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美国宣布国家紧急状态加征关税的可能性有多大?

What is the likelihood of the USA declaring a national emergency and imposing tariffs?

wallstreetcn ·  Jan 14 06:29

CITIC SEC believes that Trump may threaten other countries by declaring a national emergency to push the USA towards achieving its political goals, but the probability of this initiative being implemented is relatively low.

However, after Trump took office, the tariff policy has indeed become the most significant tail risk this year. If Trump ultimately implements tariffs by declaring a national emergency, it will cause severe volatility in the Global financial markets.

In early 2025, CNN reported that Trump is considering invoking the IEEPA to declare a national economic emergency to impose tariffs. Besides wartime, only President Nixon imposed tariffs while declaring a national emergency in 1971 when ending the dollar's gold standard.

During Trump's previous term, he threatened to declare a national emergency to impose tariffs on Mexico to address the immigration issue, but in the end, Mexico and the USA reached an agreement, and Trump's threat did not materialize.

CITIC SEC believes that Trump may threaten Other countries by declaring a national emergency during his second term to push the USA to achieve its political goals, but the probability of this happening is relatively low.

In early January 2025, CNN reported that Trump's consideration of declaring a national emergency and imposing tariffs on other countries raised market concerns.

On January 8, American media reported that Trump might invoke the International Economic Emergency Powers Act (IEEPA) to declare a national economic emergency to impose tariffs on Other countries.

IEEPA authorizes the President to take urgent measures, including Trade and economic sanctions, when facing special threats that originate partially or entirely from Overseas.

What is the difference between imposing tariffs based on trade investigation results and imposing tariffs after declaring a national emergency?

Both situations are based on USA legal provisions, where the USA Congress has delegated tax legislation authority to the USA President. However, there are differences in the implementation efficiency between tariffs imposed based on trade investigation results and tariffs imposed after declaring a national emergency.

Imposing tariffs based on trade investigation results requires an investigation and the tariffs are imposed after the investigation results are disclosed, while after the USA President declares a national emergency, the President has the power to immediately implement the tariffs without the need for congressional approval, and there is theoretically no limit on the commodities subjected to tariffs.

Historically, there have been many instances of tariffs being imposed based on trade investigations, whereas tariffs imposed after declaring a national emergency are relatively rare in peacetime.

What does it mean if Trump declares a national emergency?

The Congress itself possesses tax legislative authority granted by the Constitution. Since 1933, following President Roosevelt, the USA President has had the authority to declare a national emergency under the 1917 Trading with the Enemy Act ("TWEA"), which does not require congressional approval. After declaring a national emergency, the USA President has rights related to trade, economic sanctions, etc., to respond to foreign hostile forces, such as prohibiting trade with hostile countries, freezing assets of hostile countries, adjusting tariffs, restricting financial transactions, and imposing limitations on personnel and communication information.

To clarify and limit the powers of the President when declaring a national emergency, the USA Congress passed the International Emergency Economic Powers Act (IEEPA) in 1977.

Compared to TWEA, IEEPA places certain limitations on presidential power, including the requirement that once the President invokes IEEPA to declare a national emergency, the President must immediately submit a situation report to Congress, and the President should report at least once within every six-month interval of exercising powers based on IEEPA.

Since 1977, successive presidents of the USA have begun to restrict related international Trade, freeze Assets, and implement financial sanctions based on the IEEPA. However, there has never been a situation where a national emergency was declared under the IEEPA that resulted in the imposition of tariffs (there had been cases prior where a president of the USA declared a national emergency under the TWEA and then imposed tariffs).

In peacetime, only President Nixon imposed tariffs upon declaring a national emergency when he ended the gold standard for the dollar in 1971.

In 1971, President Nixon declared a national emergency under the Trading with the Enemy Act (TWEA) and implemented several economic measures such as tariff adjustments to address the severe economic situation in the USA after ending the dollar's gold standard.

In the late 1960s and early 1970s, the USA faced a huge budget deficit and increased pressure on Gold reserves.

In August 1971, President Nixon declared a national economic emergency, suspended the convertibility of dollars to Gold, ended the Bretton Woods system, and imposed a 10% tariff on imported products to address the expanding trade deficit and the pressure on the dollar caused by the collapse of the Bretton Woods system.

During his previous term, Trump also declared a national emergency multiple times and implemented measures concerning national security and public health.

For example:

1) Continuing the emergency declared by the Obama administration in 2015 due to the threat posed by the situation in Venezuela.

On August 6, 2018, an emergency was declared based on IEEPA and other laws, implementing economic sanctions against Iran.

On September 12, 2018, an emergency was declared in response to foreign interference in the US elections, granting the government sanctioning power.

On February 15, 2019, an emergency was declared at the southern border, reallocating funds to construct a barrier.

In March 2020, an emergency was declared due to the COVID-19 pandemic, releasing funds and resources to local governments.

During his previous term, Trump did not practically declare national emergencies under IEEPA to impose tariffs, but he threatened Mexico with these measures to push for a solution to the issue of illegal immigration.

During his first term, Trump threatened to declare a national emergency under the International Emergency Economic Powers Act, planning to impose an additional 5% tariff on all imports from Mexico starting June 10, 2019, to address the issue of illegal immigration.

He warned that if Mexico did not take action, the tariff would gradually increase to 25%. This threat prompted a swift response from the Mexican government, and ultimately both sides reached an agreement, with Mexico agreeing to take strong measures to stop illegal immigration, resulting in Trump's tariff plan being suspended indefinitely.

CITIC SEC believes that Trump may use the declaration of a national emergency to threaten other countries to promote the USA's political goals, but the likelihood of this happening is relatively low.

Specifically, CITIC SEC believes that the probability of the USA effectively declaring a national emergency and implementing immigration-related measures is relatively high (similar to the previous term when Trump used this to obtain funding for a wall).

However, apart from wartime, the situation of directly imposing tariffs under a national emergency declaration has only occurred once in 1971 (when the dollar was decoupled from Gold). This institution believes that the probability of directly imposing tariffs under a national emergency is low, and it is more likely that the USA president will use this as a threat, employing it as a trade negotiation tool.

However, since Trump took office, tariff policy has indeed become the most significant tail risk this year. If the USA president ultimately imposes tariffs by effectively declaring a national emergency, it will cause severe fluctuations in the Global financial markets.

Risk factors:

Since Trump took office, his policy tendencies have exceeded expectations; the USA's hawkish stance towards China has exceeded expectations; and the risks of Trade frictions between the USA and Other countries have also exceeded expectations.

Authors of this article: Mingming S1010517100001, Zhou Chenghua, Wang Nanxian, Source: CITIC SEC Research, Original title: "Debt Market Enlightenment | How Likely is the USA to Announce a National Security Emergency and Impose Tariffs?"

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