Trump’s National Emergency Plan: 25% Tariffs on Canada Explained

As Donald Trump gears up for a potential return to the White House, the possibility of imposing a 25% tariff on Canadian imports has sparked widespread debate.The former president has floated the idea of invoking the International Emergency Economic Powers Act (IEEPA) to declare a national emergency, a move that could dramatically alter the trade landscape between the U.S. and Canada.

With his inauguration just weeks away, the details of Trump’s tariff strategy remain shrouded in uncertainty. Greta Peisch, former general counsel for the Office of the U.S.Trade Representative, points to the IEEPA as a likely mechanism.“When you look at the connection the president-elect draws between tariffs and issues like fentanyl and border security, it’s unclear what authority he would use, but the IEEPA seems the most plausible,” Peisch explained.

The IEEPA, a national security statute, grants the U.S. president sweeping powers to regulate economic activities during emergencies. While it’s predecessor, the trading with the Enemy Act, was used in the 1970s to impose a 10% tariff on imports, no president has ever utilized the IEEPA for such purposes.“It would be a new tool in the tariff toolbox,” peisch noted.

Trump has a history of wielding economic measures to achieve policy goals. During his frist term, he threatened Mexico with 5% tariffs to address border security and immigration concerns. “That never came to pass because a deal was reached, and the tariffs were never imposed,” Peisch recalled. This time, however, reports indicate Trump is seriously considering an economic emergency declaration to enforce tariffs on Canada.

The IEEPA isn’t the only legal avenue Trump could pursue. His team is also examining the Trade Act of 1974, which was used to impose tariffs on China, and the Trade Expansion Act of 1962, which targeted Canadian steel and aluminum. Despite the Canada-U.S.-Mexico Agreement (CUSMA), negotiated during Trump’s first term, Peisch emphasized that the pact permits member countries to take measures deemed necessary for their own security.

Trump’s tariff threats are nothing new. Shortly after his 2016 election victory, he warned Canada and Mexico to curb illegal border crossings or face sweeping tariffs.He recently reiterated this stance,stating,“We don’t have tariffs on them yet,but that will happen.” In response, Canadian Prime Minister Justin Trudeau and Finance Minister Dominic LeBlanc visited Mar-a-Lago last year to discuss the issue. Following the meeting, Canada announced a $1.3-billion package to bolster border security.

Despite thes efforts, Trump has ramped up his rhetoric, even suggesting Canada should become the 51st state. “there’s not a snowball’s chance in hell,” Trudeau retorted. However, Canadian officials are taking the tariff threat seriously. “We have to be ready,” Foreign Affairs Minister Mélanie Joly told reporters ahead of a cabinet meeting to discuss potential retaliatory measures.

Ottawa is reportedly considering tariffs on American steel, ceramics, plastics, and orange juice.Meanwhile, Canadian leaders have been vocal in U.S. media, warning that such tariffs would harm American consumers and businesses. Wolfgang Alschner, an international economic law expert at the University of Ottawa, argues the situation extends beyond trade disputes. “We are seeing the U.S. using economic tools to achieve non-economic policy gains, and that is the poster definition of economic coercion,” he said.

Alschner believes targeted retaliatory tariffs alone won’t resolve the issue. Canada must also address economic security concerns, eliminate trade irritants, and work toward resetting its relationship with the U.S. to avoid further escalation.

Understanding the IEEPA and Its Potential Impact on U.S.-Canada Trade Relations

As the United States prepares for a new management under President-elect donald Trump,speculation is mounting about the potential use of the International Economic Emergency Powers Act (IEEPA) to impose tariffs on Canadian imports. This move, if enacted, could have far-reaching implications for trade relations between the two nations. To better understand the IEEPA and its relevance, we spoke with Greta Peisch, former General Counsel for the Office of the U.S. Trade Representative.

What is the IEEPA, and How Does it Work?

