Tariffs and Trade: What Comes Next

CFR experts discuss the impact of the Supreme Court's decision on Friday and President Trump’s policy options with a deep dive into the legal aspects of the ruling and other authorities at the president's disposal.

For additional resources on tariffs, read CFR polling conducted with Morning Consult, “What Americans Really Think About Trade and Tariffs.”

BEHBEHANI: Welcome, everyone, to today’s Council on Foreign Relations briefing on tariffs, our second since the Supreme Court ruling on Friday. This will be a deep dive into the legal aspects of the ruling and other authorities at the president’s disposal. The contents of this discussion and Q&A will be on the record, and a recording will be posted online at the conclusion of this event. 

This briefing is a part of the Council’s ongoing mission to inform U.S. engagement with the world, work that also includes the analysis and resources posted across our channels including ForeignAffairs.com and CFR.org, where you’ll also find the results of recent polling CFR conducted with Morning Consult on what Americans really think about trade and tariffs. 

Let me now hand it off to Inu Manak, a senior fellow for international trade; and Jennifer Hillman, senior fellow for trade and international political economy who’s joining us in London. Over to you, Inu. 

MANAK: Thanks so much, Lilly. And thank you, everyone, for joining us this afternoon for this media briefing on trade and tariffs. 

On Friday, the Supreme Court struck down the sweeping tariffs that President Trump had imposed on most U.S. trading partners, starting with executive orders on Canada, Mexico, and China, the fentanyl orders; and then the reciprocal tariffs in a different executive order that relied on the International Economic Emergency Powers Act. By a vote of six to three, the justices ruled that the tariffs exceed the powers given to the president by Congress under IEEPA, and this means that he can no longer use IEEPA to levy tariffs. So there’s a lot to unpack in terms of what that ruling says, how the justices fell on a number of different issues, and we want to take the time to break that down. 

So, with that, I want to turn to Jennifer and ask you to sort of explain to us sort of what the central reasoning was of the Court in applying their ruling of striking down these tariffs. 

HILLMAN: Well, thank you very much. And I, too, am delighted to be here, so I welcome all of you joining us. 

You know, I think the good news for all the lawyers, if you will, is that this is a pretty clean and straightforward opinion. I mean, the bottom line is that the reasoning of the Court starts with the Constitution. And Article I, Section 8 of the Constitution gives the power to impose taxes and tariffs, and the power to regulate foreign commerce, to the Congress, not to the president. And therefore, the only way in which the president can impose tariffs ever is if the Congress has delegated that authority to the president in some way or in some form in legislation. 

So the question before the Court was simply a straightforward one: Did IEEPA—did the Congress when they enacted IEEPA, did they hand over tariff authority to the president? And you know, again, Chief Justice Roberts said very clearly in the opinion the answer to that question is no. And I’ll quote you just one line from the opinion. What he said is, “Our task today is to decide only whether”—and again, he’s speaking of a specific phrase in the statute—“the power to”—quote—“‘regulate’ importation”—end quote—“as granted to the president in IEEPA embraces the power to impose tariffs. Answer: It does not.” So what the Court did is simply look at the statute and say, what does the statute say? And the only part of the statute that the administration or anyone argued could even arguably apply is the part of the statute that gives the power to the president to regulate importation or exportation. And so, again, the question before the Court is, can you read that word “regulate” to mean tariff? And in the end, the Court said no. 

And I would add that, you know, the real basis for the Court’s determination in terms of saying, no, regulate does not mean tariff or tax is that they really did draw this line between what is a regulatory power and what is a taxing or tariff power. And they said that regulating means something very different from—you know, from tariffing or taxing, and that because the IEEPA statute does not use the word “tariff” or “duty” or have any other indicia or any other words that describe something like a tax, that it cannot be read to provide this tariff authority. So it’s a clean, straight-up answer of does IEEPA permit any tariffs at all ever, and the Court in essence said no. 

MANAK: Right. And you know, they did look at all the other verbs that were in the statute, right, and found that none of them said tariff or duty of any kind. So it really showed that they were looking at that clean statutory interpretation. 

But there’s another point here, too, and I kind of want to get your thoughts on this too, because Roberts invoked the major questions doctrine as well in writing his opinion, and that requires executive branch officials to identify sort of a clear congressional authorization when they seek to exercise some sort of major power that has some significant political or economic consequences. So could you kind of explain to us the reasoning here on major questions and then, also, why only three of the justices relied on this in that opinion? 

