Written on: January 1, 2025 by Nicholas Georges
Happy New Year from the Household & Commercial Products Association (HCPA). As 2025 begins, so do the terms for returning and newly elected Congress members, as well as the start of a second Trump Administration. We can expect many changes at both the Federal and State levels that will impact Industry. One area where we know this will be the case is trade, which will likely be dominated by tariffs.
On the campaign trail leading up to his election, President-elect Trump promised to impose significant tariffs on imports. He stated, on more than one occasion, that he wants to reshape global trade through tariffs, including as much as 60% on imports from China and 10–20% on all other foreign [non-U.S.] products.i Trump said this arrangement would favor domestic manufacturing and increase government revenue. As I write this column at the end of November 2024, he has already announced a 25% tariff on goods from Canada and Mexico and a 10% tariff on Chinese goods, effective when he takes office.ii Obviously, the specific details are unknown and will likely change as the impacted countries respond and/or negotiate, but it still creates uncertainty in the marketplace.
Recall that, in 2018, the first Trump Administration imposed tariffs on steel and aluminum at 25% and 10%, respectively, under Section 232 of the Trade Expansion Act of 1962. Section 232 authorizes the President to adjust the import of goods through tariffs from countries if the goods are deemed a threat to national security.
The Trump Administration also imposed tariffs against China under Section 301 of the Trade Act of 1974, one of the principal means by which the U.S. enforces its trading rights and addresses unfair practices by its trading partners. You may remember that these tariffs were not well received by other governments, who retaliated by imposing their own tariffs on U.S. goods.
The media has discussed at length the impact that tariffs will have on U.S. consumers; however, their impact on U.S. businesses—especially those such as the aerosol industry that rely on imported materials such as steel and aluminum—isn’t discussed to the same extent. According to economists Aaron Flaaen and Justin Pierce,iii using tariffs as a tool for protecting and promoting domestic manufacturing is complicated by globally interconnected supply chains. Tariffs can reduce competitiveness due to retaliation and higher costs in downstream industries.
We don’t know for certain which laws and authorities President-elect Trump will employ during his second administration, but we can speculate that they will be similar to his first term in the White House. It’s likely that any additional tariffs imposed on China will continue to occur through the authority granted under Section 301. For other countries, the Trump Administration may continue to utilize Section 232, but could also use Section 338 of the Tariff Act of 1930, which allows the President to impose tariffs of up to 50% of a product’s value when a President finds that a foreign country has either discriminated against or imposed unreasonable charges on U.S. commerce. There’s also the International Emergency Economic Powers Act (IEEPA), which grants the President authority to deal with any unusual and extraordinary threat (in this case, through a tariff), including national security and the U.S. economy, if the President declares a national emergency with respect to the threat.
Regardless of the avenue pursued, the U.S. should expect retaliation from other countries if Trump moves forward with new and/or additional tariffs in his second term. Consumers aren’t the only stakeholder burdened by tariffs. Like many industries, the aerosol industry doesn’t exist in a domestic vacuum where the impact of tariffs won’t be felt.
Should we see activity related to tariffs in 2025, HCPA will be working with allied trade associations and coalitions to advocate on behalf of the industry and educate policymakers about the negative impact that tariffs could have on business. If you have any questions or would like to be involved, please contact me at ngeorges@thehcpa.org. SPRAY
i Washington Post, November 8, 2024
ii Washington Post, November 26, 2024
iii Flaaen, Aaron, and Justin Pierce (2019). “Disentangling the Effects of the 2018–2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Finance & Economics Discussion Series 2019-086. Washington: Board of Governors of the Federal Reserve System, link.