The IEEPA is a national security statute that grants the U.S. president significant authority to regulate economic transactions during emergencies.“The president must declare a national emergency and demonstrate that the situation poses an ‘unusual and remarkable threat’ to U.S. national security, foreign policy, or the economy,” Peisch explained. In this context, President-elect Trump appears to be linking issues such as fentanyl trafficking and border security to a broader national security threat, potentially justifying the use of the IEEPA to impose a 25% tariff on Canadian imports.

Is this a Legitimate Use of the IEEPA?

Peisch noted that while the IEEPA provides the president with considerable discretion, its application in this scenario would be unprecedented. “Historically, the IEEPA has been used in situations like the Iranian hostage crisis or post-9/11 financial crackdowns,” she said. “Applying it to impose tariffs on a close ally like Canada would be a significant departure from past uses.” She added that courts have occasionally pushed back when the connection between the declared emergency and the action taken appears tenuous. “If challenged, the administration would need to provide compelling evidence that Canadian imports pose a direct and immediate threat to national security.”

Potential Consequences for U.S.-Canada Trade Relations

The repercussions of such a move could be severe.“Canada is one of the United States’ largest trading partners,” Peisch emphasized. “A 25% tariff on all imports would disrupt supply chains, increase costs for American consumers, and likely provoke retaliatory measures from Ottawa.” This could escalate into a full-blown trade war,harming businesses and workers on both sides of the border. Additionally, it could strain diplomatic relations with a key ally at a time when global cooperation is more crucial than ever.

Why Is President-Elect Trump Considering This Approach?

President-elect Trump has long been a proponent of using tariffs as a tool to address trade imbalances and protect domestic industries.Peisch suggested that his consideration of the IEEPA reflects his broader trade policy ideology. “He views tariffs as a way to assert U.S. economic interests, even if it means challenging longstanding alliances,” she said.However, she cautioned that such an approach carries significant risks. “It’s imperative that this kind of game, because we are really playing with fire here, doesn’t get out of hand.”

This report was first published on January 11, 2025.

The Implications of Tariffs on U.S. Trade Policy: A Deep Dive

In recent years,the use of tariffs as a tool to protect domestic industries and address trade imbalances has become a contentious topic in U.S. trade policy. the International Emergency Economic Powers Act (IEEPA) has emerged as a mechanism that allows the executive branch to bypass congress and take unilateral action. While this approach aligns with a preference for swift decision-making, it also raises significant concerns about its long-term implications.

The Risks of unilateral Tariff Actions

One of the most pressing risks of using tariffs under the IEEPA is the potential for setting a dangerous precedent. If national security is repeatedly cited as a justification for protectionist trade measures, it could undermine the rules-based international trading system. This approach might encourage future administrations to adopt similar strategies, leading to increased trade tensions and economic instability.

Advice for Businesses and policymakers

For businesses, the possibility of new tariffs necessitates proactive planning. companies should evaluate the potential impact on their supply chains, identify alternative suppliers, and develop strategies to mitigate rising costs. As one expert noted, “Businesses should start scenario planning now. if tariffs are imposed, they’ll need to assess the impact on their supply chains, explore option suppliers, and consider how to mitigate increased costs.”

Policymakers, on the other hand, must focus on ensuring that any trade actions are proportionate and based on credible evidence. Engaging with the administration to advocate for balanced policies is crucial. Additionally, preparing for potential legal challenges and minimizing collateral damage to the broader economy should be top priorities.

political Ramifications of Tariff Policies

The political consequences of implementing tariffs are another critical consideration. While such measures may resonate with certain voter bases, the economic fallout could alienate other constituencies. Job losses, price increases, and perceptions of executive overreach could lead to pushback from Congress, the courts, and even members of the same political party. As one analyst pointed out, “The success of this strategy will depend on how effectively the administration can articulate and defend its rationale.”

Looking Ahead

As the situation continues to evolve, stakeholders across industries and government must remain vigilant. the interplay between trade policy, national security, and economic stability is complex, and the outcomes of these decisions will have far-reaching implications. Staying informed and prepared is essential for navigating this uncertain landscape.

Stay tuned for further updates on U.S. trade relations and the potential impact of tariff strategies on the global economy.

What are the potential consequences for U.S.-Canada trade relations if President-elect Trump uses the IEEPA to impose tariffs on Canadian imports?