HILLMAN: So the major questions doctrine is something that has been to some degree codified, if you will, or at least described more specifically by the Supreme Court only in the most recent years. And it is, again, as you say, this doctrine that if it is something that involves a major question, major impact in terms of the U.S. economy, the Congress has to have been very clear about its delegation of that authority. And so the question before the Court as Roberts saw it in this opinion was, was it very clear that the Congress actually delegated tariff authority to the president in IEEPA, and obviously looked at the language and said, absolutely not, how could it possibly be clear if, you know, the Congress never even used the word “tariff’ or “duty” anywhere; put in no language about how you would determine how much is the duty, for how long would it be in place; no process for any comment or notice from anybody; that it doesn’t look like or read like any other tariff statute, so how could it possibly be clear that the Congress intended to give the president this big power to impose tariffs? 

So that was pretty much walking through the major questions doctrine to say just it’s not here. I mean, this is—there’s no doubt—nobody disputes that imposing this high tariffs across all goods from all countries is a major question, so there was no debate about that. You know, this is well beyond any of the other prior major questions doctrines. That was not the question. The question was, OK, then once you apply this doctrine, do you see this kind of clear indication? 

And the reason I think that the—that the three, if you will, liberal justices—I mean, Sotomayor and Ketanji Brown Jackson and Elena Kagan—did not include the major questions doctrine is two things. 

One, they started out by saying you don’t need it—you don’t need the major questions doctrine; just a straight normal statutory interpretation under any regular form of interpretation would get you to the result that this statute does not provide for tariffs, so you do not need to reach the major questions doctrine. That was their first argument. 

And secondly, I think they don’t want to embrace the major questions doctrine because it has been used in the past, again, by the conservative justices to strike down a lot of the initiatives that President Biden, President Obama, and others have invoked that would allow them to address things like climate change, or environmental measures, or health-care measures, or others. Again, Biden, again, had struck down his efforts to try to cancel student loans during COVID because of an argument that under major questions it was not clear that the Congress was giving that authority. A number of the powers to shut down coal-fired power, again, under the Clean Air Act, it was—it was ruled, no, you know, there’s not this clear delegation. So I think for some of the justices—and again, for many Democrats—they don’t like this major questions doctrine and they think it’s creating an unrealistic standard to expect the Congress to have anticipated all kinds of things that could come up every time they pass a piece of legislation, to specify every single time the statute can be used, how it can be used, when it can be used—that that’s really asking too much of the Congress; we won’t get there. And we certainly won’t get there with a lot of older laws that are not going to be updated or amended, you know, in the near term. And so I think there is in that sense a real reluctance to embrace in any fulsome way the major questions doctrine unless you really have to, and they said you don’t have to. 

MANAK: Yeah. I found that all very interesting. And I thought Justice Gorsuch’s opinion was really fascinating because it showed that there were disagreements in the reasoning, and not just with those justices that thought the ruling didn’t need to address major questions and that the statutory interpretation, as you mentioned, was enough, but also with the justices that invoked major questions for previous cases with less economic significance and didn’t do so in this instance. 

So I kind of want to turn a bit to the dissents, then, too, to unpack those, you know. So how did the justices come to a different conclusion than the majority opinion on this one? What were some of the things that you found and that could highlight for that? 

HILLMAN: Yeah. So, again, it was Justice Kavanaugh writing the dissent, joined by Justices Alito and Thomas—writing, I would say, the main dissent. And I think he started out by saying I don’t think you apply the major questions doctrine in this instance because he perceives that there is effectively a foreign affairs exception to the major questions doctrine, and that whenever the matter involves the foreign affairs that there should be great deference to the president; that you simply should not expect, you know, again, the Congress to have given out every little—you know, to have been very precise in their—in their statutory language; in general, basically saying that if it falls under this broad—what he would describe as a very broad umbrella of foreign affairs, as long as you’re under that foreign affairs umbrella that the president should be given significant discretion and significant deference, and that if you require the imposition of this major questions doctrine you’re not giving the president the deference that I think Justice Kavanaugh thinks he should have gotten. So a lot of his opinion was really all about saying, you know: This is different. This is foreign affairs. This is national security. This is exactly the area in which we should not be second-guessing the president. We should allow him to do what he has done in this instance because, again, it fits within this broader umbrella. 

MANAK: And he also mentioned something else that I thought was interesting where he talks about IEEPA’s power to block imports includes a range of options, right, so there’s the lesser tool of tariffs, that that should be allowed. And so I think this is really the idea that Trump talked about, too, in the press briefing—you know, basically, why would IEEPA allow him to ban trade but then not impose, like, a 1 percent tariff? Can you explain that, just like what’s the reasoning here? 

