Matthew Schaefer on Trump Administration Trade Policy: A Historical Perspective and Key Questions & Takeaways
The following is an excerpt from a new Yeutter Institute piece by University of Nebraska law professor Matthew Schaefer entitled "Trump Administration Trade Policy: A Historical Perspective and Key Questions & Takeaways," offering a good roundup of a lot of the biggest trade policy issues out there at the moment:
Key Questions & Takeaways
1) Is this equivalent to a “forced round” of trade negotiations? There has been no successful GATT/WTO round of negotiations since the conclusion of the Uruguay Round in 1994. Some argue President Trump’s tariff actions are leading to a “forced round” of trade liberalization. As countries give market access and tariff-cutting commitments to the United States, those commitments must be given to all other WTO countries on a most-favor-nation (MFN) basis under the various WTO agreements, including the GATT (dealing with trade-in-goods). While the public is still waiting on the details of the various commitments countries have made in deals with the Trump Administration, it will be important to see not only what the commitments are but whether they are indeed extended on an MFN basis or whether some countries will ignore their WTO MFN obligations. Of course, the interesting feature of this “forced round” is that the United States does not participate in the tariff-cutting like prior rounds but actually increases tariffs above existing rates. Further, unlike prior negotiating rounds, this forced round only features bilateral negotiations between the United States and others. Bilateral negotiations have long been preferred by the Trump Administration, even going back to President Trump’s first term
2) Has Congress given away too much unbounded authority on tariff increases to the President? While presidential tariff-cutting authority under trade promotion authority was always time-limited by Congress, large amounts of tariff-raising authority has been delegated to the President without any sunset. Even in the first Trump Administration, there was unhappiness in Congress with the use of Section 232 and attempts by members of Congress to place further limits on it. However, if Congress delegates authority to the President with no sunset on that authority, it is very difficult to terminate or even place further constraints on that authority later as the President will veto any legislation doing so, thus necessitating two-thirds support in both houses of Congress to override the veto – an uphill climb at any time and even more so today. If IEEPA-based tariffs are ultimately upheld by courts of appeal or the U.S. Supreme Court, this will certainly only increase the power the President has to take tariff-raising actions into the future as IEEPA also has no sunset clause.
3) What is the likely final result of the legal challenges in US courts to the IEEPA-based tariffs? President Trump’s social media post indicates it is only leftist judges that would strike down the IEEPA-based tariffs. However, the three judges on the CIT that ruled against the IEEPA-tariffs were a Reagan appointee, an Obama appointee, and a Trump appointee. Judge Contreras is an Obama appointee, but also notably appointed by Chief Justice John Roberts to serve a term on the United States Foreign Intelligence Surveillance Court. At this point, it is hard to say that there is any link between which President appointed a judge and their views on the use of IEEPA to impose tariffs. U.S. Trade Representative Greer has indicated confidence in ultimate success for the government. The U.S. Supreme Court has a 6-3 majority for conservative justices and has generally supported President Trump’s actions in other areas. However, in this case several doctrines of great importance to conservative justices – the non-delegation doctrine and the major questions doctrine – may be implicated at least in terms of influencing statutory interpretation. As discussed below, some justices may also be concerned that if tariffs are allowed under IEEPA that tariff actions could be used for almost an unlimited number of rationales, trade and non-trade-related. Further, some justices may comfort themselves in knowing that even if they deny the President the ability to impose tariffs under IEEPA that other delegated authorities will likely allow the President to closely approximate his current tariff policy.
4) If the IEEPA-based tariffs are ultimately invalidated by US courts, what other authorities might the administration rely upon? The Trump Administration would need to rely on other so-called three-digit authorities: Section 232, Section 301, and Section 122, all of which have procedural hoops-and-hurdles as well as some substantive limits that must be complied with in order to use the particular delegated authority. While expanding use of those authorities to implement across-the-board tariffs globally may stretch those authorities and lead to a whole new round of litigation, these delegated authorities can likely be used to implement tariffs that closely approximate current policy. For example, Section 232 (19 USC 1862) states: “Upon request of the head of any department or agency, upon application of an interested party, or upon his own motion, the Secretary of Commerce (hereafter in this section referred to as the "Secretary") shall immediately initiate an appropriate investigation to determine the effects on the national security of imports of the article which is the subject of such request, application, or motion.” (emphasis added). The text of the law thus refers to a specific “article” being imported and the history of use of the law also indicates it is to involve article-specific investigations and actions. However, the tariff actions against specific products can be, and often are, extended to derivative products. For example, steel tariffs have been extended to products such as refrigerators, freezers and stoves. Currently, there are Section 232 investigations underway for the following products: timber/lumber, semiconductors, pharmaceuticals, critical minerals, heavy trucks, aircraft drones, and polysilicon. President Trump has threatened 100% duties recently on semiconductors, and a whole host of derivative products contain semiconductors. Section 301 perhaps has even greater leeway as it provides that “[i]f the Trade Representative determines that (1) an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, and (2) action by the United States is appropriate, the Trade Representative shall take all appropriate and feasible action authorized under subsection (c), subject to the specific direction, if any, of the President regarding any such action, and all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to obtain the elimination of that act, policy, or practice.” While most Section 301 investigations involve a single country, a few focus on particular discriminatory acts (e.g. digital services taxes) engaged in by more than one country. The Office of the U.S. Trade Representative publishes an annual report of trade barriers to U.S. exports in foreign countries (the National Trade Estimates report) and could use that as the basis to launch dozens of Section 301 investigations that focused on individual countries. The 2025 version of the National Trade Estimates report listed trade barriers in approximately 60 countries plus the 27-member European Union. Both Section 232 and Section 301 allow for investigations and determinations to proceed rapidly as both statutes impose maximum but not minimum time frames for various aspects of the process. As to Section 122, even the CIT believes that statute would be appropriate to use for trade-in-goods deficits, but the problem the Trump Administration might see in that authority is that tariffs are capped at 15% and limited to 150 days unless extended by Congress.
