U.S. trading partners must have breathed a sigh of relief last week when President Donald Trump announced a 90-day pause on the imposition of tariff rates above 10 percent. However, along with Trump’s economic team, they are quickly realizing that the three-month reprieve, while welcome, is an incredibly short time to hammer out trade deals. Typically, U.S. officials spend at least six months—twice the length of time of the current pause—just to develop their negotiating positions in consultation with Congress and stakeholders. Actual negotiations usually span several years. But as we are learning, these are not normal times.

Countries around the world are scrambling to pull together the best teams and develop strategies, tactics, and substantive offers for a trade negotiation with the United States. The very first thing these countries need to consider is whether they want to push to be at the front of the negotiating queue, a potentially attractive option if they conclude that going early may lead to softer deals. Some may decide that they are better off hanging back and watching how others fare first. This would allow them the opportunity to at least gain a better sense of which negotiating topics (or sweeteners) are of the most importance to the White House and potentially to learn from others’ missteps in this new speed-negotiating world.

Thus far, the Trump administration has referenced a long list of requests of foreign counterparts, including tariff cuts, reductions in trade deficits, increased purchases of U.S. goods, cooperation on countering the China challenge, and much else. Trading partners rightly are now looking for clarity on which of these issues are must-haves, allowing them to focus their efforts on what matters most to the White House during this short window.

Countries are also unclear on whether these negotiations can lead to tariffs below the 10 percent universal rate now in place or whether that rate represents a floor. In addressing this question, Trump indicated last week that there may be some narrow flexibility—but not much. With the recent announcements of special exclusions for phones and other electronic products from the tariff hikes, countries must be more confident now asking for further product exclusions to help their domestic companies weather the tariff storm.

In my recent conversations, foreign trade negotiators have expressed exasperation about making major announcements of U.S. investments or purchases without receiving any credit for these actions in the tariff rates assigned to their countries. To avoid this trap, many are likely to now ascribe to a traditional trade negotiating mantra: Nothing is agreed until everything is agreed.

Foreign counterparts are also likely to initiate their own negotiating requests to the United States, beyond the elimination of the Trump-assigned tariff rates. While most reluctantly accept that these deals will largely be tilted in favor of the United States, they nevertheless will be under domestic pressure to secure gains in the talks. At a minimum, the Trump team should expect countries to request that they be shielded from any future tariff increases. They will negotiate hard to avoid a situation whereby they conclude a deal with the United States in the next 90 days that features formidable concessions and commercial announcements on their part, only to be hit by sectoral or other tariffs over the next three years. If the administration is invested in these agreements, it should take seriously such requests.

The Trump White House also faces several challenges in the next three months. The short negotiating window, coupled with the 70 or so countries seeking agreements, will place tremendous pressure on the U.S. negotiating team. And if Washington and Beijing somehow find a way back to the negotiating table during this period, resources will be even further stretched. Many subcabinet officials await confirmation and some career staff are being let go or leaving on their own volition, resulting in fewer experienced negotiators at a time when they are urgently needed. While led by the Office of the U.S. Trade Representative, as well as the Treasury and Commerce departments, trade negotiations typically involve input from a range of departments including Agriculture, Labor, Health and Human Services, Transportation, and others, many of which are being subjected to massive downsizing by Trump’s Department of Government Efficiency. To deal with these challenges and heighten the chances of success, prioritization with respect to both partners and negotiating topics will be key.

Treasury Secretary Scott Bessent has already identified Japan as a priority partner, with South Korea, Vietnam, and India also cited. We are already seeing a parade of officials from these countries visit Washington. But others are looking for indications of when a slot might open for them. Grouping countries into high-, medium-, and low-priority categories could be a useful internal exercise. Such categorization could be based on a range of factors, including the size of a country’s economy, the magnitude of their trading relationship with the United States, tariff levels, the size of their bilateral trade deficit, the scope of their nontariff measures, and their willingness to join U.S. efforts to counter China.

With respect to substantive matters, prioritization is also key. I have been repeatedly asked whether the administration is seeking more of a commercial deal, focusing on further announcements of new investments and purchases of U.S. energy, agriculture, and weapons, or whether it is more interested in a rules-based agreement with enforcement provisions. It’s not clear whether even U.S. negotiators know the answer to this question, beyond the response of “both.” More clarity is urgently needed if deals are to be struck during the pause period.

