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INSIGHTi
Escalating U.S. Tariffs: Affected Trade
Updated September 6, 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/parts and titanium sponge (the President
decided not to impose tariffs on uranium imports, after an investigation); and
(3) Section 301 of the Trade Act of 1974 on U.S. imports from China.
In May 2019, in response to concerns over immigration, the President also proposed an additional 5%
tariff on imports from Mexico under the International Emergency Economic Powers Act (IEEPA), but
subsequently suspended the proposed tariffs indefinitely citing an agreement reached with Mexico. For a
timeline of recent actions, see CRS Insight IN10943, Escalating U.S. Tariffs: Timeline. The
Administration has stated that it is using existing and proposed tariffs for a range of purposes, including
as leverage for trade negotiations with affected trading partners, such as China, Japan, and the European
Union (EU), and, as noted, to influence Mexico’s immigration policies. While tariffs may benefit a
limited number of import-competing firms, they also increase costs for downstream users of imported
products and consumers and may have broader negative effects on the U.S. economy, as well as several
policy implications.
The multiple tariff increases applied to date, ranging from 10% to 45%, affect approximately 15% of U.S.
annual imports. This amounts to $393.3 billion of imports using 2018 annual data; notably, the tariffs
went into effect at various times in 2018 and 2019 (Figure 1). Section 301 tariffs on U.S. imports from
China account for more than 90% of trade affected by the Administration’s tariff actions. 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.
In the spring and summer of 2019, the Administration implemented and proposed a series of additional
tariff actions, significantly expanding the share of U.S. trade potentially affected. In August, the
Administration announced new Section 301 tariffs of 10% on approximately $300 billion of U.S. imports
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from China. In response, China announced retaliatory measures on approximately $75 billion of U.S.
exports, most of which are additional tariffs on U.S. exports already subject to Chinese retaliation. The
Administration countered by proposing to increase all U.S. Section 301 tariffs by 5%: from 25% to 30%
on the existing approximately $250 billion of imports subject to stage 1-3 tariffs, to take effect on October
1, 2019; and from 10% to 15% on the new stage 4A and 4B tariff lists, effective September 1 and
December 15 (Figure 1). 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. The President also proposed an additional 5% to 25% tariff on all imports from Mexico
(now indefinitely suspended). In total, these actions would potentially affect over $1 trillion of U.S.
imports, or 40% of the annual total.
Figure 1. Trump Administration Tariffs and Affected Trade
Sources: 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 August 29, 2019, the United States collected $35.9 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. Preliminary research, for example, suggests the increase in trade policy
uncertainty may have reduced aggregate U.S. investment by 1% or more in 2018. Estimates of the tariffs’
overall economic 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 July 25, 2019, would lower U.S. GDP by roughly 0.3 percent by
2020 below a baseline without the tariffs; considering also recently proposed actions, the IMF estimated
that the tariffs would reduce global GDP in 2020 by 0.5 percent.
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Retaliation amplifies the potential effects of the U.S. tariff measures. Retaliatory tariffs in effect cover
approximately $97.5 billion of U.S. annual exports, based on 2018 export data (Table 1). This amount is
scheduled to increase to $112.5 billion, if China implements its recently announced plans to impose
additional tariffs on December 15 and to reinstate additional tariffs on U.S. cars and auto parts.
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 Mexico. Adverse effects could grow if a tit-for-tat process of retaliation continues and the
scale of trade affected increases.
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
4-70%
June 21, 2018
Indiaa
$1,427
10-50%
June 16, 2019
Russiab
$430
25-40%
Aug. 6, 2018c
Total Exports Affected by Retaliation
$9,043
Section 301
China—Stage 1c
$12,896
25%
July 6, 2018
China—Stage 2c
$11,595
25%
Aug. 23, 2018
China—Stage 3c,d
5-10%/
Sept. 24, 2018/
$59,698
5-25%
June 1, 2019
China—Stage 4Ae
$25,463
5-10%
Sept. 1, 2019
China—Stage 4Be (proposed)
$41,790
5-10%
Dec. 15, 2019
China—Reinstated Auto Tariffs (proposed)
$11,720
5-25%
Dec. 15, 2019
Total Exports Affected by Retaliationf
$90,967
Total and Proposed Exports Affected by Retaliationf
$106,014
Overall Total Exports Affected by Retaliationg
$97,488
Overall Total and Proposed Exports Affected by Retaliationg
$112,535
Sources: 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.
a. India’s retaliatory tariffs were initially announced at the WTO in June 2018, with tariffs ranging from 10%-50%, but
were repeatedly postponed. India’s latest announcement appears to remove 2 of the 30 products from its initial list
and may affect retaliatory tariff rates.
b. 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.
c. Export calculation excludes auto tariffs suspended until December 15, 2019.
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d. China’s retaliatory tariffs in response to U.S. stage 3 Section 301 tariffs initially ranged from 5-10%. In response to the
Trump Administration’s increase of Section 301 stage 3 tariffs to 25% on May 10, China increase its retaliatory tariffs
on certain products to 20% and 25%.
e. China’s Stage 4 retaliation includes new tariffs on 1,600 products and also increases the tariff rates of nearly 3,450
products that are already subject to retaliatory tariffs.
f.
Total exports adjusted to account for tariff lines affected by multiple stages of China’s retaliation to Section 301
tariffs.
g. Total exports adjusted to account for tariff lines affected by China’s retaliation to both Section 232 and Section 301
tariffs.
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 to the extent they result in a more level playing field for U.S. firms, many have
raised concerns, including the chairman of the Senate Finance committee, who stated that the President’s
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, S. 365, and S.
899), while other Members and the Administration have 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 15% 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?
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
Congressional Research Service
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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
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
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