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INSIGHTi
Escalating U.S. Tariffs: Affected Trade
Updated June 5, 2019
The trade practices of U.S. trading partners and the U.S. trade deficit are a focus of the Trump
Administration. Citing these and other concerns, the President has imposed tariff increases under three
U.S. laws:
(1) Section 201 of the Trade Act of 1974 on U.S. imports of washing machines and solar
products;
(2) Section 232 of the Trade Expansion Act of 1962 on U.S. imports of steel and
aluminum, and potentially motor vehicles and parts, uranium, and titanium sponge; and
(3) Section 301 of the Trade Act of 1974 on U.S. imports from China.
Most recently, in response to concerns over immigration, the President has also proposed an additional
5% tariff on imports from Mexico under the International Emergency Economic Powers Act (IEEPA), set
to take effect June 10, 2019, and increase by 5% monthly up to 25%. For a timeline of recent actions, see
CRS Insight IN10943, Escalating Tariffs: Timeline. The Administration has stated that it is using existing
and proposed tariffs for a range of purposes, including as leverage for broader trade negotiations with
affected trading partners, such as Japan and the European Union (EU), and, as noted, to influence
Mexico’s immigration policies.
The multiple tariff increases applied to date, ranging from 10% to 45%, affect approximately 10%
($267.5 billion) of U.S. annual imports (Figure 1). While the Administration has taken some steps to
reduce the scale of imports affected by the tariffs (i.e., by exempting Canada and Mexico from the steel
and aluminum duties and creating processes by which certain products may be excluded), the general
trend is an escalation of tariff actions. The Administration recently increased tariffs from 10% to 25% on
approximately $200 billion of U.S. imports from China. It also proposed a 25% tariff on nearly all
remaining imports from China, in addition to the newly proposed 5% to 25% tariffs on imports from
Mexico. In addition, President Trump declared U.S. motor vehicle imports a national security threat,
particularly from the EU and Japan, granting him authority to impose tariff increases on such imports. In
total, these actions would potentially affect over $1 trillion of U.S. imports, or 40% of the annual total.
While tariffs may benefit a limited number of import-competing firms, they also increase costs for
downstream users of imported products (e.g., Ford estimates the metal tariffs cost the firm nearly $1
billion) and consumers (e.g., research by economists from the New York Federal Reserve estimates the
tariffs in effect in 2018 cost the average household $414, which could grow to $831 with the recent 15%
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increase on Chinese imports), and may have broader negative effects on the U.S. economy, as well as
several policy implications.
Figure 1. Trump Administration Tariffs and Affected Trade
Source: CRS calculations with data from U.S. Census Bureau sourced through Global Trade Atlas.
Notes: Based on annual 2018 import values. Excludes exempted countries. Motor vehicle and parts import figure includes
only U.S. imports from the European Union and Japan, which were the focus of the President’s proclamation declaring
motor vehicle imports a national security threat. Tariff-rate quotas (TRQs) are a form of import restriction in which one
tariff applies up to a specific quantity or value of imports and a higher tariff applies above that threshold.
As tariffs act as a tax on foreign-produced goods, they distort price signals, potentially leading to less
efficient consumption and production patterns, which may ultimately reduce U.S. and global economic
growth rates. As of May 29, 2019, the United States collected $25.5 billion from the additional taxes paid
by U.S. importers, according to U.S. Customs and Border Protection. Increasing tariffs also create a
general environment of economic uncertainty, potentially dampening business investment and creating a
further drag on growth. Economic estimates of the tariff effects vary, depending on modeling assumptions
and the specific set of tariffs considered. Most studies, however, predict declines in GDP growth: the
Congressional Budget Office estimated that the tariffs in effect as of December 4, 2018 would lower U.S.
GDP on average through 2029 by roughly 0.1 percentage point below a baseline without the tariffs; more
recently, the OECD estimated that proposed increases on tariffs from China could further reduce U.S.
growth by nearly 0.9 percentage points, including negative effects on investment.