Given that each country has its own unique trade regimes and irritants, the Trump administration will need to tailor negotiating requests. If time were not of the essence, this would make perfect sense. But we have only 90 days. What may be useful to consider is what I would call a “tailored template approach.” Specifically, there would be common provisions for all, with details shaped to fit the unique circumstances of the country. For example, on nontariff measures—the barriers that keep U.S. products shut out of a market despite lower tariffs—parties could agree on general rules to govern their reduction over a specified period of time and agree to reinstate tariffs should these commitments not be held. These provisions could then be followed by the list of the specific nontariff measures for each country that would be subject to these commitments.

In entering into talks, the administration will quickly see that it has a serious trust deficit with partners, many of which feel that they have been mistreated and disrespected with Trump’s high tariffs. In such an environment, it’s important for the United States to avoid a situation where countries negotiate detailed deals with cabinet officers only to learn that the president rejects the pact and wants more. Close channels of communication between the White House and the U.S. negotiating team, with clear mandates for officials, will be necessary to steer clear of such situations.

The White House should also give thought now on how to treat partners at the end of the 90 days. A handful may actually reach deals or deals “in principle” with the United States resulting in the lifting of the tariffs. But for countries engaged in good-faith negotiations that are unable to finalize a deal in time, an extension may be warranted. Likewise, more time should be considered for those partners that have requested negotiations with the administration only to be told that they need to wait their turn.

While 90 days may seem like an eternity in the Trump era, it is a highly compressed timeframe in the trade world. U.S. trading partners will not be the only ones feeling the heat. In light of stock market fluctuations, rising prices, a weakening dollar, and the uncertain bond market, the Trump administration will be under pressure to score early negotiating victories to show that its disruptive trade policy is working.

To read this analysis as it was published on the Foreign Policy website, please click here. 

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On April 8 and 9, U.S. Trade Representative Jamieson Greer testified before the House Committee on Ways and Means and Senate Committee on Finance about President Trump’s 2025 Trade Policy Agenda.

Video 1: On April 8, 2025, the U.S. Senate Committee on Finance held a hearing on the  Trump Administration’s 2025 Trade Policy Agenda with United States Trade Representative Jamieson Greer. 

To watch the full Senate Finance Committee hearing as it was posted by Associated Press here (actual hearing video starts at approximately minute 13:50). 

Video 2: On April 9, 2025, the U.S. House Committee on Ways and Means held a hearing on the Trump Administration’s 2025 Trade Policy Agenda with United States Trade Representative Jamieson Greer. 

To watch the full House hearing as it was posted by the U.S. House Committee on Ways and Means click here (actual hearing video starts at approximately minute 15:00). 

The post Ambassador Jamieson Greer’s Testimonies on the President’s 2025 Trade Policy Agenda appeared first on WITA.

For decades, under the biased rules of the World Trade Organisation, the US has faced systematically higher tariffs from its major trading partners and far more punitive non-tariff barriers.

The result is a national emergency that threatens our economic prosperity and national security.

At the heart of this crisis is a trade deficit in goods that has ballooned to more than $US1 trillion ($1.6 trillion) annually. The economic models of free trade, which predict that chronic trade imbalances will always be eliminated through price adjustments via exchange rates, are dead wrong.

The US cumulative trade deficits in goods from 1976 – the year chronic deficits began – to 2024 have transferred over $US20 trillion of American wealth into foreign hands.

That’s more than 60 per cent of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies and even parts of our food supply.

A central driver of this one-sided trade is the WTO’s “most favoured nation” (MFN) rule, which requires member countries to apply the lowest tariff they offer to any one nation to all WTO members. America’s trading partners can maintain high, uniform tariffs across the board – with no incentive to negotiate fairer terms with the US.

Loss of manufacturing jobs

Since 1979, the year that manufacturing jobs peaked in America and the Tokyo round of the General Agreement on Tariffs and Trade ushered in major MFN-driven tariff reductions, the US has lost 6.8 million manufacturing jobs.

Since China joined the WTO in 2001, real median weekly earnings in the US have largely stagnated – rising little more than 10 per cent over the entire period.