5) Even if IEEPA-based tariffs are ruled illegal, would tariffs included in the trade deals themselves provided independent authority to continue charging the increased tariffs? Tariff-cutting authority for the President lapsed in July 2021. However, the trade deals the second Trump Administration has reached with the EU, Japan, UK and others do not involve the U.S. reducing current tariffs, but rather imposing additional tariffs on products from those countries. Some in Congress might argue such deals need Congressional approval. Indeed, the Congress actually approved the agreement with Taiwan concluded during the Biden Administration after the fact and imposed additional procedural requirements on any future agreements with Taiwan and that agreement did not involve tariff-cutting nor tariff-increases. Presidents in the past have argued agreements are impliedly approved if they do not include any terms or obligations that conflict with current U.S. law. (This was the argument in support of the digital trade chapter within the U.S.-Japan mini-deal during the first Trump Administration, for example, and also the argument by the Biden Administration for its Taiwan deal). One problem with this argument is that the HTSUS is considered a law and Trump’s recent deals imposing additional tariffs make changes to the HTSUS. This may be another issue that leads to litigation in U.S. courts – whether the agreements with foreign countries raising tariffs on products from those countries are valid without Congressional approval and whether they provide an independent basis for changes to the HTSUS.
6) Might Congress pass legislation approving of the Trump tariffs or otherwise delegate broad authority to impose across-the-board tariffs globally? Most bills introduced in this session of Congress thus far dealing with tariffs would actually limit the President’s authority to impose tariffs. Most of these bills have been introduced by Democrats, but Sen. Rand Paul (R-Kentucky) has introduced the No Taxation without Representation Act of 2025 that would require the President to make a tariff proposal to Congress and then have Congress approve the tariff proposal in order for it to take effect. The bill would also eliminate or curtail many existing authorities the President has to impose tariffs. A bi-partisan bill sponsored by Sen. Maria Cantwell (D-Washington) and Rep. Don Bacon (R-Nebraska) would require the U.S. International Trade Commission to assess the economic impact of proposed tariffs by the President under existing authorities and submit the report to Congress 60 days prior to the tariffs being able to take effect. However, any bill limiting or curtailing existing trade authorities will be vetoed by the President. There is one bill, HR735 introduced by Rep. Riley Moore (R-West Virginia) that actual would authorize a “reciprocal” tariff policy that is quite similar to a bill originally introduced in 2019. Interestingly, the bill would seem to require that reciprocal duties be assessed on a good-by-good basis, rather than a country-wide basis. That would require a lot of detailed analysis and research, one reason why the Trump Administration, seeking to act quickly, resorted to country-wide reciprocal duty rates using a formula based on a country’s trade deficit with the United States. The bill only has 10 or so co-sponsors. Just in the past few days, Reps. Jared Golden (D-ME) and Greg Steube (R-FL) introduced a bill in the House titled the “Secure Trade Act” that would impose a 10% baseline tariff on all countries and either a 35% (non-strategic products) or 100% (strategic products, such as aircraft engine components and microdrones) tariff rates on imports from China. The bill also authorizes the President to impose even higher tariffs on imports from China than the 35% and 100% rates.
