- Donald Trump could be considering declaring a national economic emergency to provide legal justification for universal tariffs he promised on the campaign trail. Markets are reacting to the CNN report, but there’s no way to know what he’ll do when he takes office.
Donald Trump, the once and future president and self-proclaimed “Tariff man,” could declare a national economic emergency to provide legal justification for universal tariffs he floated on the campaign trail and since his victory, according to CNN, which cited four people familiar with the matter.
The President-elect would potentially use the International Economic Emergency Powers Act, or IEEPA, to enable his tariffs, CNN reported. It basically grants sweeping powers in an emergency to the president to control economic happenings, meaning he could regulate imports and impose duties. One source told the outlet that Trump is a fan of the law because of how comprehensive it is, in that he can decide how tariffs are put into play without proving their necessity. “Nothing is off the table,” another person familiar told CNN.
The Trump transition team did not immediately respond to Fortune’s request for comment.
Once again, the latest Trump news is already pushing markets around even though he’s still weeks away from stepping foot in the Oval Office again. The S&P 500, Nasdaq, and Dow dipped on the report published early Wednesday. Europe futures slipped, too, and Treasury yields edged up.
But Trump says a lot of things. No one knows what he’ll actually do once he’s sworn in. During a recent press conference at Mar-a-Lago, Trump vowed to rename the Gulf of Mexico the Gulf of America; he also said he might use “economic force” to make Canada the 51st state. We’ll see whether any of those things happen.
Still, Trump threatened to use IEEPA to impose tariffs during his first term. He threatened Mexico with gradually increasing tariffs on all goods unless it did something about the number of undocumented people crossing the border. Either way, sources told CNN no final decision has been made and it appears other parts of trade law are being considered.
Since his election win, Trump has threatened China, Mexico, and Canada with tariffs; the latter two countries are America’s largest trade partners. On the campaign trail, Trump repeatedly proposed a 10% to 20% universal tariff on all imports. His billionaire fans appear to support it, but economists mostly consider tariffs to be inflationary. His 10% tariffs could cost a middle-income household $1,700 a year, according to the Peterson Institute for International Economics; a 20% universal tariff would cost that same middle-income household $2,600 a year.