Today, the average US MFN tariff is just 3.3 per cent. China’s is double that at 7.5 per cent. Thailand and Vietnam hover near 10 per cent, and India stands at a staggering 17 per cent.

The imbalance extends to automobiles: the EU charges four times the US car tariff at 10 per cent for sedan cars; China’s base import tariff for passenger vehicles is 25 per cent.

Non-tariff barriers are even worse

Even worse than this is the barrage of non-tariff weapons foreign nations use to strangle American exports, unfairly boost their shipments to the US, and wall off their markets.

These tools include currency manipulation, value added tax distortions, dumping, export subsidies, state-owned enterprises, IP theft, discriminatory product standards, quotas, bans, opaque licensing regimes, burdensome customs procedures, data localisation mandates and, increasingly, the use of “lawfare” in places such as the EU to target America’s largest tech firms.

On top of that, many foreign competitors operate from sweatshops and pollution havens that morally and environmentally stain the global landscape from Asia and Africa to Latin America.

While the WTO technically allows challenges, its dispute resolution system is functionally broken – and the consequences have been catastrophic.

The US has brought several high-profile agricultural trade disputes to the WTO – targeting foreign bans on poultry, hormone-treated beef and genetically modified crops.

In nearly every case, the US prevailed. But the victories did not matter. The EU’s ban on hormone-treated US beef was challenged in 1996 and ruled illegal in 1998. Despite this, the EU has not lifted it.

A trade system where we face higher tariffs, steeper non-tariff barriers and no viable path to resolution is nothing more than an “honour system” in a world with no honour among cheaters. That’s why America must – and now is – defending itself.

Trump’s reciprocal tariff doctrine does exactly what the WTO has failed to do: it holds foreign countries accountable.

The US will now match the substantially higher tariffs and crushing non-tariff barriers imposed on us by other nations. This is about fairness, and no one can argue with that.

This is not a negotiation. For the US, it is a national emergency triggered by trade deficits caused by a rigged system.

President Trump is always willing to listen. But to those world leaders who, after decades of cheating, are suddenly offering to lower tariffs – know this: that’s just the beginning.

We will want to hear from countries including Cambodia, Mexico and Vietnam that you will stop allowing China to evade US tariffs by trans-shipping exports through your countries. The far bigger threat lies in the web of non-tariff barriers that continue to choke American industries. And that, too, must end.

All America wants is fairness. President Trump is simply charging you what you are charging us. What is fairer than that?

The writer is Donald Trump’s senior counsellor for trade and manufacturing.

To read the full opinion as published by Financial Review, please click here.

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Enacted in 1946, the APA governs how federal agencies can issue regulations. The APA establishes specific procedures, such as a public comment period, that federal agencies must follow when they engage in administrative action, such as issuing new rules and regulations, adjudication of licenses, or interpretation of existing regulations. In addition, the APA provides standards for judicial review of an agency action, enabling courts to strike down actions if they find that their substance or procedural history fails to meet APA standards. 

However, the APA excludes certain agency functions from its procedural requirements and judicial standards, including actions involving “military or foreign affairs functions” under Title 5, Sections 553(a)(1) and 554 (a)(4) of the U.S. Code. In short, the Rubio memorandum is an effort to protect most of President Trump’s actions on trade, illegal immigration, export controls, artificial intelligence, and espionage from procedural requirements and judicial review by pulling these under the umbrella of the “foreign affairs” exception. 

Doing so would insulate the administration from having trade-related agency actions struck down in the courts because of “process fouls”—procedural errors in conducting an agency action. For example, agency actions involving trade would no longer be exposed to potential “arbitrary and capricious” claims under Title 5, Section 706, of the U.S. Code, which allow courts to strike down agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. In other words, agency actions can be struck down when they are so far-fetched that they appear to lack any reasonable basis, do not consider relevant factors, or demonstrate a clear error of judgment. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). These agency actions would still remain subject to tests of constitutionality or compliance with applicable laws.

The first Trump administration frequently ran into process fouls, and so far, the new administration gives every sign of having the same problem. In its first two months, the administration has already run into a burst of unfavorable court rulings.

Given the administration’s focus on implementing new trade actions with respect to China, Mexico, Canada, and others, it is unsurprising that it would take steps to shield these actions from judicial challenges. Still, the Rubio memorandum raises the question of whether existing trade laws are, in fact, subject to the APA, and, if so, whether the secretary’s memo will make any difference. The short answer is that some trade laws are subject to the APA, and some are not. It is not clear whether the memo would force any significant changes.