HILLMAN: Yeah. And this was an interesting one because it was actually even brought up during the oral argument, where during the oral argument the argument was made that you—you know, all of these other powers of IEEPA to nullify, to void, to block, to embargo, to do all of these things form this kind of doughnut, and then in the hole in the middle you have tariffs; why would you take out a tariff authority? And again, I think Justice Kavanaugh is addressing that issue in saying, you know, look, if you’re going to allow all these much harsher, you know, penalties, all of the—you know, to go all the way to embargoing imports or banning them altogether, why wouldn’t you allow this lesser power of tariffs to be imposed? That makes no sense that you have sort of two ends of a continuum and yet you don’t allow a power in the middle. 

I mean, I personally think that Justice Roberts did a very good job of answering that question in the majority opinion by saying tariffs are simply different in kind. You know, it is not a matter of degree and it is not a continuum; that tariffs, because they are taxes and involve revenue, you know, are simply different in kind in terms of what they do, and different in terms of where they fall in the Constitution. They fall as a straight-up power of the Congress, not any power of the president. There’s not even a hint of shared power with respect to tariffs; they are solely the power of the Congress. And therefore, they’re different in kind than these other authorities given under IEEPA. 

I would only personally add my own sense is, you know, I do think there’s also a big difference in saying that the IEEPA gives a power to regulate imports, to ban imports, to embargo imports, et cetera, because that still remains a power in the power of the president to decide when and what the embargo applies to. But when you think about tariffs, the decision about whether or not to import or not rests with the importer. I mean, if they’re going to choose to spend the 50 percent, you know, additional cost to bring something in with a 50 percent tariff, that is then giving the power to the private importer. It’s no longer a regulatory power by the government because it is not the government that is, in that sense, enforcing or controlling anymore. 

So, again, I think there is—there is reason to say that there is a distinction in kind. But that is clearly what the—what the Kavanaugh dissent was trying to say, is: No, they’re not. They’re just on a continuum, and that it doesn’t make sense to give the president only the sort of nuclear option without giving him something less than that. 

MANAK: Yeah. And I also found that really interesting. I thought he did a good job of explaining sort of why there wasn’t this continuum in that regard. And you know, there were other things that he addressed, too, that we saw in the—in the dissent as well, though, so a few other claims that were made, really Justice Thomas’ additional dissent and what he wrote there. So maybe could you tell us a little bit about that as well and those other issues. 

HILLMAN: So, yeah. So, yeah, Justice Thomas wrote his own dissent, you know, again, meaning no one else joined him in this, which to me I think was quite, quite striking, I mean, and went very, very far in the direction of saying there should be a very significant amount of power given over to the executive branch. What Thomas’ solo dissent really goes through is, again, among the other powers that the Constitution gives solely to the Congress is the power to legislate. Article I, Section 1 of the Constitution, you know, gives the Congress the power to pass all—to make all laws, to do all legislation. And what Thomas said is, yes, but that really means that the Congress can still delegate a lot of its authority, even its legislative authority, and that the only aspects that remain solely with the Congress are ones that he refers to as core legislative authorities, which is those that threaten life, liberty, or property. And again, he tries to justify this on the basis of a number of, you know, old historical texts. 

But I will say to me this is breaking really new ground. I mean, most people would say, you know, they don’t see anything in the Constitution that would suggest that somehow the powers of the Congress are limited to only those things related to life, liberty, or property. When the Constitution uses the word all legislation, you know, it has historically been presumed to mean all. But Thomas is clearly trying to start down this road of saying, you know, you can cut back significantly the amount of power that belongs to the Congress to only this narrow lane of life, liberty, and property, and everything else falls to the president. Obviously, he didn’t get any other justices on that opinion, but I think he’s putting down some markers. 

MANAK: Yeah. I thought it was a really interesting read and one where it seemed like he was saying that Congress can delegate its tariff powers away completely in his reasoning. But that’s not the majority view, certainly in what we saw in the ruling. 

So I guess maybe stepping back, if we were to, you know, make sense of all this in one big-picture way, and not just in terms of the page count—because this was a big ruling, and I think we all spent all of Friday combing through it, and again all weekend—if you’re just, you know, talking to someone and explaining to them, what should they take away from this? What’s the big takeaway at the end of reading those 170 pages and what it means for the Congress in particular? 

