers Act (IEEPA) of 1977
– Purpose: Grants the President broad authority to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the U.S. that has a foreign source.
– Application Example: In January 2025, President-elect Donald Trump considered declaring a national economic emergency to justify implementing universal tariffs on both allies and adversaries.
This approach would leverage the IEEPA, granting the President authority to control imports during a national emergency. Trump pledged to impose a 10% tariff on global imports to the U.S., a 60% tariff on Chinese goods, and a 25% tariff on imports from Canada and Mexico.
Implications for Purchasing Teams
Understanding the President’s authority to impose tariffs is crucial for purchasing leaders. Such actions can:
- Increase Costs: Tariffs directly raise the cost of imported goods, impacting budgets and procurement strategies.
- Disrupt Supply Chains: Sudden imposition of tariffs can lead to supply chain disruptions, requiring rapid adjustments and sourcing alternatives.
- Create Uncertainty: The potential for new tariffs introduces uncertainty, making long-term planning more challenging.
Strategies to Mitigate Tariff Impacts
APD has developed a wealth of resources to help purchasing leaders navigate the complexities of tariffs. We’ve hosted webinars, published blogs, and created tools to provide actionable insights.
Explore our Topic Hub on U.S. Trade Policy for more resources, including:
- Archived webinars and presentations.
- In-depth blogs and articles.
- Tools and strategies tailored to procurement professionals.
At APD, we’re committed to equipping purchasing professionals with the knowledge and tools needed to thrive amid the complexities of global trade. By leveraging our topic hub, you can stay ahead of the curve and make informed decisions to mitigate the impact of tariffs on your operations.