Q1: Which trade actions are subject to the APA, and which are not?

A1: The distinguishing question for whether a trade action is subject to the APA is whether the statute authorizing the action requires a presidential decision, in which case action taken under such statute is not subject to the APA, or an agency decision, in which case action taken under such statute is subject to the APA. The Supreme Court held in Franklin v. Massachusetts, 505 U.S. 788 (1992) that presidential actions are not reviewable under the APA, as the president is not specifically included in the APA’s defined scope of what constitutes an “agency action.”

Because the International Emergency Economic Powers Act (IEEPA), which the administration called on to impose recent across-the-board tariffs on China, Mexico, and Canada, requires a presidential decision, action taken under the statute is generally not subject to the APA. IEEPA actions nevertheless can be challenged in the courts as violations of due process under the Constitution or as actions beyond the president’s authority, as in Dames & Moore v. Regan, 453 U.S. 654 (1981).

Section 232 of the Trade Expansion Act of 1962, which the president has relied on to impose tariffs in both administrations, also involves a final decision by the president after a report and investigation by the Department of Commerce and is thus also exempt from the APA. While Section 232(b)(2)(iii) of this statute authorizes the Department of Commerce to hold hearings and seek public comments, it does not require these procedural steps. Instead, doing so is discretionary: The Department of Commerce can, “if it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation.” Because these procedural steps are not mandatory, and in the end, the final decision on any action rests with the president, Section 232 actions can only be challenged on Constitutional and other statutory grounds and not under the APA.

The other statute that the first Trump administration used frequently was Section 301 of the Trade Act of 1974, which it used as the basis for a series of tariff actions on China. Unlike actions taken under IEEPA and Section 232, actions taken under Section 301 are subject to the APA because the statute grants ultimate authority to the U.S. Trade Representative (USTR), albeit subject to the direction of the president. Accordingly, USTR Lighthizer’s decisions in 2018 and 2019 to impose 25 percent and 7.5 percent tariffs on various Chinese products were challenged under the Administrative Procedure Act in the U.S. Court of International Trade (CIT). The court found that USTR’s Section 301 decisions are covered by the APA, rejecting the U.S. government’s claims that Section 301 decisions are non-reviewable because they are presidential actions. The court also found that Section 301 decisions are not covered by the foreign affairs exception to the APA. The court went on to find that USTR had failed to adequately respond to comments filed as part of the notice and comment process for the tariff actions as required by the APA, although the court eventually upheld the tariffs after USTR filed a supplemental response to the comments. The case is still on appeal at the U.S. Court of Appeals for the Federal Circuit (CAFC).

Another consideration related to which trade actions might be subject to the APA is their constitutional basis. Many of the trade laws discussed above, including Section 301, are traditionally considered to be an exercise of Congress’s constitutional authority to “regulate commerce with foreign nations” under Article I, Section 8, which has been delegated with certain guidelines to the executive branch to implement. Actions authorized by these statutes are considered distinct from trade actions that might stem from the president’s Article II authority over foreign affairs, which is the focus of the Rubio memorandum. In addition, antidumping and countervailing duty decisions under Title VII of the Trade Act of 1974 are expressly subject to judicial review in Title 28, Section 1516a(b), of the U.S. Code, under an arbitrary and capricious standard. Likewise, decisions under Section 201 of the Trade Act of 1974 are reviewable by the Court of International Trade under Title 28, Section 1581(i), of the U.S. Code, and the U.S. International Trade Commission is required to hold a public hearing and afford opportunities for stakeholder comments in such proceedings under Title 19, Section 2252(b)(3), of the U.S. Code. In the end, it is unlikely that the administration will be able to get traditional trade statutes like Section 301, Section 201, or Title VII antidumping and countervailing duties excepted from APA procedural provisions or judicial review, but they might have better luck with IEEPA and Section 232.

Q2: Have the president’s previous tariffs been challenged in court?

A2: The use of any of these tariff authorities by President Trump is almost certain to be challenged by importers or other stakeholders, but as we pointed out in a previous article, such claims would face a steep uphill climb if past precedent is any indication. The courts, including the Supreme Court, traditionally have been reluctant to interfere with the president’s exercise of foreign affairs and tariff powers. To be sure, most claims have advanced constitutional or statutory, rather than APA-based, arguments. 

