Trump’s Two-Step Tariff Plan

  • Emergency Tariffs First: Trump is considering using rarely invoked emergency powers to impose immediate tariffs while conducting formal investigations into trading partners.

  • Legal Framework: His team is exploring Section 301 investigations, the International Emergency Economic Powers Act, and Section 338 of the 1930 Tariff Act to implement tariffs of up to 50% on certain imports.

  • Potential Car Tariffs: Trump may impose tariffs on vehicle imports as early as April 2, using a previous national security study on the global car industry.

  • Alternative Short-Term Option: Section 122 of the Trade Act of 1974 could allow temporary tariffs capped at 15% for 150 days, but this option seems unlikely.

Purpose & Revenue Focus

  • While Trump frames tariffs as a response to unfair trade practices, his officials are primarily focused on using them to generate revenue for tax cuts rather than for trade negotiations.

  • The administration is racing to find a legal basis that allows tariffs to be applied swiftly and broadly.

International Response & Concessions

  • Foreign governments are scrambling to secure exemptions before the April 2 deadline.

  • The UK is considering reducing taxes on US tech companies to appease Washington.

  • EU trade commissioner Maroš Šefčovič is set to meet with Lutnick and Greer for last-minute negotiations.

Next Steps

  • Trump plans to officially announce tariffs on April 2, calling it “Liberation Day.”

  • Any tariffs introduced will be an evolution of his universal tariff plan from his first presidential campaign.

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Source: Forex Live