Trump enters uncharted territory using tariffs as a weapon
WASHINGTON — President Donald Trump is taking the weaponization of tariffs to new extremes, testing the will of Congress to block the president’s use of a tool reserved for a national crisis and possibly provoking a legal battle.
In threatening Mexico with tariffs to force better border security, Trump is deploying potential levies to achieve policies that have nothing to do with economics or trade. The president has repeatedly brandished the threat of trade sanctions as leverage to negotiate deals with other countries, and he has proclaimed himself a proud “Tariff Man.”
But with the Mexico move, the president is showing a willingness to use laws traditionally seen as a last resort. In the process, it’s becoming increasingly difficult to distinguish between the president’s domestic political agenda and America’s economic policy abroad, with potentially destabilizing effects for financial markets and the global economy.
“These are coming out in a completely unexpected way. It’s the unpredictability of it, that people don’t know where this is all going,” said Nathan Sheets, chief economist for PGIM Fixed Income and a former Treasury official from the Obama administration. “When it’s so uncertain, it’s hard to make investment decisions and in that circumstance people pull back and go risk-off.”
To impose the duties on Mexico, the president is invoking the International Emergency Economic Powers Act, allowing him to bypass Congress to “investigate, regulate or prohibit” everything from foreignexchange transactions to transfers of credit, and freeze assets.
Trade experts are already questioning Trump’s authority to impose tariffs under IEEPA. It’s been used primarily to sanction nations such as Iran during the hostage crisis and it’s never been deployed to directly hit imports with tariffs, according to the Congressional Research Service, a nonpartisan arm of the legislature.
“This is certainly unprecedented,” said Doug Jacobsen, a trade lawyer at Jacobson Burton Kelley in Washington. “It could be challenged in court, and the courts certainly will give deference to Congress. Ultimately Congress could change the law or prohibit the president from taking this action.”
The law’s roots trace to the First World War, when then President Woodrow Wilson sought “expansive new powers to meet the global crisis,” according to a report by the Congressional Research Service. Since then, presidents have declared a state of emergency to push through various policies.