The CAFC stated in Maple Leaf Fish Co. v. United States, 762 F.2d 86 (Fed. Cir. 1985) that courts have “a very limited role” in reviewing presidential trade actions “of a highly discretionary kind,” such as tariffs or import quotas under Section 201, and such actions can only be set aside if they involve “a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority.” Maple Leaf Fish Co. is particularly relevant since the CAFC has jurisdiction over most trade law appeals.

While importers have previously challenged President Trump’s Section 232 tariffs on imported steel and aluminum and his Section 301 tariffs on Chinese products, these cases have gone nowhere. In American Institute for International Steel (AIIS) v. Morgan, Case: 19-1727 (July 28, 2020), the CAFC reaffirmed that the Section 232 tariffs did not violate the Constitution’s Separation of Powers under the non-delegation doctrine. In Transpacific Steel v. U.S, and in PrimeSource Building Products v. U.S., Case No. 2021-2066 (Fed. Cir. 2023), the CAFC found that delays imposing Section 232 tariffs beyond the 180 days spelled out in the statute were still within the president’s authority. Likewise, the CIT rejected a challenge to President Trump’s Section 301 tariffs, although the case is still pending on appeal.

 Q3: Will there be new challenges, and how are they likely to play out?

A3: Given the current Supreme Court’s willingness to revisit past precedents and the anticipated high costs of the tariffs, there will almost certainly be legal challenges to the administration’s trade actions. This prediction holds true even if the Rubio memorandum successfully exempts certain trade actions from the judicial review under the APA’s “arbitrary and capricious” standard, because some of the most promising claims against the Trump administration’s recent tariffs are based on constitutional arguments.

President Trump’s tariffs on steel, aluminum, and Chinese products under Sections 232 and 301 would likely be on solid ground given past court decisions upholding similar actions in Trump 1.0, although his Section 232 tariffs on imported autos could be challenged on statutory grounds given the five-year lapse between issuance of the Department of Commerce’s report on February 19, 2019, and his decision to act by imposing 25 percent tariffs on imported autos and core parts. Likewise, President Trump’s “Liberation Day” reciprocal tariffs on a broad swath of U.S. trading partners could be more exposed, given their unprecedented scope. Importers are likely to argue (1) that the reciprocity tariffs violate the Supreme Court’s recent revival of the “major questions doctrine” under Chief Justice Robert’s opinion in West Virginia v. Environmental Protection Agency, 597 U.S. 697 (2022), which held that administrative agencies do not have the power to regulate on a “major questions” of extraordinary economic and political significance unless they have clear statutory authority from Congress; and (2) that the statutes violate the nondelegation doctrine because they completely cede Congress’s power to levy tariffs to the president without providing an intelligible principle or constraining guidelines on how to implement such tariffs. While the non-delegation doctrine has been a dead letter since the 1930s, some of the conservative justices (e.g., Justice Gorsuch) have expressed an interest in revisiting it (and a nondelegation challenge to the FCC’s University Service Fund is currently before the Supreme Court in Federal Communications Commission v. Consumers’ Research). Any challenges to the Trump tariffs will initially be heard at lower levels but will likely get to the Supreme Court eventually. As discussed above, both the Supreme Court and lower courts have repeatedly upheld tariff statutes against nondelegation attacks. As a practical matter, many federal judges will likely be unwilling to check the president’s authority because they perceive his tariff policies as having just received a popular mandate and because they are reluctant to second-guess a presidential determination of an emergency or national security threat. As explained in our previous paper, one key issue to watch is whether lower-level judges are willing to preliminarily or temporarily block a presidential action that rests on a declaration of emergency or national security finding while the litigation plays out.

Warren Maruyama is former USTR general counsel under President George W. Bush and former White House policy staffer under President George H.W. Bush. Meghan Anand is a practitioner of international trade and investment law. William Reinsch is senior adviser and Scholl Chair Emeritus at the Center for Strategic and International Studies in Washington, D.C.

To read the full analysis, click here.