7) Is the WTO essentially irrelevant now in terms of establishing and enforcing global trade rules? The WTO consisted of essentially three pillars: a forum for negotiation, the dispute settlement system, and the trade-policy review mechanism (TPRM). The first two pillars have had significant cracks in them for a long time. The last completed large round in the GATT/WTO system concluded in 1994. While some follow-on sectoral agreements (e.g. telecommunications, banking, and information technology products) were concluded in the first several years after the WTO’s creation, and there have been a few other notable negotiating achievements such as the expanded WTO procurement agreement in 2012, none of these come close to the scope of a full, comprehensive round of negotiations. The chances of any large-scale WTO negotiation in the foreseeable future is non-existent. The dispute settlement system suffered a massive crack with the collapse of the Appellate Body in late 2019. But over 50 countries subscribe to the MPIAA that allows them to avoid the appeal into the void issue. Still operational, is the TPRM in which the trade and economic policies of members are reviewed periodically, with opportunities for questions and examination by other countries. Various committees of the WTO also continue to operate, such as the sanitary and phytosanitary (SPS) committee that seeks to tackle such barriers to trade through consultation and discussion. In short, the WTO continues to have a role, just one much more limited than it had a decade ago. U.S.-China trade relations essentially fell outside the WTO by the middle of the first Trump Administration. Now U.S.-trade relations with the world are in reality outside the confines of the WTO. Other nations’ trade relations with each other, however, to large degree continue to be subject to WTO rules.
8) Are tariffs or threats of tariffs also being used for non-trade purposes? In addition to the fentanyl and human trafficking rationale for the IEEPA-based tariffs against Canada, Mexico and China, there are numerous other instances in which tariffs have been used for non-trade purposes in the first 200 plus days of the Trump Administration. On August 7th , President Trump issued an EO that found “that the Government of India is currently directly or indirectly importing Russian Federation oil” and thus declared that “articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent.” This secondary sanction seeks to have India stop such purchases but the move has been criticized because the United States previously encouraged India to buy Russian oil to help stabilize global energy markets. It has also been criticized for setting back relations built by the United States with India over the past five administrations, particularly given neighboring Pakistan’s products only face a 19% tariff when imported into the United States. On July 30, Brazil was hit with a 40% (on top of the 10% baseline tariff for a total of 50%) additional tariff rate for restricting the free speech of U.S. citizens on internet platforms and cotinuing to pursue the prosecution of former President Bolsonaro. (Bolsonaro and his allies have been charged with a plot to kill the winning Presidential candidate and a Brazilian Supreme Court justice in an attempted coup). In April, Mexico was threatened with additional duties over water rights issues between the two countries.
9) Tariff Stacking: What tariffs get added on top of others and what ones do not? As a general matter, each of the tariffs imposed under Section 301, Section 232 and IEEPA are added on top of each other and on top of the existing Column 1 HTSUS NTR/MFN rate. However, there are numerous exceptions. On April 29, President Trump issued an Executive Order with the following stacking rules: For goods subject to the auto and auto parts tariffs, there will be no additional IEEPA-based duties hitting Canada or Mexico, and no additional duties from Section 232 steel and aluminum tariffs. In early June, it was made clear that goods facing Section 232 steel and aluminum tariffs would not face IEEPA-based tariffs on Canada and Mexico. The Section 232 metals tariffs do stack on top of one another, but Section 232 tariffs only apply to the proportion of metal content in a good. For the additional 25% tariff on goods from India for purchasing Russian oil, those generally stack on top of India’s reciprocal tariff rate of 25% but there are exceptions for certain products. The European Union’s agreement with the United States, as implemented by Executive Order, states that for a good with a Column 1 duty rate of less than 15%, the sum of its Column 1 duty rate and the additional duty imposed by the Executive Order will be 15%. For EU goods, already facing a Column 1 duty rate higher than 15%, there will be no additional duty. Japan was able to negotiate a similar stacking rule a week after having its initial trade deal always add the 15% agreed tariff on top of the NTR/MFN rate.
10) Transshipment: Do goods deemed to be transshipped through a third country for purposes of evading tariffs face even higher tariff rates (than the ones sought to be evaded)? Transshipment of goods, i.e. simply passing goods through a third country and claiming the goods have origin of that third country in an effort to avoid higher duties, has long been a concern of the Trump Administration. Indeed, this concern goes back the first term of President Trump, when there were worries Chinese goods were being transshipped through Vietnam in an effort to evade the Section 301 tariffs imposed on Chinese goods. President Trump’s July 31 executive order imposes a 40% additional duty on any transshipments meant to evade higher duties. However, there are questions as to how transshipment will be deemed to occur – whether it will be by application of long-standing rules of origin that ask whether a good underwent a “substantial transformation” in a country prior to shipment to the United States or whether new rules might be created that would declare that goods that have some non-trivial content from non-market economies such as China to be declared of Chinese-origin regardless of content or further activities occurring in subsequent countries in the supply chain. For example, the July 22 announcement of the agreement between the United States and Indonesia says that the two countries “will negotiate facilitative rules of origin that ensure that the benefits of the agreement accrue primarily to the United States and Indonesia.” The July 31 executive order also directs that “[t]he Secretary of Commerce and the Secretary of Homeland Security, acting through the Commissioner of CBP, in consultation with the United States Trade Representative, shall publish every 6 months a list of countries and specific facilities used in circumvention schemes, to inform public procurement, national security reviews, and commercial due diligence.”