Tariffs will raise prices; USAID cannot be legally shut down by the President
President Trump is enacting blanket tariffs on Canada, Mexico, and China. In the case of Canada, he appears to be acting beyond his legal authority. Law bars Trump from shuttering USAID.
Today, there are concerning signs about the state of US international relations. President Trump says he will enact blanket 25% tariffs on all goods imported from Canada and Mexico, and 10% tariffs on all goods from China. There are also concerns about the future of US development assistance to more than 100 countries.
Efforts to dissolve USAID are illegal
At this writing, the website for USAID, the US Agency for International Development, has gone dark. There is no official statement yet indicating what this means, exactly, but reports suggest President Trump is attempting to enact a plan to dissolve USAID and fold some of its responsibilities into the Department of State.
Just Security has a detailed legal analysis outlining why this would be an illegal executive action. According to Just Security:
Congress established USAID as its own agency and asserted its role in transfers of functions between USAID and State. It authorized the president to abolish or reorganize USAID for a moment in time, in accordance with the plan it authorized the then-president to provide in 1998. That reorganization occurred, with USAID’s independence retained. And there is no additional authority granted by Congress to the president to abolish USAID as an agency.
The new administration already attempted to freeze all foreign aid. There is widespread confusion about whether Trump has legal authority to freeze foreign aid. His defenders claim that as President he has sole authority over all aspects of the exective branch, including all staff positions, all expenditures of any kind, and what agencies should and should not exist.
The President does not have such authority. First of all, Congress controls federal spending, not the Executive branch. It is the responsibility of the President to oversee administration of appropriated funds in the manner Congress has determined appropriate. The move to freeze all foreign aid already approved in line with Congressional action is illegal.
It is also dangerous. ProPublica is reporting:
On Friday morning, the staffers at a half dozen U.S.-funded medical facilities in Sudan who care for severely malnourished children had a choice to make: Defy President Donald Trump’s order to immediately stop their operations or let up to 100 babies and toddlers die.
They chose the children.
This is one example of lives on the line, right now. Beyond this example, US-funded humanitarian aid, food assistance, health aid, and pandemic detection and prevention, all play a role in saving lives, supporting stability, and preventing famine, conflict, and threats to public health.
The big questions on USAID, at this moment:
Is Trump trying to dissolve the agency illegally?
Which branch of government—Executive, Legislative, or Judiciary—will act to ensure that does not happen?
How many lives, humanitarian efforts, and nation-states will be at risk if he blocks aid?
Will personnel management staff in the federal government defend USAID staff in their obligation to keep working?
Tariffs on 3 biggest US trading partners put US economy at risk
All mentions of taxation in the Constitution are in Article I, which empowers Congress. This includes “duties” that would be applied to imports. The President’s authority to impose tariffs has been delegated by Congress for specific circumstances only—to address urgent national security threats or other kinds of emergency.
Mr. Trump says he will impose blanket 25% tariffs on Canada and Mexico, the two most important trading partners of the US and both close allies. The lower 10% rate he says he will impose on China is odd, given his rhetoric, but revealing. It shows he is aware of the potential harm the China tariff could pose to some of his close allies, like Elon Musk, and that he is aware tariffs will likely raise prices and could slow the economy.
The American Enterprise Institute projects Trump’s tariffs on Mexico will likely increase the number of undocumented immigrants coming to the United States. Their analysis finds:
Selling your labor in the US becomes more attractive, as the value of your wages, remittances, and saving in the currency of your home country increases. That, in turn, makes migrating to the US, legally or illegally, more attractive.
Blanket tariffs are a very blunt instrument, and they will almost certaintly provoke retaliatory tariffs. Such a “trade war” will likely increase prices across the US economy, especially considering both Canada and Mexico provide energy, minerals, agricultural products, and manufactured goods that stabilize or reduce prices for Americans.
As Markus Wagner writes in The Conversation:
One of the hardest hit industries will be the automotive industry, which depends on cross-border trade. A car assembled in Canada, Mexico or the US relies heavily on a supply of parts from throughout North America.
Cars have already increased in price dramatically since before the pandemic. Further surges in vehicle pricing will undermine household budgets, local consumption, and the profitability or even viability of small businesses. These tariffs are also far higher than during his first term, and they come on top of several years of high inflation. The economic disruption should be expected to be very serious.
The Center for Strategic and International Studies warns tariffs on Canada will undermine US security in minerals and related industries, finding:
Any tariffs with Canada on minerals would have heavy consequences on defense, nuclear energy, and heavy manufacturing. Canada is a critical ally in the United States’ efforts to reduce reliance on China for critical minerals—both for feedstock and midstream processing.
The tariffs are expected to raise prices for Americans, reducing both real wages and overall consumer confidence. The tax on Americans could be $350 billion or more this year alone. The withdrawal of aid—including legally authorized aid contracted for delivery—could undermine US diplomatic standing and geostrategic interests, making all negotiations, including around security and intelligence, more difficult.
UPDATE—Sun, Feb 2, 2025
Two top security officials at USAID on leave
The AP is reporting:
The Trump administration has placed two top security chiefs at the U.S. Agency for International Development on leaveafter they refused to turn over classified material in restricted areas to Elon Musk’s government-inspection teams…
The reporting also notes Department of Government Efficiency (DOGE) operatives did eventually gain access to the classified materials, despite not having sufficient security clearance. The two officials put on leave were required by law not to grant access to anyone without formal clearance to view classified materials.