Retaliation amplifies the potential effects of the U.S. tariff measures. Retaliatory tariffs in effect cover
approximately $91.8 billion of U.S. annual exports, based on 2018 export data (Table 1). Retaliatory
tariffs broaden the scope of U.S. industries potentially harmed, targeting those reliant on export markets
and sensitive to price fluctuations, such as agricultural commodities. Some U.S. manufacturers have
announced plans to shift production to other countries in order to avoid the tariffs on U.S. exports. Lost
market access resulting from the retaliatory tariffs may compound concerns raised by many U.S.
exporters that the United States increasingly faces higher tariffs than some competitors in foreign markets
as other countries conclude trade liberalization agreements, such as the recently-enacted EU-Japan FTA
and the TPP-11 agreement, which include major U.S. trade partners, such as Canada, the EU, Japan, and
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Mexico. Adverse effects could grow if a tit-for-tat process of retaliation continues and the scale of trade
affected increases. China’s potential retaliation against another round of U.S. tariffs is limited by the fact
that it has already imposed tariff increases on nearly all its U.S. imports, but it could further increase
tariffs on the products it has already targeted or impose various punitive non-tariff measures on U.S. firms
operating in China.
Table 1. Retaliatory Actions in Effect
U.S. Exports
Additional
Retaliatory Trade Action
(millions, 2018)
Tariff
Effective Date
Section 232
EU
$2,893
10-25%
June 25, 2018
China
$2,522
15-25%
Apr. 2, 2018
Turkey
$1,771
5-60%
June 21, 2018
Russia
$430
25-40%
Aug. 6, 2018
Total
$7,616
Section 301
China—Stage 1
$12,896
25%
July 6, 2018
China—Stage 2
$11,595
25%
Aug. 23, 2018
China—Stage 3
5-10%/ Sept. 24, 2018/
$59,698
5-25%
June 1, 2019
Total
$84,189
Overall Total in Effect
$91,805
Source: CRS calculations based on import data of U.S. trade partner countries sourced from Global Trade Atlas and tariff
details from WTO or government notifications.
Notes: Canada and Mexico withdrew their retaliation after the Trump Administration exempted both countries from the
Section 232 steel and aluminum duties. Russia published its list of retaliatory tariff rates and products on July 6, 2018. The
tariffs appear to have gone into effect within 30 days of publication.
Many Members of Congress, U.S. businesses, interest groups, and trade partners, including major allies,
have weighed in on the President’s actions. While some U.S. stakeholders support the President’s use of
unilateral trade actions, many have raised concerns, including the chairman of the Senate Finance
committee, who stated that the President’s recently proposed tariffs on Mexico are a “misuse of
presidential tariff authority.” Several Members have introduced legislation that would constrain the
President’s authority (e.g., H.R. 723, S. 287, and S. 365), while other Members and the Administration
has advocated for increasing this authority (e.g., H.R. 764). As it debates the Administration’s import
restrictions, Congress may consider the following:
Delegation of Authority. Among these statutes, only Section 201 requires an affirmative
finding by an independent agency (the ITC) before the President may restrict imports.
Section 232 and Section 301 investigations are undertaken by the Administration, giving
the President broad discretion in their use. Are additional congressional checks on such
discretion necessary?
Economic Implications and Escalation. The Administration’s tariffs imposed to date
cover 10% of annual U.S. goods imports; proposed tariffs could potentially increase this
to 40%. Negative effects of the tariffs may be substantial for individual firms reliant
either on imports subject to the U.S. tariffs or exports facing retaliatory measures. The
potential drag on economic growth could be significant if tit-for-tat action escalates.
What are the Administration’s ultimate objectives from the tariff increases and do
potential benefits justify potential costs?
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International Trading System and U.S. Foreign Relations. While the Administration
argues that the imposition of U.S. import restrictions is within its rights under
international trade agreement obligations, including at the World Trade Organization
(WTO), U.S. trade partners disagree and have initiated dispute proceedings, and begun
retaliating. The United States has initiated its own dispute proceedings arguing that
retaliatory countermeasures violate trade agreement obligations. What are the risks to the
international trading system and to broader U.S. foreign policy goals of continued
unilateral action and economic confrontation?
Author Information
Brock R. Williams, Coordinator
Keigh E. Hammond
Specialist in International Trade and Finance
Research Librarian
Wayne M. Morrison
Specialist in Asian Trade and Finance
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
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IN10971 · VERSION 5 · UPDATED