President-elect Donald Trump has vowed to impose massive new tariffs upon entering office on Jan. 20, calling them “the greatest thing ever invented.” And unlike some of his other campaign promises, he’s been consistent, repeatedly suggesting he’ll impose a 10% to 20% tariff on all foreign goods and a tariff of 60% or higher on products coming from China.

The big question facing those that stand to be affected by Trump’s plans is just how he’ll go about rolling out the new tariffs — and how fast. Here are some of his options, as well as the potential roadblocks and consequences and how countries, industries and companies might respond:

Executive action

Trump has the power to enact large parts of his trade agenda on his first day in office. An “unusual and extraordinary threat” to national security, foreign policy or the US economy would be sufficient under the International Emergency Economic Powers Act, which President Jimmy Carter signed into law in 1977.

During Trump’s first term in office, he used this power to threaten countries and renegotiate trade deals. In May 2019, he threatened to hit Mexico with tariffs on its exports, citing the national security threat he saw from migrants entering the U.S. illegally. Those duties were never put into place but Mexico agreed to deploy its newly formed national guard to stop migrants.

At a campaign stop in Pittsburgh on Monday, Trump promised to hit Mexico with a 25% tariff on all goods if the nation doesn’t stop drugs from coming in to the U.S. A moment later, he suggested that the tariff could be raised even higher, potentially to 100%.

“America’s got the most open economy in the world. Access to this economy deserves fair treatment, reciprocity,” Republican Senator Bill Hagerty of Tennessee, who’s considered a potential choice for Trump’s cabinet, said Thursday in an interview on Bloomberg Television’s “Balance of Power.” “We haven’t been getting that, and I think this is an opportunity to come back and address it.”

Trade investigations

While emergency powers are a logical place to start, Trump could also use the so-called 232, 301 and 201 provisions in trade laws that he used in his first administration to place duties on hundreds of billions of dollars annually in imports from China, as well as on steel and aluminum from trade partners from the European Union to Mexico and Canada.

“He would likely use all of the tools in the toolkit,” said Dan Ujczo, a senior counsel at law firm Thompson Hine in Columbus, Ohio, who has worked extensively on North America and China trade issues.

The 232 and 301 provisions require public comments and timelines that mean the new duties would take longer to take effect. Trump could try to work around that by linking the new tariffs to Commerce Department and U.S. Trade Representative investigations from his first term, though he could also start new probes.

“We think procedural requirements, as well as the response from the economy, will limit the scope of trade actions,” Anna Wong, chief U.S. economist for Bloomberg Economics, wrote in a research note this week. “We also assume U.S. trade partners would retaliate in kind.”

No more ‘normal’ China trade

One thing that Congress could do early in a Trump administration, especially if Republicans take control of both chambers, is pass legislation repealing China’s permanent normal trade relations, or PNTR, with the U.S.. That’s exactly what was done to Russia after President Vladimir Putin’s invasion of Ukraine in 2022.

Repealing the status would reset tariffs on Chinese goods to higher levels, potentially affecting the cost of goods to U.S. consumers, sending inflation higher, keeping the Federal Reserve’s interest rate higher for longer and and even increasing the unemployment rate. There are members of Congress who want to go even harder, raising tariffs on certain Chinese imports to 100%.

Repealing China’s PNTR could be an interim step as the process of trade investigations plays out. Republican Senators Tom Cotton, Marco Rubio and Josh Hawley have already proposed legislation that would rescind China’s PNTR status and create a separate mechanism for treating imports from the country.

Withdrawing from international trade agreements

Trump could unilaterally withdraw from international trade agreements, or use the threat of withdrawal as a way to renegotiate those deals. He used that playbook in his first term to trigger a renegotiation of the North American Free Trade Agreement. He’s also threatened to shake up the rules-based system overseen by the Geneva-based World Trade Organization.

Trade deals aren’t treaties under U.S. law, which means that Trump could withdraw from them on his own authority, though he would likely face legal and congressional efforts to stop him.

Court challenges

Trump is on pretty firm ground when it comes to his powers under the International Emergency Economic Powers Act. Although the declaration of national emergencies under the law can be challenged in court as unconstitutional, U.S. courts have generally given the president broad leeway in the declaration of such emergencies.

To contest the action, a U.S. importer of goods coming from overseas could sue the government entity collecting the tariffs, as well as Trump, according to Timothy Keeler, a partner in international trade at Mayer Brown. The case would go before the U.S. Court of International Trade.

That process can take months, and a successful outcome for the petitioner is far from guaranteed.

“The judiciary has pretty much given the president a green light on that,” Ujczo, the Thompson Hine trade lawyer, said about the president’s powers under IEEPA.

It’s also unlikely that companies will be successful in challenging the president’s actions taken following the Section 201, 232 and 301 processes.

“If Congress has given the authority to the executive branch, it’s very hard to challenge the findings, especially if it’s connected to national security,” Keeler said.

Industry reaction

What’s clear is that Trump has considerable authority to enact much of his trade agenda on his own, without Congress. On top of that, one of his key trade advisers, Robert Lighthizer, has advocated for universal tariff levels and is unapologetic about the import taxes imposed while he served as USTR during Trump’s first term.

“Few of those who criticize these tariffs stop to consider what the brand of free trade they have promoted has done to America and to American workers over the past 30 years,” Lighthizer wrote in the Financial Times last week.

But just how the incoming Trump administration will carry out his tariff threats and how aggressively it will pursue the across-the-board idea is still an open question. Many CEOs are hoping that he pulls back on some of the more draconian proposals.

“He may reconsider given the potential drawbacks of the levies, or the administration may use the threat of tariffs as a negotiating tactic with foreign governments,” Wells Fargo & Co. economists Jay Bryson and Michael Pugliese said in a note to clients Wednesday. However, “we advise readers to take the president-elect’s threats of tariffs seriously if not literally.”

(With assistance from Shawn Donnan, Ramsey Al-Rikabi, Kailey Leinz and Joe Mathieu.)

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