HILLMAN: Well, when I step away from it, I would say this is a huge victory for the Constitution of the United States. It’s a huge victory for the Congress. It’s a huge victory for the notion of a separation of powers. It’s a huge victory for the rule of law. I mean, it is, again, the Court saying that the Constitution still matter(s), and when the Constitution says tariff power belongs to the Congress that’s what it means. It means tariff power belongs only to the Congress. 

And so the fact that the president has already, you know, signed an executive order that says they will no longer collect any of these IEEPA duties—as of today they’re no longer collecting IEEPA duties—says to me that, you know, when the Congress—I’m sorry, when the Court speaks like this, very clearly, and makes it really clear—there’s no ambiguity in this decision; it is straight up you do not have the authority to impose tariffs under IEEPA ever—it to me is very important to say that there is still this notion of a separation between the powers of the Congress and the powers of the executive branch, and it is clearly still the Court saying and we, the Court, get to decide where that line is drawn between what is a power that the president has and what is a power that the Congress has; and we’ve drawn the line, and tariffs fall on the side of the line that belongs to the Congress. 

MANAK: And I guess importantly, you know, this decision only applies to IEEPA. So then what does it mean, stepping back, for trade policy overall? 

HILLMAN: Right. Right. So I will say, again, I think this is an extremely significant and important decision from a political, legal, constitutional separation-of-powers standard—very important, very significant. From a trade law standpoint not so much, because at the end of the day with respect to trade and tariff policies because the ruling here is a narrow one—you know, does IEEPA, just IEEPA, provide for tariffs—you know, it in the end of the day has a much more limited reach. And in this context that we’re sitting in with all of these tariffs on all of these goods all over the world, I think it is important to understand that the only thing that was eliminated by this decision is the tariffs that were applied pursuant to IEEPA. 

So left in place are all of the tariffs that have been applied under the national security statute Section 232. So that’s the 50 percent tariffs on steel and aluminum and a number of their—or their derivative products, 50 percent on copper. It’s the 25 percent on autos and auto parts. It’s the tariffs on wood, and underneath that kitchen vanities, and bathroom vanities, and other wooden furniture. Again, it’s—the whole series of those 232 tariffs remain in place. They’re not touched, not impacted in any way by this ruling of the Supreme Court. Similarly, the Section 301 tariffs that we’ve had since the first Trump administration on about $360 billion worth of goods being imported from China, those tariffs, again, are not touched by this IEEPA ruling. Nor would any future 232, or 301, or antidumping, or countervailing duty, or Section 201. 

So nothing in this opinion changes any of those other trade statutes, the way in which they’re implemented, the way in which the investigations are conducted under them. None of them are impacted by this IEEPA ruling. So in that sense from a trade standpoint a much more narrow decision. 

MANAK: And IEEPA itself was left untouched in other ways, right? So there are other applications for IEEPA that the president could essentially use for different actions entirely. 

HILLMAN: Yeah. And a part of me thinks that this may have been one of the reasons why the Court went down this very clean, you know, sort of just know there is no power to do tariffs, because one of the things that I think might have been very problematic is if they’d actually gone into IEEPA and started rendering an opinion that would try to define some of the prerequisites that are part of IEEPA. So, again, the president, whenever he invokes IEEPA, can only invoke IEEPA if he has made a declaration that there is a national emergency that has as its genesis outside of the United States, with that emergency being described as unusual and extraordinary—an unusual and extraordinary threat to the United States. And then whatever he does once he’s declared that emergency must deal with the particular emergency that he’s declared and nothing else. 

And so before the Court even in this IEEPA case was a lot of argument about can you really say that our trade deficit, which is one of the—one of the bases for a huge number of the IEEPA tariffs, is, in fact, you know, subject to that unusual and extraordinary test? If we—because we have been running a trade deficit in this country for fifty years in a row, every single quarter for fifty years. So, again, a big argument before the Court is: How can you describe that as unusual or extraordinary? An event that’s happened every single quarter for fifty years is not unusual and is not extraordinary. 

Ditto the fentanyl tariffs. There was a huge argument—so these were tariffs that were put on Canada, Mexico, and China in theory because they weren’t doing enough to deal with the fentanyl problem. But again, it begs the question before the Court: Well, what does a duty or putting a tariff on a T-shirt, or a teddy bear, or, you know, sort of anything else actually have to do with fentanyl, that that is not dealing with the issue? The Court, I think, did not want to go down that road, because as soon as you go down that road it also affects how the—how the Court would define unusual and extraordinary when it comes to imposing an embargo, when it comes to imposing sanctions, when it comes to imposing the other measures that are routinely imposed under IEEPA. 

