Hitting the Ground Running: Trump’s Promised Tariffs on February 1, 2025

By Brett W. Johnson, T. Troy Galan, and Kristen N. Iteen

As President Trump begins his second term, the absence of tariffs among the more than 200 executive orders signed on his first day in office was a notable deviation from expectations. However, the President announced plans to impose 25 percent tariffs on imports from Mexico and Canada starting February 1, 2025, marking a significant shift in North American trade policy.

Despite this announcement, the scope and whether tariffs will take effect immediately remains uncertain. Several legal authorities that allow the President to impose tariffs without Congressional action require investigations or procedural steps. However, other authorities, though unprecedented in modern application, could allow for immediate implementation.

To help businesses involved in international trade — whether directly or through their supply chains — prepare for this action and understand its potential impacts, this article examines the legal authorities under which the President may act.

Previously Used Legal Authorities Impacting Foreign Trade Costs

President Trump relied on several statutes during his first administration to impose tariffs. These authorities generally involve procedural steps that prevent the immediate implementation of tariffs on February 1, 2025.

1. The Trade Expansion Act of 1962

Under Section 232 of this act, the President is authorized to impose import restrictions if the U.S. Department of Commerce determines that certain imports threaten to impair national security. Required investigations under this section evaluate factors such as domestic production capacity, future needs, and national defense requirements. Upon completion of the investigation, the President has 90 days to decide whether to impose tariffs, quotas, or other measures, which must then be implemented within 15 days.

Although Section 232 tariffs must be grounded in national security concerns, President Trump successfully used this authority during his first term to impose tariffs on steel and aluminum imports.¹ These measures, initially applied to imports from most U.S. trading partners, were later lifted for Canada and Mexico.

2. The Trade Act of 1974

During his first administration, President Trump frequently invoked Section 301, which authorizes tariffs in response to unfair trade practices. Before tariffs can be imposed under this provision, the Office of the U.S. Trade Representative must conduct an investigation and find that the foreign government in question has violated trade agreements or engaged in unreasonable practices burdening U.S. commerce.

Section 301 tariffs imposed during the President’s first term largely targeted China. If the administration pursues new tariffs under Section 301, the process would again require consultations with the affected stakeholders, opportunities for public comment, and formal dispute resolution. Additionally, exclusions or exemptions precures for certain products, which were made available during the previous round of tariffs, are likely to be reinstated. It is expected that any Section 301 determination would immediately be subject to litigation at the Court of International Trade.

Other Authorities Allowing Immediate Tariffs

While the aforementioned statutes require procedural steps, there are other legal authorities that could enable the President to impose tariffs immediately. These authorities, though rarely utilized, align with the current administration’s sweeping executive actions.

1. International Emergency Economic Powers Act (IEEPA)

The IEEPA grants the President the power to regulate imports in response to emergencies involving external threats. Although this statute has not been used to impose tariffs directly, President Nixon relied on its predecessor, the Trading with the Enemy Act, to impose a 10 percent import tariff in 1971 to address balance-of-payments deficits.

A national emergency declaration under the National Emergencies Act would provide the basis for invoking the IEEPA. The President could potentially tie this action to recent emergency declarations, such as the southern border emergency he declared on his first day in office or even the national emergency related to drug trafficking enacted under the previous administration. While tariffs imposed under the IEEPA could face legal challenges from trade partners under the United States-Mexico-Canada Agreement (USMCA), the President’s broad authority under national emergency powers allows for swift implementation without procedural delays.

2. Tariff Act of 1930

Section 338 of this act authorizes the President to impose tariffs of up to 50 percent on imports from countries deemed to impose unreasonable charges or restrictions on U.S. goods. Unlike other trade statutes, Section 338 requires minimal fact-finding and procedural steps, giving the President greater discretion to act quickly.

While Section 338 remains a significant potential tool for addressing trade imbalances or unfair practices, it has not been used to impose tariffs on U.S. trading partners. Its application has largely remained theoretical, with no president invoking it in modern trade contexts.

Conclusion

The uncertainty surrounding the timing and scope of President Trump’s trade policies underscores the importance of preparation for businesses involved in international trade. Whether tariffs are implemented immediately or after procedural investigations, companies should take proactive steps to mitigate potential disruptions.

Key measures include ensuring accurate classification of goods under the Harmonized Tariff Schedule (HTS), as incorrect classifications could result in unnecessary tariff payments or regulatory violations. Companies may also explore options for changing the country of origin of their products by demonstrating substantial transformation in a third country, which could help avoid tariffs. In addition, companies may want to explore using Foreign Trade Zones to not only take advantage of preferential duties, but also obtain other economic incentives, such as lower property taxes.

Finally, it is essential for businesses to have robust import and export compliance programs in place. The Trump administration is expected to enhance enforcement of international trade regulations, making it critical to update policies, procedures, and training to ensure adherence to evolving requirements. There are already several schemes – such as utilizing different documentation for importation or utilizing transshipment countries – in an attempt to avoid trade regulations. These schemes, among others, are potentially criminal and could impact a company’s ability to utilize its global supply chain effectively.

Companies should continue to be vigilant in understanding the impact of international regulatory changes that impact global supply chains. When changes are proposed, companies should either directly, or via trade organizations, provide comment as to the changes to ensure government agencies are aware of the impact of any regulatory change on actual business operations and the eventual consumer.