November has been a ride for economic affairs ever since Donald Trump has been reinstated as the president of the USA. Ever since he came into power, he has been in the news for various reasons, from imposing tariffs to the Green New Scam or the immigration laws. Trump is buzzing in the news feed every week. For the trade hawkers, there’s a strained environment.
Under his aegis, the country has begun imposing tariffs on all the foreign goods coming to the USA. There are tariffs, and special trade policies made in the best interest of the USA. To ensure their national security interests. The US tariffs on China and neighboring countries are not an act of randomness; there are some trade laws that the USA takes very seriously. To give you better hindsight, refer to the potential legal acts prominently in the land and how Trump will or has enforced them.
In this blog, we will touch upon the following:
- Section 301 of the Trade Act of 1974
- Section 232 Trade Expansion Act of 1962
- Section 201 of the Trade Act of 1974
- The International Emergency Economic Powers Act (IEEPA)
Section 201 of the Trade Act of 1974
Section 201 “safeguard” actions are designed to offer relief to the U.S. industry and facilitate positive adjustments to import competition. Under this act, the president can impose tariffs or quotas if a surge in imports is found to cause serious harm to U.S. industries. Investigations under Section 201 are conducted by the independent, bipartisan International Trade Commission (ITC), which typically uses the full 180 days allowed by law to complete its review.
This timeframe includes public hearings and gathering comments. After the investigation, the ITC makes recommendations to the president on measures to address the injury, such as imposing tariffs or quotas, to help the affected industry adjust to increased import competition. The process ensures thorough and impartial decision-making. Section 201 actions are deemed consistent with U.S. international obligations provided that they conform to the World Trade Organization (WTO) Agreement on Safeguards.
Section 301 of the Trade Act of 1974
Titled “Relief from Unfair Trade Practices,” Section 301 of the Trade Act of 1974 seeks to impose trade sanctions, tariffs, or quotas on imports coming from countries that do not stand in line with U.S. trade agreements or engage in the acts deemed as “unreasonable” or “unjustifiable”.
Section 301 of the Trade Act of 1974 gives the Office of the United States Trade Representative (USTR) a wide range of responsibilities and authorities to investigate and take action to enforce U.S. rights under the trade agreements and retaliate against certain foreign trade practices.
There is no minimum time limit for tariffs that can be imposed under a new Section 301 investigation. However, the process includes consultations, a hearing, and a period for soliciting and reviewing public comments that may require some time. Furthermore, implementing measures likely requires a U.S. Trade Representative (USTR) who has to coordinate with the Senate. This process may take several months under the new administration.
Under this Section:
1.Implement duties or types of import restrictions.
2. Completely withdraw or suspend any trade agreement concessions.
3. Come to terms with a binding agreement with the foreign government to eliminate the conduct in question if action persists in the form of import restriction.
It is anticipated that Trump may hold Section 301, the backbone of the 2018-2020 trade war against China, as he looks to expand his tariffs on Chinese imports. The statute allows the U.S. to retaliate against the trading partners’ unfair practices and implement nearly 20-25% on $370 billion worth of Chinese imports, from semiconductors to machinery to toys, after the USTR investigation figured out that China was using improper U.S. intellectual property and pressuring U.S. companies to transfer technology to Chinese firms.
Section 232 Trade Expansion Act of 1962
Section 232 of the Trade Expansion Act empowers the president of the United States to make adjustments or modify the imports of goods and services from other countries if the quantity or circumstances surrounding imports are deemed to threaten national security. Before doing so, the president must receive a report from the U.S. Department of Commerce.
Under this Section:
- The Commerce Department has up to 270 days to complete and deliver this report after starting an investigation.
- The law does not require any additional procedures or specify a minimum waiting time before action can be taken.
The International Emergency Economic Powers Act (IEEPA)
Back in 2018, Trump implemented Section 232 to impose tariffs of nearly 25% on global steel imports and 10% on aluminum. After a year, he negotiated exemptions for Canada and Mexico that led to the removal of their tariffs on U.S. exports like pork, beef, bourbon, and other goods. Since 1980, the Department of Commerce has conducted 10+ Section 232 investigations.
Signed into law by President Jimmy Carter in 1977, the International Emergency Economic Powers Act (IEEPA) is a US federal law that empowers the President to regulate international commerce during a national emergency. The IEEPA authorizes the president to declare an unusual and extraordinary threat to the national security, foreign policy, or economy of the United States stemming in whole or substantial part from outside the country.
Under the provisions outlined in Section 202, the President is authorized, at specified times and within the defined scope, to take action through regulations, instructions, licenses, or other means to:
- Examine, Control, or Restrict:
(i) Transactions involving foreign exchange;
(ii) Credit transfers or payments between, by, through, or to any banking institution, provided these transactions include any interest tied to a foreign country or its nationals;
(iii) The import or export of currency or securities;
when conducted by individuals or concerning property under U.S. jurisdiction.
- Investigate, block, regulate, or prohibit transactions involving property or rights tied to any foreign country or its nationals by any person or property under U.S. jurisdiction.
These were some of the prominent sections. While the imposition of tariffs on imports can have an impact on both the foreign exporters and the U.S. domestic markets. It is important to keep an eye on latest developments based on USA Trade Tariffs to get broader economic landscape and sentiments of the business community.
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