US Considering 'State of Emergency' Declaration... Trump Takes Action to Fulfill Pledges

Considering Declaration of 'National Economic Emergency' for Universal Tariff Implementation

Trade Act Takes Time for Investigating Unfair Practices and Discrimination

Invoked Once During 'Nixon Shock'... Pressured Dollar Devaluation with Tariffs

CNN reported on the 8th that President-elect Donald Trump is considering declaring a 'National Economic Emergency' to implement a universal tariff policy.

CNN, citing four officials, reported that President-elect Trump could implement tariff policies using the 'International Emergency Economic Powers Act (IEEPA).' The IEEPA is a law that grants the president broad authority to control economic activities, including trade with foreign countries, when a national emergency threatening the security, foreign policy, or economy of the United States arises.

The review of the IEEPA was conducted in the process of finding ways to implement the universal tariff policy, which was a campaign pledge of President-elect Trump.

As a means to impose tariffs, Section 301 of the Trade Act, which was used as a weapon in the trade war with China during Trump's first administration, was first mentioned. Section 301 of the Trade Act stipulates that tariffs can be introduced if it is determined that the counterpart country is engaging in unfair trade practices such as providing subsidies. President Joe Biden also used this law to increase tariffs on Chinese electric vehicles, batteries, semiconductors, and solar panels. However, applying this law takes several months due to the need for public opinion collection and hearings to prove unfair trade practices.

Trade Act Section 338, which allows for the imposition of new or additional tariffs if U.S. products are discriminated against, is also one of the alternatives. However, this also takes several months for investigation.

In contrast, tariff policies through the IEEPA can be realized immediately. Kelly Ann Shaw, a trade lawyer who served as Deputy Director of the White House National Economic Council (NEC) during the Trump administration, stated, "The president has broad authority to impose tariffs for various reasons," and "IEEPA is certainly one of them."

There has been only one instance in U.S. history where a president raised tariffs citing a national emergency. That was during the 'Nixon Shock' in 1971 when former President Richard Nixon declared the abolition of the gold standard (a system where currency value is linked to gold). At that time, President Nixon imposed a 10% universal tariff on foreign products, stating it was a measure to prevent U.S. products from being disadvantaged by unfair exchange rates. Former President Nixon pressured Germany and Japan to devalue the dollar with the tariff card. However, former President Nixon used the Trading with the Enemy Act (TWEA), the predecessor of the IEEPA.

President-elect Trump's team stated, "A final decision has not been made on whether to declare a national emergency."

Reporter Kim In-yeop inside@hankyung.com