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While there is no guarantee that Trump and his administration will achieve the goal he has in mind, it is important to understand the president’s perspective, what he wants his administration to achieve, and how he intends to do it. If carried out successfully, these efforts could have enormous impacts on the global trade and economic system.

Individuals, businesses, and even countries, should weigh the potential risks to their own economic and business models. But also, and perhaps more importantly, they should consider the potential opportunities that a transformed US economy and global trading system might bring.

Contrary to nearly all his predecessors, Trump believes that US interests, and in particular American workers and companies, are disadvantaged by the liberal international economic system that emerged after the collapse of the Soviet Union.

To start, it is worth briefly describing Trump’s worldview. Contrary to nearly all his predecessors, Trump believes that US interests, and in particular American workers and companies, are disadvantaged by the liberal international economic system that emerged after the collapse of the Soviet Union. He believes that the United States embraced an ideology of ‘free trade’ as an unqualified virtue and unwisely disarmed itself by removing protections against the free flow of labour, capital, technology, and goods.

According to Trump, these decisions, which both Republican and Democratic politicians championed, led to the hollowing out of the US economy and industrial strength, while transferring jobs and wealth to the citizens of other nations. While in theory he may accept the arguments of David Ricardo’s comparative advantage, in practice he believes that this theoretical ideal rarely emerges as nations game the system to their own advantage. When these abuses became too blatant to ignore, he faults his predecessors as being too wedded to their ideological biases and too naïve to understand that appeals to legalistic norms shrink in the face of sovereign power. For Trump, the persistent and deepening trade deficit that the United States carries with the rest of the world (though not with Australia), is evidence of the failure of these theories. He is deeply critical of politicians and experts who put their faith in an ideal, which, in his opinion, does not exist in reality.

Closely linked to this suspicion about ‘free trade’ is his deep scepticism of multilateral organisations and international institutions which supposedly safeguard this liberal international economic system. Again, he may accept the theory of a rules-based order maintained by objective international organisations, but in practice he believes these entities cannot enforce the rules and that nations must protect the interests of their own citizens, instead of outsourcing it to others.

Lastly, Trump views the United States as well positioned to change the global trade and economic system. As the world’s largest and wealthiest consumer market with the deepest and richest capital markets, he believes the United States has enormous leverage in renegotiating the terms of trade with its partners individually.

The themes of this worldview are not new, and Trump campaigned on them in 2016, 2020, and 2024. In each subsequent campaign and during the Biden administration, Trump’s political opponents tacked closer to his views on these issues, giving him confidence that American voters share his concerns and have provided him a political mandate to change the global trade and economic system.

Renegotiating the terms of trade

Based on these themes, Trump looks to renegotiate much of the globalisation orthodoxy. Under that system, manufacturing and other industrial activities moved from the United States to other countries with either lower labour costs or to those who could negotiate trade agreements that both benefited their citizens and provided low barrier market access to the United States. Under this version of globalisation, the United States provided two public goods: security, which brought down the cost of commerce, and a market of last resort, that countries could sell into with few barriers which enable those countries to power their own economic development and prosperity.

Trump views this as an unsustainable arrangement, that places heavy burdens on the United States, which lets allies freeride on public goods, and allows rivals to build economic, industrial, military, and technological strength at the expense of the United States.

Rather than viewing the provision of security and market access to the United States as something Americans owe to the world, Trump seeks to share the cost of security with those that share values with the United States and to make access to the US market a privilege.

Rather than viewing the provision of security and market access to the United States as something Americans owe to the world, Trump seeks to share the cost of security with those that share values with the United States and to make access to the US market a privilege. To the degree that companies and countries want to assist in furthering US prosperity and to share in the profits, their investment and manufacturing in the United States will be welcome. The availability of abundant energy, a well-educated workforce, and most importantly, wealthy consumers who will consume large quantities of products and goods, is likely to be attractive to those who want to manufacture in the United States, for the United States. For those who can provide commodities and raw materials for this industrial and manufacturing renaissance that the United States cannot provide itself, those imports to the United States will be welcome at low or no tariff rates.

The responsibility for implementing these changes will fall primarily on five individuals, known colloquially as, the ‘trade team.’ Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, nominee for US Trade Representative Jamieson Greer, Director of the National Economic Council Kevin Hassett, and Senior Counselor for Trade and Manufacturing Peter Navarro.

