Bracing for impact: 5 things to watch with Trump's upcoming tariffs

U.S. president-elect Donald Trump, seen speaking at a 2016 campaign rally, is promising actions starting on inauguration day Monday to punish U.S. trading partners. (Carlo Allegri/Reuters)

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Countries around the world are bracing for an economic bruising on Monday. And few have more at stake than Canada.

That's because three-quarters of everything Canada sells into the world, it sells to the United States, and U.S. president-elect Donald Trump is threatening trade penalties the day he takes office.

We do know he's planning 100 executive orders starting on inauguration day, and it's virtually certain they will include trade and border measures.

What we don't know is the scope, the severity and the structure of his promised trade actions. Even Trump's Republican allies on Capitol Hill aren't certain, and public comments suggest the full plan won't be complete Monday.

WATCH | Trump's 25% tariff threat against Canada, Mexico:

Trump threatens 25% tariffs on Canada, Mexico on 1st day in office

2 months ago

Duration2:24

In a post on his Truth Social platform, U.S. president-elect Donald Trump has threatened to impose a 25 per cent tariff on all goods from Canada and Mexico until both countries stop what he called the ‘invasion’ of undocumented migrants and drugs crossing the U.S. border.

"In a nutshell. what I'm hearing is: 'We don't know what he's going to do,'" Canada's U.S. Ambassador Kirsten Hillman told CBC News, describing her conversations with Republican lawmakers and state governors.

"I'd like to say we know what's going to happen. I suspect we won't know until Monday," she said.

Here are five things to watch.

What law will he use?

The president has different powers to implement tariffs under U.S. trade laws. No president in modern history has used these laws as aggressively as Trump is threatening.

Trump will apply different tools at different times, on different countries and products, Canada-U.S. trade expert Laura Dawson predicts.

"I think he's going to try all avenues," Dawson said.

• This Sunday, Cross Country Checkup is asking: What does another Trump presidency mean to you? How seriously are you taking his tariff threats? Fill out this form and you could appear on the show or have your comment read on air.

Those potential tools include Section 232 of the 1962 Trade Expansion Act, which allows tariffs on national-security grounds, as Trump once did with steel and aluminum.

Then there's Section 301 of the 1974 Trade Act — it lets a president penalize unfair practices, as Trump and President Joe Biden have both done with China.

Another piece of the 1974 law, Section 122, allows tariffs to alleviate a trade imbalance. It's worth noting here that Trump constantly complains about imbalanced trade.

Finally, there's a never-before-used tariff weapon: the 1977 International Emergency Economic Powers Act (IEEPA), in the event of a national emergency.

While no president has ever applied that 1977 law to impose tariffs, it holds an attractive quality for a diehard protectionist: it works fast.

Implementing the IEEPA first requires a president to declare a national emergency; Trump clearly hinted at one when he complained of a broken border with Mexico and Canada. 

"If they want to push the boundaries of what's legal, they could try that," said Simon Lester, a trade lawyer, analyst and onetime World Trade Organization official. 

"They could just say, 'Hey, IEEPA gives us this authority. We're imposing 10 per cent tariffs on the whole world, or on these specific products. Let's see what the courts have to say about it,'" Lester said.

All the other laws carry certain encumbrances: Sections 232 and 301, for example, require some sort of study, and the use of Section 122 is limited to 150 days. Trump could turn to these laws for some of his actions.