I mean, IEEPA is routinely used when we impose sanctions. When Russia invades Crimea, we put on sanctions. We use IEEPA as that authority. Et cetera. So I think the Court wanted to make sure that the rest of IEEPA and the authority for the president to engage in those kind of emergency actions remained completely intact, and they achieved that. They did not make any effort to try to define any of these terms, or to put any guardrails around them, or to try to create any lines within IEEPA itself. And so in that sense I think the IEEPA statute really was left very much in place for what it has traditionally been used for. 

MANAK: And one other issue that the Court did not bring up was that of refunds, and this seems to be the big issue that a lot of folks are asking about. What is going to happen with all these refunds? Do we know anything yet, or are we still waiting for more information? 

HILLMAN: I don’t—I don’t—I personally don’t think we’re waiting for anything, and I think the Court did not have to address it. Again, what the Court said is just these IEEPA tariffs are illegal. And to me, then, you just revert to, then, what is the law? And the law to me is very well-established: Once a duty has been declared illegal, you are absolutely entitled to a refund because, again, the collection of the duty from the very beginning was never lawful. So it is an unlawful exaction of money, you know, from the importer of record. So to me, this is a really straightforward question. Yes, it will be hard, in the sense that there’s going to be a lot of requests, you know, for refunds. But there is a well-established process by the customs service to do these refunds.  

They’re going to end up going down two different lanes depending on what’s the status of the actual import. So, again, for all of the entries—so, again, just to back up and, you know, sort of see where we are, when any import comes into the United States right now the importer of record has to file a customs declaration that says, this is the good that I’m importing. This is its value. This is the amount of tariffs that I owe. And they put all of that into their customs declaration. And they pay the duty. And then Customs has up to 315, really 314 days is what they really generally use, to basically close the books, to check it all, to make sure did you really declare correctly, did you declare the right amount, did you pay the right amount of duties? So there is this period where the entry has come in, the goods are out there in the U.S. economy somewhere, but the books, the accounting, has not been finished. In customs parlance, this is called liquidating the entry.  

So during any of that period until the entry is liquidated, the importer also has the right to go back in and correct their declarations. So I think what you will see in the vast majority of cases is the importer of record is going to go in and say, I want to correct. This is, you know, a post-entry correction. I want to correct my entry. I made a mistake. I included IEEPA duties. There are no IEEPA duties. I’m correcting my record. And then Customs will liquidate the entry, and will see that too many duties were paid, and will have to immediately pay a refund with interest. And I think the vast majority of transactions, that’s what’s going to happen. 

If, on the other hand, the books have closed, the entry has been liquidated, the paperwork is done, it’s over, then you do have to formally protest. And you have 180 days from the time that the—that the entry was liquidated to protest. And you’re basically saying, Customs, you made a mistake. You charged me IEEPA duties. I don’t owe IEEPA duties. I want a refund. Those may be a little bit more complicated. And, again, it absolutely requires you to file a protest. But, again, importers are entitled to these refunds. Technically, when that happens, you know, Customs has to, what they call, re-liquidate the entry. But I think there is a lot of certainty there. 

The Justice Department, the Trump administration Justice Department, in cases before the Court of International Trade, said, we promise if these IEEPA duties are deemed to be illegal, we will allow reliquidations. We will not object to reliquidations. And we will pay refunds. So the Trump administration is on record in court pledging to the judges of the Court of International Trade that they would allow these reliquidations and that they would be paying refunds. So I think legally it is very straightforward and there’s no ambiguity. It’s now a matter of getting the kind of—just the mechanics working, and working as quickly as we can. 

MANAK: Great. So I’m going to sort of shift gears a bit to sort of the reaction to the ruling as well. But before I do that, just want to remind everyone, if you do have questions please do raise your hand, because we’ll make some time to get to as many questions as possible. So, Jennifer, Trump was quick to respond to the court ruling and put new tariffs in place. Announced new tariffs under Section 122. A different tariff statute that a lot of people had to quickly learn, and many of us had said is something that the president would definitely use if he had to revert back to something. So could you walk us a little bit through Section 122 of the Trade Act of 1974? What does this this law allow the president to do? What are some of the constraints around it? And is there a possibility that this may also face a legal challenge?  

