Dem
47
GOP
53
One thing that Donald Trump has promised to do is raise tariffs on Mexico, Canada, and China on Day 1. The Constitution gives Congress the power to levy tariffs, not the president. However, Congress has passed laws giving the president that power under certain circumstances. That may be challenged in court, because the Supreme Court has ruled in several cases that Congress may not delegate powers expressly assigned to the legislative branch by the Constitution.
Nevertheless, Trump is virtually certain to try, especially since many Republican office holders are egging him on. Some have said that as a savvy businessman, he knows to do these things. For example, Rep. Tim Burchett (R-TN) said: "A businessman like Trump gets it." Some are more specific. Rep. Ralph Norman (R-SC) said: "The tariffs will incentivize manufacturers to invest in American made products." Rep. Marc Molinaro (R-NY) sees Trump's announcement as "a powerful message: stop the flow of fentanyl and illegal immigrants into this country." Rep. Andy Ogles (R-TN) said "The government of Mexico has been complicit in allowing the largest human trafficking operation in history." Rep. Don Bacon (R-NE) said: "Mexico deserves this because they are blocking our corn exports." And there are many more.
But these members either don't know how tariffs work or don't see the consequences (or are in denial). When a U.S. company—say, Walmart—imports a product with a tariff on it, the importer pays the U.S. government the tariff—not the foreign manufacturer. Since Walmart already has low margins in order to maintain market share, it is not going to be able to absorb the loss in many cases, and will then have to raise prices. This is known as "inflation."
Companies that import industrial products under tariff—say, steel—will have to raise the price of their finished products—cars, new housing, appliances, etc. It is unavoidable. In some cases, this will provide an incentive for some American company to produce the product domestically, but the difference in wages between China and the U.S. is so great that there will be very few products that suddenly become profitable by making them in the U.S. with a tariff of only 10%. The Mexican and Canadian tariffs of 25% may produce some substitution, but only if the importer is convinced the tariff will last. No company wants to spend millions to build some factory, only to see a Democratic president in 2028 remove the tariff as part of some bigger deal.
Scott Lincicome, a trade expert at the libertarian Cato Institute, doesn't believe Trump will actually pull the trigger. In an interview, he said: "It's crap, and you can quote me on that." He also wondered: "Is it really a political winner to make avocados more expensive right before the Super Bowl? And what about one of the other top imports from Mexico: beer?"
But the biggest problem with imposing tariffs is the likely retaliatory tariffs. Last time around, Trump dealt with then-Mexican president Andrés Manuel López Obrador, a charismatic old-school politician with whom he got along well. This time he will have to deal with Mexican President Claudia Sheinbaum, a leftist ideologue who is much less willing to bend to Trump's will. She knows that many U.S. companies import all manner of products from the maquiladoras they have built in Northern Mexico on account of the free-trade agreement, and they will scream bloody murder if that trade is effectively stopped. If China responds to tariffs by switching to agricultural imports from Brazil, U.S. farmers will suffer and some will go under. Republican senators will not be shy telling Trump about this.
What might happen is that Mexico and Canada will make some small changes (probably ones they were planning to make anyway) and then Trump will claim victory, take his football, and go home. With China, it is harder to tell what will happen because President Xi Jinping does not like taking orders from Trump. Also, Xi is prepared to play the long game and knows that tariffs will raise inflation in the U.S. and that Trump promised to get prices down, not up. Xi might be willing to absorb some temporary losses to put Trump in a position where he comes to Xi and begs to end the trade war—on his terms, especially during the 2026 election season when rising inflation could cost Republicans control of Congress. (V)