Interview with Greta Peisch: Understanding the Potential Use of the IEEPA and Its Impact on U.S.-Canada Trade Relations

Archyde News Editor: Good afternoon, Ms. Peisch.Thank you for joining us today. As a former General Counsel for the Office of the U.S. Trade Representative, your insights are invaluable as we navigate the complexities of President-elect donald Trump’s potential use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs on Canadian imports. Let’s dive right in. Can you explain what the IEEPA is and how it effectively works?

Greta Peisch: Thank you for having me. The IEEPA is a national security statute that grants the U.S. president significant authority to regulate economic transactions during emergencies. essentially, the president must declare a national emergency and demonstrate that the situation poses an “unusual and extraordinary threat” to U.S. national security, foreign policy, or the economy. In this context, President-elect Trump appears to be linking issues like fentanyl trafficking and border security to a broader national security threat, potentially justifying the use of the IEEPA to impose a 25% tariff on Canadian imports.

Archyde News Editor: Is this a legitimate use of the IEEPA? Has it ever been used in this way before?

Greta Peisch: while the IEEPA provides the president with considerable discretion, its application in this scenario would be unprecedented. Historically, the IEEPA has been used in situations like the Iranian hostage crisis or post-9/11 financial crackdowns. Applying it to impose tariffs on a close ally like Canada would be a significant departure from past uses.Courts have occasionally pushed back when the connection between the declared emergency and the action taken appears tenuous. if challenged, the governance would need to provide compelling evidence that Canadian imports pose a direct and immediate threat to national security.

archyde News editor: What are the potential consequences for U.S.-Canada trade relations if this move is enacted?

Greta Peisch: The repercussions could be severe. Canada is one of the United states’ largest trading partners. A 25% tariff on all imports would disrupt supply chains,increase costs for american consumers,and likely provoke retaliatory measures from Ottawa.This could escalate into a full-blown trade war, harming businesses and workers on both sides of the border. additionally, it could strain diplomatic relations with a key ally at a time when global cooperation is more crucial than ever.

Archyde News Editor: Why do you think President-elect Trump is considering this approach? What’s the rationale behind it?

Greta Peisch: President-elect trump has long been a proponent of using tariffs as a tool to address trade imbalances and protect domestic industries.His consideration of the IEEPA reflects his broader trade policy ideology. He views tariffs as a way to assert U.S. economic interests, even if it means challenging longstanding alliances. However,I would caution that such an approach carries significant risks. We are really playing with fire here, and it’s imperative that this kind of action doesn’t get out of hand.

Archyde News Editor: given the potential for a trade war, how should Canada and the U.S. approach this situation to avoid further escalation?

Greta Peisch: Both countries need to engage in open and constructive dialog. Canada has already taken steps to address some of the concerns raised by President-elect Trump, such as the $1.3-billion package to bolster border security. However,more needs to be done to address economic security concerns and eliminate trade irritants. It’s also crucial for both nations to work toward resetting their relationship to avoid further escalation. Targeted retaliatory tariffs alone won’t resolve the issue; a complete approach is needed.

Archyde News Editor: what advice would you give to businesses and consumers who might be affected by these potential tariffs?

Greta Peisch: Businesses should start preparing for the possibility of increased costs and supply chain disruptions. Diversifying supply chains and exploring choice markets could help mitigate some of the risks. Consumers should also be aware that tariffs could led to higher prices for goods, so budgeting and planning ahead would be wise. It’s a challenging situation, but being proactive can definitely help soften the impact.

Archyde News Editor: Thank you,Ms. Peisch, for your time and expertise. Your insights have been incredibly enlightening.We’ll be closely monitoring how this situation unfolds in the coming weeks.

Greta Peisch: Thank you. It’s a critical issue, and I hope both nations can find a way to navigate these challenges without causing lasting harm to their economies and relationship.

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This interview provides a comprehensive look at the potential use of the IEEPA and its implications for U.S.-Canada trade relations,offering valuable insights for policymakers,businesses,and consumers alike.