HILLMAN: Yeah. I mean, thank you. I mean, part of it is I think to me it was not surprising that the president chose Section 122, because it is the only statute out there that would allow the president to impose duties on all goods from all countries in one go. All of the other tariff authorities that he could use—232, 301, 201, anti-dumping, countervailing duty—are going to be country specific or product specific, or both. And all of those statutes are going to require a fairly extensive investigation, findings of fact, hearings, and a whole lot of process. So they could not be done quickly.  

So the one statute that would allow this kind of quick across-the-board tariff is Section 122. So what it does—when 122 was drafted, you know, way back in the early ’70s, when, you know, as the United States was beginning the process of coming off of the gold standard. As many of us might remember, you know, the dollar used to be pegged to the value of gold. And we had a lot of, you know, bricks of gold at Fort Knox that when, ultimately, you know, anyone holding dollars wanted to exchange for gold, they could do that. When gold got very tight, Richard Nixon finally decided we can no longer do this and took the United States off of the gold standard.  

When we did that, then our currency was allowed to float. And when it was allowed to float, there was a concern that if there were to be a huge shift in the value of the dollar, you know, very quick depreciations of the dollar, or a significant balance—international balance of payments problems, given the pegging of the dollar, that there needed to be a remedy. And one of the ways in which you fight back, if you will, on these currency depreciations or on runs on the dollar is to stop imports.  

So Section 122 was drafted to say that if the president finds that there is a fundamental international payments problem facing the United States, and that fundamental international payments problem can come from, you know, a concern over an imminent, you know, crashing of the dollar, an imminent falling of the dollar, or from trade—I’m sorry, not trade—deficits, balance of payments deficits where the United States has trouble making its payments in dollar currency, or where we’re trying to get an international agreement around stabilizing exchange rates—if one of those three things is happening and there needs to be restraints on imports, including tariffs, the president is authorized to do them.  

So it’s a statute that comes out of kind of older history related to the dollar and the value of the dollar. It’s never been used because as long as the dollar has been floating, you know, many would say that, you know, you’re never going to need this. There’s sort of no such thing anymore as the same idea of—that we were—that we were in, you know, many years ago when the dollar—when the dollar was floating. So again, it’s an old statute, but they’ve clearly picked up on it. This is what they’ve done. They’ve announced—they’ve put out an executive order for a 10 percent tariff across the board on, again, all goods from all countries, except for a list of goods that they are allowed to take out that are items that are either not, you know, in significant supply in the United States, or are in other ways critical for supply chain management and other things.  

So they have excluded certain critical minerals, currency, metals and bullion, energy products, natural resources, you know, fertilizer, and then certain other agriculture products, beef, tomatoes, oranges, et cetera, pharmaceuticals. So, again, there’s a list of products that are exempted from this tariff. These were announced on Friday, shortly after the Supreme Court’s decision. The next day, the president posted on social media that it was not going to be a 10 percent across the board tariff, it was going to be 15 percent. That I know of, we’ve not yet seen an executive order implementing that 15 percent. So I don’t know whether we’re going to stay at the 10 percent which is—which, again, is in an executive order, or whether the president’s social media post is going to be realized and they’ll soon issue a new executive order raising the tariff. 

MANAK: Yeah, we’re still waiting to see that come through. I was checking the Federal Register. I had not seen anything yet. So waiting to see whether it’s 10 or 15 percent. One thing I will say about those exemptions too, they clearly track on exemptions that were already granted to the IEEPA tariffs, and some exemptions that were noted in the deals that were negotiated—both the frameworks and then the reciprocal trade agreements. 

HILLMAN: Yeah, and I should note, I mean, they, for example, exclude goods from Canada and Mexico if they meet the U.S., Mexico, Canada Agreement, the USMCA, rules of origin. Those are exempted. So, yes, you’re correct. I think that’s exactly where this list came from is the goods that were exempted from the IEEPA tariffs or were agreed upon in these deals to be exempted from the tariffs. That’s the list that is not going to have these new Section 122 tariffs applied.  

You asked about a challenge. You know, and this one to me—you know, again, I think you are hearing a lot of talk of people that may want to challenge these tariffs. I mean, obviously for the importers, you know, you can imagine that if you’re going to get your tariffs back—you’re going to get your refunds back from IEEPA, you might want to challenge for the same exact reason. So even if it takes a year to litigate the case, if at the end of the day you get all of your tariffs back again in the form of a refund, you know, there may be some value to the importers in doing that.  

