Why New Tariffs Are Essential Until Trade Deals Are Renegotiated

 

Trump’s Legal Justifications for New Tariffs in 2025

1. Section 301 (Unfair Trade Practices – China and Others) ✅

🔹 Why? China continues state subsidies, forced tech transfers, and IP theft.
🔹 How? The U.S. Trade Representative (USTR) can renew and expand the 2018-2019 tariffs under Trump’s original Section 301 action.
🔹 Additional Targets:

• EVs & Batteries (to counter China's state subsidies)

• AI & Semiconductor Tech (to limit strategic dependence)

📌 2025 Action Plan: Trump could immediately reauthorize and expand these tariffs, requiring no new legislation.

2. Section 232 (National Security Tariffs – Critical Industries) ✅

🔹 Why? China is using Mexico and Canada to bypass tariffs under USMCA loopholes (e.g., EV batteries, solar panels).
🔹 How? The Commerce Department could conduct a new national security review of:

• Electric Vehicles (EVs) flooding North America

• Rare Earth Minerals & Solar Panels (China dominates supply chains)

• Steel & Aluminum (reviving 2018 tariffs)

📌 2025 Action Plan: A Section 232 review takes months, but Trump could immediately declare an emergency tariff on China-linked goods while it’s in progress.

3. Section 201 (Safeguard Tariffs – Protecting Domestic Manufacturing) ✅

🔹 Why? If industries like automobiles, steel, solar panels, and semiconductors face a surge of cheap imports, this can be used.
🔹 How? The U.S. International Trade Commission (USITC) would conduct an injury review, allowing Trump to impose tariffs for up to 8 years.
🔹 Example: This was how Trump originally justified tariffs on washing machines and solar panels in 2018.

📌 2025 Action Plan: Trump could immediately request a new USITC investigation into industries like:

• EVs & Batteries (China-linked brands using Mexico loopholes)

• Chip Manufacturing (to counteract China's state-backed expansion)

4. IEEPA (National Emergency Economic Powers Act) ✅

🔹 Why? Trump could declare a national emergency over China’s trade policies, citing economic coercion, industrial espionage, and supply chain risks.
🔹 How? Allows immediate tariffs or economic sanctions against companies or industries deemed a threat.

📌 2025 Action Plan: Trump could invoke IEEPA on day one to place tariffs or sanctions on:

• Chinese state-backed companies (like BYD for EVs)

• Critical technology exports (AI, semiconductors, rare earths)

5. Balance-of-Payments Emergency Tariffs (Section 122) 🚨 (Less Likely, But Possible)

🔹 Why? If the U.S. trade deficit worsens significantly, Trump could justify temporary tariffs (15% for 150 days).
🔹 Example: This has rarely been used, but if the deficit with China or Mexico surges, Trump could try.

How China Exploits Trade Loopholes & Why Tariffs Are Necessary

🔹 De Minimis Loopholes: Chinese exporters use this rule to ship cheap goods directly to U.S. consumers, avoiding tariffs.
🔹 USMCA Workarounds: Chinese companies set up in Mexico and Canada to qualify for tariff-free trade.
🔹 WTO Rules Limit U.S. Actions: The WTO has ruled against previous tariffs, favoring China’s trade manipulations.

Preemptively Countering Arguments Against Tariffs

🔹 “Tariffs Hurt Consumers” – Not Always True: Strategic tariffs have helped rebuild U.S. industries like steel, aluminum, and semiconductors.
🔹 “China Will Retaliate” – They Already Are: China uses economic coercion (e.g., rare earth mineral restrictions) regardless of U.S. tariffs.
🔹 “Tariffs Raise Prices” – Only If Done Wrong: Targeted tariffs protect industries and jobs without broad inflationary impact.

Final Strategy: Combining These for Maximum Effect

Trump could layer multiple justifications:
✅ Day One: Invoke Section 301 to expand tariffs on China’s EVs, chips, and solar tech.
✅ First 90 Days: Launch new Section 232 & 201 reviews on EVs, semiconductors, and steel.
✅ Long-Term: Use IEEPA for emergency tariffs if China manipulates the market.

Conclusion: Why Tariffs A Must Until Trade Deals Are Renegotiated

• China is exploiting trade loopholes (USMCA, WTO rules) to flood markets with subsidized products.

• Tariffs are the only immediate tool available to prevent American job losses.

• Congressional approval is NOT required for these actions—Trump can act alone.

Canada would suffer far more in a trade war with the U.S. Here’s a breakdown of why:

1. Canada's Overreliance on U.S. Trade

• 77% of Canada's exports go to the U.S., compared to just 18% of U.S. exports going to Canada.

• That means Canada is far more dependent on the U.S. market than the other way around.

• A trade war would likely devastate Canadian industries reliant on U.S. demand, particularly oil, autos, and manufacturing.

2. GDP Impact

• Exports to the U.S. account for 19% of Canada's GDP, whereas exports to Canada make up only about 2% of U.S. GDP.

• Any major disruption in trade would shrink Canada’s economy significantly, while the U.S. would barely feel the impact.

3. Key Export Vulnerabilities

• Crude Petroleum ($107B): The biggest Canadian export is oil, and the U.S. is the primary buyer. If the U.S. imposed tariffs or shifted sourcing (even partially), it would crush Canadian energy revenues.

• Automobiles & Parts ($37.4B + $13.7B U.S. parts imports): The cross-border auto supply chain is deeply integrated. Any disruption would drive up costs for Canadian automakers and erode competitiveness.

4. U.S. Has More Market Options

• The U.S. has a broader range of trading partners. While Canada’s second-largest trade partner (China) accounts for just $31.1B, the U.S. can divert trade to Europe, Mexico, or Asia far more easily.

Conclusion: Canada Cannot Win a Trade War

If a trade conflict escalates, Canada will face:

• GDP contraction

• Job losses in key industries

• A potential collapse in oil and auto exports

Meanwhile, the U.S. could shift supply chains elsewhere with minimal disruption. The imbalance is clear—Canada simply cannot afford a trade war with the U.S.