Maintenance Mindset: What’s next for Trump’s tariffs, and how quickly will manufacturers feel the effects?

Welcome to Maintenance Mindset, our editors’ takes on things going on in the worlds of manufacturing and asset management that deserve some extra attention. This will appear regularly in the Member’s Only section of the site.

As President Trump took office, all manufacturing eyes were on tariffs. The president has long been an open critic of low-tariff policies and has made many tariff promises on the campaign trail. Presidential authority over tariffs, as I learned this week, isn’t always as easy as an executive order, but still one of the more powerful and speedy executive actions.

Last week, my colleague Tom Wilk addressed what Trump had said so far regarding new U.S. tariffs and a look at how U.S. manufacturers were preparing. At a press conference post-inauguration, following the signing of many executive orders (which did not include any tariff hikes), the president said to expect tariffs on February 1, which is just a few days away. 

This statement got me wondering about the process for enacting new tariffs, how long it takes and what we can expect from the process. I think I’ve yet to emerge completely from researching a maze of regulations and the impacts of tariffs, but I hope today to give you some background to help you understand what’s next for possible tariffs.

The implications are huge for manufacturing. Industries that are deeply integrated into the global supply chain, like automotive, heavy machinery and electronics, are vulnerable to tariff increases. Metals and minerals industries are also vulnerable and were a specific target of previous Trump tariffs. This means emerging energy transition industries like battery production and U.S. defense contractors are eagerly anticipating the next move on tariffs.

Tariffs also can have real shop floor implications for component/replacement part inventory or raw material planning. Uncertainty is often the most dangerous road for businesses, so let’s try to get a handle on tariffs. And don’t forget about the side of the tariff game that is about using them as a means to another end – a simple threat to get what you want, and one that often works.

It’s a big issue with countless contributing factors, so where do we start? Let’s start at the beginning.

Presidential authorization on global tariffs

Tariffs aren’t actually an authority of the executive branch, but rather, the president is authorized by Congress to make tariff adjustments under different laws. Tariffs were historically a major source of revenue for many countries, but that’s generally not the case today. According to a Congressional Research Service report, “U.S. Tariff Policy: Overview,” (December 2024), “Tariffs are now typically used selectively to protect certain domestic industries, advance foreign policy goals, or as negotiating leverage in trade negotiations.” 

The U.S. Constitution gives Congress the right to set import tariffs, which it did until the 1930s. During the Great Depression, global tariff rates increased, and U.S. exports decreased. Congress responded by giving the President negotiation power over trade agreements and the power to proclaim tariff reductions up to a pre-set boundary, without congressional action or approval. The hope was that more flexibility would help the president revitalize global trade. 

After World War II and the establishment of the multinational General Agreement on Tariffs and Trade (GATT), which later integrated with other agreements establishing the World Trade Organization (WTO), global tariff rates generally declined in response to the ways that the open market established its own rules to reduce trade barriers and prevent trade wars. Over the past 70 years, tariffs have accounted for only around 2% total U.S. federal revenue. Duties paid on U.S. imports doubled from FY2015 to FY2020 from approximately $37 billion to $74 billion. The Biden Administration has maintained many of those policies with CBP collecting $77 billion in FY2024.

According to the Congressional Research Service report: “Because tariffs are no longer a major element of domestic tax policy, they have instead become an instrument of U.S. foreign policy and trade promotion.”

How does the president enact a new tariff?

The process for enacting tariffs typically doesn’t happen overnight. Quarles, a law firm that represents companies in technology, energy, financial services, manufacturing, pharmaceuticals and more, outlined the process for enacting tariffs and what measures there are to challenge it. 

First, the president typically issues a proclamation to announce the new tariffs. Then, the U.S. Trade Representative will publish a notice in the Federal Register, outlining the reasons for the tariffs. Once tariffs are enacted, Customs and Border Protection (CBP) enforces them at U.S. borders.

Most tariff actions also require a public comment period, where businesses and other stakeholders can express their concerns about the tariffs’ impacts. Often this results in exemptions or reduced tariffs for specific products or industries. Companies and industries often hire government relations firms to lobby policy on their behalf, or businesses and associations can be active in the process of drafting language for this type of proposed legislation. They can also challenge tariffs in U.S. courts. The Court of International Trade handles international trade disputes. Internationally, businesses or countries can bring cases before the WTO. Congress can also challenge tariff decisions made by the president by passing legislation to overturn them. 

In time of war, emergency or threats to national security, Congress also has authorized the president to adjust tariff rates in response to U.S. foreign policy and national security interests, under laws such as:

• The Trade Expansion Act of 1962 empowers the President to adjust tariffs on imports that threaten to impair U.S. national security.
• The Trading with the Enemy Act of 1917 and the International Emergency Economic Powers Act (IEEPA) of 1977 empower the President in a time of war or emergency to impose tariffs on imports.
• The Trade Act of 1974 empowers the President to raise tariff rates temporarily when the U.S. International Trade Commission (ITC) determines that a sudden import surge has caused or threatened serious injury to a U.S. industry.

In order to use his authority to adjust tariffs for national security, emergency or war, President Trump will need to make a legal case, starting with an investigation by the U.S. Department of Commerce. The president has experience doing this, as the increased tariffs on steel and aluminum were done during the first administration, under the authority of the Trade Expansion Act of 1962. And though the president’s first day onslaught of executive orders did not include any upfront tariff hikes, he did sign a memorandum on January 20, called America First Trade Policy, which essentially outlined the investigations needed to make the case for emergency tariffs and much more. 

The Brookings Institution, a nonprofit, nonpartisan research organization, recently said that the executive branch’s wide menu of tariff options has more power and less checks and balances than any other executive branch action, and “Unlike most federal regulations, tariffs avoid almost all the legislated guardrails, administrative procedures, and judicial reviews that apply to other executive regulations.” Again, this is at the delegation of Congress. Tariffs aren’t generally implemented overnight, but can be fast tracked, by Washington standards.

This research suggests that the quickest road to new tariffs is via the IEEPA Act of 1977, which can address unusual and extraordinary threats to national security, foreign policy or the economy. Tariffs implemented under IEEPA bypass departmental reports, reviews and public notice-and-comment periods.

The uncertainty about what will happen can be the most challenging part for manufacturers, says Rosemary Coates, executive director of the Reshoring Institute, president, Blue Sillk Consulting, and a guest that Tom Wilk welcomes to the Plant Services podcast episode this week.

“Predictability is what all businesses hope for, right? An unpredictable environment is very difficult to manage,” Coates says. She says a lot of companies have tried to source product early, and there was a huge jump in port traffic over the last few months.

I hope this article provided some direction on how tariffs are enacted and what to look for next. It is murky waters. I’m still deep in the rabbit hole looking for answers to exactly what the Trump administration did last time around with tariffs and what it could mean for the manufacturing industries at risk.