There are others that I think want to litigate this case, again, to make this point about the separation of powers, and/or to make the point that the president cannot just invoke Section 122. He has to actually make the requisite factual findings. And for some, their view is you can’t make this finding, that the United States is currently experiencing a fundamental international payments problem. I mean, everybody else’s debt is denominated in dollars. I mean, we don’t have the same kind of problem that countries that are desperate to actually be able to exchange their currency for dollars—we don’t have that. We are the world’s primary currency. So there are some that would argue, you know, we—you know, the president has not and cannot make the required showing. And that therefore, this statute should be challenged because it, again, is the president, you know, bringing on powers that he does not have.  

You know, from my perspective as a lawyer, I think this is a harder case to litigate because it’s asking the court not just to read the statute and figure out whether the power is there. There’s no question there’s a power in 122, if it’s properly invoked, to impose tariffs. The issue is whether a court is going to second guess the president’s judgment that there is a fundamental international payments problem. And that’s what he’s declared. And the question is, I think the courts are going to be more deferential to the president with respect to that determination. 

MANAK: That’s an excellent point. And it is time limited, so 150 days might be something that companies are considering as well in the challenge, that this could be potentially over in that time period. I want to sort of turn to some of the participants who have their hands up. Maybe, Lilly, if you can help me figure out how to bring these folks online, that would be great.  

OPERATOR: We will take our first raised hand from Kelly Malone. 

Q: Hi. Thank you so much for taking the time today.  

The president and then, through Scott Bessent, has indicated that obviously 301s are going to be instigated for separate countries. Can you talk through how that might play out? Obviously, coming from a Canadian standpoint, what would Canada see in a 301 investigation? (Laughs.) But, you know, when you’re looking at this from a global 301 investigation standpoint. 

HILLMAN: Yeah. I mean, I do think I would not be surprised to see them initiate Section 301 investigations against basically all of the countries that we have these deals with, because I think they’re looking for a legal basis under which they could keep in place those deals, including the tariffs that were imposed under those deals. And the only basis on which they have to impose tariffs on, again, whether it’s Canada or whether it’s any of the other trading partners, is through some other authority, because the Section 122 tariffs are going to go away in 150 days.  

So, again, Section 301, just to review for everyone else, again, requires an investigation done by the United States Trade Representative’s Office. And there’s two roads within Section 301. One is what is referred to as the mandatory road, meaning you must take action if you find that your trading partner is violating the terms of a trade agreement that they have with the United States, and that that violation is burdening the United States. So, again, I think the vast majority of the agreements are not going to be down that road. They’re going to be down the other road, which referred to as the discretionary road, which is to say that, you know, there’s an investigation to determine whether or not any practices by any of our trading partners are unreasonable or discriminatory, and burden U.S. commerce.  

And if they make those findings, then, again, the president has the discretion to impose trade measures, including tariffs, on that trade partner. And, again, just to remind everyone, that is the authority that was used by the first Trump administration against China, where the finding was that China engaged in a number of intellectual property theft as well as technology transfers, you know, that were taking U.S. technology. To the result of, you know, causing a burden on U.S. commerce of $50 billion. The Trump administration started out by imposing tariffs on $50 billion worth of Chinese imports, and then China retaliated, and the whole thing escalated. But they used that core Section 301 finding and kept amending and amending and amending to get to the point where we are right now with tariffs on about $360 billion worth of goods from China.  

So it’s my understanding that that’s what they want. They want to get that grounded, you know, 301 determination against all of the significant trading partners where they can then amend it once it’s been found to be the core bedrock of a legal authority to impose tariffs. 

Then you—then you amend it, you change it over time so that it can adjust to the various things that may happen under a trade agreement, again, because we have to remember whatever the countries may or may not agree to in terms of a tariff level, the president does not have the authority on the U.S. side of the table to charge those tariffs unless he’s got a 301 investigation, you know, once the 122 tariffs expire. 

MANAK: Yeah, and I would just add for those looking for information on what might be in those 301 investigations I think the National Trade Estimates report is always a good guide to see what some of those unfair trade practices are that USTR is concerned about and has been bringing up for the last year now as the basis of some of the negotiations that have been ongoing as well.  

So let’s take another question from the audience. 

OPERATOR: We’ll take our next question from Sea Winter (sp).  

MANAK: Please go ahead.  

OPERATOR: They’ve lowered their hand. We’ll go to Caroline Atkinson next.  

Q: Hi. Thank you very much. Incredibly clear and helpful description. I’m not a trade expert so I particularly enjoyed it. Thank you.  

I have two questions. One is how do you place one of these 301 findings, and is it just something that can be done by USTR? It’s not something that is subject to a court ruling or anything like that.  

