When Trump won the presidential election, he promised there would be tariffs. On November 25, 2024, we got a clearer picture of what those tariffs will look like. President-elect Donald Trump posted on social media that he would be imposing 25% tariffs on imports from Mexico and Canada on his first day in office. Additionally, Trump announced the imposition of an additional 10% tariff to pre-existing Chinese tariffs on goods imported into the U.S. According to his post, Trump plans to leverage tariffs and global trade tools to motivate change in areas historically independent from trade negotiations: immigration and drug trafficking. Tariffs were a key component of Trump’s campaign—he has described them as a means of growing the U.S. economy, protecting American jobs, and raising tax revenue.

To implement such tariffs immediately, it is likely that the new administration will rely upon the International Emergency Economic Powers Act (IEEPA), which grants the president broad authority to impose tariffs if there are concerns of a national emergency. Trump has previously threatened the use of tariffs in the context of immigration, when he announced in 2019 his intention to use IEEPA to impose and gradually increase a 5% tariff on all goods imported from Mexico. He did not ultimately impose such tariffs, but his prior reliance on IEEPA five years ago may predict similar statutory support in today’s climate. Lower courts have given the president broad powers to impose tariffs on issues concerning foreign affairs and trade policy. The Federal Circuit has recently affirmed the Trump administration’s Section 232 national security tariffs on steel imports in a number of cases (see e.g., USP Holdings, Inc. v. United States, American Institute for International Steel (AIIS) v. United States, PrimeSource Building Products., Inc. v. United States, and Transpacific Steel LLC v. United States). 

Unfortunately, U.S. importers of goods from Canada and Mexcio may not be protected by the USMCA. While the USMCA provides free trade between the U.S., Canada, and Mexico, it allows parties to impose additional tariffs under certain conditions. USMCA Article 32.2(b) states that: “Nothing in this Agreement shall be construed to […] preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.” It is likely that the new administration will rely on this provision to impose the proposed additional tariffs. The terms of the USMCA are up for their periodic review in 2026.  

With his announcement of tariffs, Trump is doubling down on his campaign commitment to raise tariffs aggressively. Some analysts expressed hope that the predicted appointments of Scott Bessent at the Department of the Treasury and Howard Lutnick at the Department of Commerce was a signal that Trump was open to a more moderate approach to tariffs. This announcement is a signal that President-elect Trump means business when it comes to tariffs. On the evening of November 26, 2024, Trump also announced his selection of United States Trade Representative: former Ambassador Lighthizer protégé and Chief of Staff, Jamieson Greer. More tariffs are likely coming. Many open questions remain like:

• Will there be an exclusion process and what will that look like?
• How will Mexico, Canada, and China respond?
• Will there be retaliatory efforts?
• In the event of retaliation, will the Trump administration work to help vulnerable sectors like agriculture, automobiles, electronics, and others?

Companies relying on the conditions of the USMCA and the status quo will need to adapt to changing conditions of trade. In the past, Trump has deployed threats of tariffs as a negotiating tool as well as part of a broader diplomatic strategy to effect compliance and cooperation in foreign affairs.