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by Bhagat Dhaliwal
On January 26, 2025, the United States prepared to impose a twenty-five percent tariff on all Colombian goods, in retaliation for President Petro refusing to accept two military planes carrying deported Colombians from landing.[1] The tariffs would have potentially impacted Colombian goods such as oil, cut flowers, and coffee; and led President Petro to impose a 50 percent retaliatory tariff on U.S. products.[2] Although Colombia soon agreed to accept the deported Colombians back into their country, this flashpoint incident may require businesses and banks to remain nimble and adaptive during the Trump Administration.
The Administration has justified the use of tariffs to accomplish immigration goals, receive favorable trade terms, and deter the arrival of illegal drugs into the US.[3] Under Section 232 of the Trade Expansion Act, the rationale of “national security” justified trade barriers on imports of aluminum and steel by the current Administration previously.[4] Section 232 of the Trade Expansion Act has been construed by the Supreme Court to provide the President with the ability to act as “he deems necessary to adjust the imports of (the) article and its derivatives so that … imports (of the article) will not threaten to impair the national security.”[5] A precondition to the President acting as “he deems necessary,” is the requirement that the Secretary of the Treasury articulate that an “article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.”[6] Section 232 has also been considered a proper delegation of authority of Constitutional authority by Congress to the President; and because the President is not an agency, the Office is not obligated to follow the Administrative Procedure Act.[7] The consequence of not being beholden to the Administrative Procedure Act has allowed the President to not be “subject to review for rationality, finding of fact, or abuse of discretion.”[8]
The power delegated to the President by Section 232, may require businesses and banks to remain nimble and adaptive in an ever-unpredictable Administration.[9] As the President’s ability to bypass the Administrative Procedure Act three-step procedure for “notice and comment rulemaking” – which requires issuing a general notice of proposed rulemaking, allowing interested persons an opportunity to participate in the rulemaking, and including in the final rule a “concise general statement of its basis and purpose,” creates the potential of increased conflicts that replicate the recent Colombia-U.S. flashpoint.[10] The impact of such an escalation has already led banks like JPMorgan to create war rooms to keep up with President Trump’s “around the clock” signing of executive orders.[11] The goal of these war rooms is to analyze the impacts of any policy proposal on businesses, clients, and communities in which banks operate.[12] However, even with these war rooms, a rapid escalation in retaliatory tariffs may be hard for businesses to manage logistically and consumers to manage rising costs.[13] As companies such as Temu, Shein, and Alibaba began stockpiling large reserves of goods before the Administration’s proposed tariffs on specific countries matured.[14] Ernst & Young LLP, has advised businesses to strategically plan to mitigate the threat of additional tariffs and has proposed businesses consider importing products from affected countries before January 20, 2025, analyze potential duty impacts, and evaluate alternative sourcing options.[15] Yet, even if businesses take anticipatory steps, the threat of rapid overnight economic punishments on countries, seen not in line with the Administration’s agenda, may lead businesses scrambling to stockpile goods or find alternative sourcing options crucial for their bottom line.[16]
[1] See Gil Guerra, Colombia, Tariffs, and Deportation Flights, Explained, The Dispatch (Jan. 29, 2025), https://thedispatch.com/article/colombia-trump-tariffs-deportation-flights-explained/.
[2] See id.; Shawn Donnan, Derek Wallbank & Eric Martin, Trump Holds Off on Colombia Tariffs After Migrant Deal (3), Bloomberg L. (Jan. 27, 2025, 10:58 AM), https://www.bloomberglaw.com/bloomberglawnews/immigration/X87JS434000000?bna_news_filter=immigration#jcite.
[3] See Presidential Actions: America First Trade Policy, White House (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/america-first-trade-policy/.
[4] See Jacob Ely, The “National Security” of Nations: President Trump’s Pretextual Tariff Rationale and How to Overcome It, 3 Int’l Comp. Pol’y & Ethics L. Rev. 241, 242 (Fall 2019).
[5] See Fed. Energy Admin. v. Algonquin SNG Inc., 426 U.S. 548, 548 (1976).
[6] See id.
[7] See Am. Inst. For Int’l Steel, Inc. v. United States, 376 F. Supp. 3d 1335, 1341-42 (CIT 2019).
[8] See id. at 1341.
[9] See id.; Guerra, supra note 1.
[10] See Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 96 (2015); see also Eli Stokols, Dough Palmer, Myah Ward & Phelim Kine, Trump Got What He Wanted with Colombia. But His Tactics Could Come Back to Bite Him, Politico (Jan. 28, 2025, 5:00 AM), https://www.politico.com/news/2025/01/28/trump-colombia-trade-tariffs-007093 (finding President Trump is unafraid to raise tension with key US allies).
[11] See Chloe Berger, Trump is Signing Dozens of Executive Orders – and JPMorgan Has Started a War Room as Corporate America Struggles to Keep up, Fortune (Jan. 22, 2025), https://fortune.com/2025/01/22/trump-executive-orders-corporate-america-struggles-to-keep-up-jpmorgan-war-room/.
[12] See id.
[13] See Paul Wiseman, US Businesses Brace for Trump’s Tariffs on Canada, Mexico and China to Drive up Costs, AP News (Feb. 2, 2025), https://apnews.com/article/trump-tariffs-china-mexico-canada-inflation-economy-69bd5b4f66eeef3e0e803e0595888f23.
[14] Bruce Crumley, U.S. Businesses Work to Limit Costs of Looming Trump Tariffs, Inc. (Nov. 11, 2024), https://www.inc.com/bruce-crumley/u-s-businesses-work-to-limit-costs-of-looming-trump-tariffs/91017053.
[15] See Carolyn Wright, United States President-elect Discusses Tariffs on Canada and Mexico, and Additional Tariffs on China, EY (Nov. 27, 2024), https://globaltaxnews.ey.com/news/2024-2169-united-states-president-elect-discusses-tariffs-on-canada-and-mexico-and-additional-tariffs-on-china.
[16] See Ben Werschkul, Markets (and the World) on Edge as Trump’s Tariff Deadline Approaches, Yahoo Fin. (Jan. 31, 2025), https://finance.yahoo.com/news/markets-and-the-world-on-edge-as-trumps-tariff-deadline-approaches-201455496.html.