And then the second point is, is there any way that Congress has a role in what will be happening next or are all of the—is the administration able to continue to act under its—under previously given authorities? 

Thank you. 

MS. HILLMAN: Two excellent questions, so maybe I’ll take the second one first, which is the Congress’ role and, again, because I think at this point it’s a fairly, in some ways, contested issue.  

Clearly, the issue with respect to the existing statutes is not contested. I mean, the statutes are what they are. The president has the authorities that he has under those statutes. The issue always becomes did the president actually do both procedurally and substantively what the statute requires. 

So even on the Section 301—your sort of other question was can it be done by USTR or are the courts involved—I mean, the courts are involved in 301 if there is a challenge that says you didn’t do this right. Either you didn’t do the process, the procedure right, you didn’t respond to comments, you didn’t give enough opportunity, you didn’t actually listen to the comments, you didn’t take them on board, or, substantively, you know, 301 limits you to these findings and you didn’t make them or, you know, again, there was something that was wrong.  

The role for the Congress is an interesting one because I think whatever else we’ve seen is, you know, Congress is starting to try to find ways to push back on what the Trump administration has been doing. I think you saw that.  

I mean, the Senate three different times passed resolutions to try to get rid of one or more of the IEEPA tariffs by terminating the underlying emergency. You saw, again, pretty rarely, enough House Republicans break from the Trump administration and also vote in the House against one—you know, the tariffs being imposed on Canada.  

So you are starting to see the Congress kind of break away a little bit because, by and large, these tariffs are very unpopular and so they’re generating a lot of political pushback. You also are starting to see the Congress more and more say, we’ve got to restrain the president. We’ve got to rethink this approach where we hand over this authority and then don’t have enough ongoing say in it.  

And the third area where the Congress is increasingly saying, you know, we do have a role and you’re—and you’re not abiding by it is whether or not any of these deals that are being negotiated, do they have to be approved by the Congress.  

I mean, it used to be the case that, you know, trade agreements were supposed to be approved formally by the Congress. USMCA, you know, all of the various FTA agreements, all of them have gone through a significant congressional process to be adopted.  

And so the issue is these agreements that they’re negotiating, they’re not in that sense full-on free trade agreements but are they nonetheless agreements that will require some, you know, approval process through the Congress? 

And what you’re seeing is, you know, across the board the Democrats saying, oh, yes, they do require a formal agreement, you know, by the Congress and the—and the Republicans at this point are still more or less saying, no, the president can do these on his own.  

So I think the role of Congress is something to watch. There’s a lot of, you know, ideas out there to start amending these trade statutes in order to give back more power to the Congress over trade.  

In terms of 301, there are—there are requirements for reexaminations and for updating. But, by and large, the answer is once there’s been this fundamental finding of, you know, again, unfair discriminatory practices that burden U.S. Congress—commerce, I’m sorry—those 301 findings can hold.  

I mean, we’re seeing now that we’re still having these 301 tariffs applied to China even though that investigation was done in 2017. So, again, once they’re in place, there is—there is times at which they have to be reviewed. But, fundamentally, those tariffs can stay in place for a very significant amount of time.  

MS. MANAK: Thank you, Jennifer.  

And, you know, to round off the discussion on 301, too, I was looking back at previous investigations and typically they take from five months to a year. The China investigation started in August 2017, didn’t conclude until March 2018, so that was seven months for that one to play out.  

Now, Ambassador Greer said there would be expedited 301s so I would imagine within the next five months of that 122 tariff expiring we probably will have those 301s completed. But you’re right to point out about Congress as well having maybe some role.  

One thing I will add, and I encourage you all to take a look at our recent survey on what Americans think about trade where we found that a plurality of Americans think that the president should not be allowed to impose tariffs without approval from Congress, so there certainly is this desire for some sort of guardrail on that action and the growing concerns over affordability may sort of moderate what the president does on tariffs after this hundred fifty days is over.  

So let me just thank you, Jennifer, so much for taking your time to share with us today your thoughts on this really important issue. We all at CFR will be covering this in detail in the coming days, weeks, months, and years so please tune in.  

And let me turn it back to Lilly to close.  

BEHBEHANI: Thank you all for attending today’s media briefing.  

If you have any questions, please email communications at CFR.org, and I’ve put the report in the chat that Inu was talking about. It’s great. And as a reminder, this event was on the record and will be posted to our event shortly—our website shortly, excuse me.  

Thank you all. 

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