An America First Trade Policy

The most far-reaching document that Trump signed on his first day in office was a presidential memorandum titled, America First Trade Policy. Addressed to his key cabinet officials, but available for the world to read, Trump’s trade policy lays out a roadmap for overhauling the way the United States conducts commerce with the world.

The policy directs the ‘trade team’ to undertake at least 21 investigations (with five specifically focused on the People’s Republic of China) into existing trade relationships, compliance with trade agreements, and any harms inflicted on the United States. These investigations, some of which include periods for public comment, unlock statutory authorities granted to the president or specific cabinet members. For example, if after an investigation by the Office of the US Trade Representative, it is determined that a foreign country is violating a trade agreement or placing unjustifiable burdens on US commerce, US Code 19, Section 2411, grants the trade representative broad authority to suspend the benefits of a trade agreement, impose duties, or restrict imports.

For those who want to understand the logic of what the United States is seeking to achieve during the second Trump administration, understanding Trump’s worldview, watching the actions of his ‘trade team,’ and following the roadmap of the America First Trade Policy will answer many questions.

The administration appears to be constructing a deliberate set of tools that it can rapidly employ to either achieve a specific policy goal, as demonstrated below, or to change the fundamental commercial calculus for businesses to manufacture products in the United States.

Under the section for economic security matters, the Trump administration has already implemented one portion of this policy. It directed the Secretary of Commerce and Secretary of Homeland Security to assess unlawful migration and fentanyl flows from Canada, Mexico, and the People’s Republic of China and recommend appropriate trade and national security measures. On 1 February, Trump signed three separate executive orders directing the imposition of tariffs on those three countries due to unlawful migration and fentanyl flows. Within 72 hours, the leaders of Canada and Mexico agreed to implement measures to address those two issues. Meanwhile China’s leader apparently refused to communicate with Trump and he ordered the imposition of an additional 10% tariff on all Chinese imports to the United States, as well as a suspension of duty-free de minimis treatment for Chinese imports under US$800.

While this trade policy offers a roadmap for where the Trump administration is going and preview of the tools it will use to get there, this process will inevitably unfold over months and years. For those who want to understand the logic of what the United States is seeking to achieve during the second Trump administration, understanding Trump’s worldview, watching the actions of his ‘trade team,’ and following the roadmap of the America First Trade Policy will answer many questions.

To read the full commentary as it was published on the United States Studies Centre website, click here.

The post It Is All About Trade appeared first on WITA.

For starters, Trump should distinguish trade agenda items that can be advanced through tariffs from trade-adjacent items that cannot.

Fortifying the United States’ defense industrial base is a critical goal but not one that tariffs can effectively advance. Major defense procurement reform is necessary to align current military capabilities with evolving risks related to drones and artificial intelligence. Rather than tariffs, Trump should harness the authority the Pentagon already has to insist that vital military goods be produced in the United States.

Tariffs will not curb economic espionage, intellectual property theft, or unlawful border crossings of people or drugs. As the U.S. Federal Reserve Bank and others have confirmed, American consumers shoulder the burden of U.S. tariffs. They should not be punished for other countries’ failings. Other points of leverage should be used, such sanctioning foreign companies benefiting from economic espionage or intellectual property theft.

Reducing U.S. trade deficits, though a worthy aim, is not achievable through tariffs either. In fact, the U.S. trade deficit rose in the face of tariffs imposed in the first Trump administration. Rather than unfair terms of trade, persistent U.S. trade deficits reflect macroeconomic factors, such as alarmingly large U.S. budget deficits. The best path to reducing the U.S. trade deficit is getting its fiscal house in order.

Tariffs will not increase U.S. manufacturing: technology, rather than trade, has been primarily responsible for the fifty-year decline in manufacturing jobs. Although U.S. manufacturing output remains near historic levels, employment has declined because machine-aided factories can operate with so few people. The most effective and equitable way to expand manufacturing is by reducing regulatory and tax burdens on U.S. employers. Tariffs hurt American consumers and export-oriented manufacturers who lose sales when U.S. trading partners impose their new tariffs in response .

Helping American workers to handle the challenges of the modern economy is another important objective that tariffs cannot achieve. A more reliable and effective safety net is essential to help workers navigate a churning labor force. Because unemployment imposes a heavy economic and psychological toll, portable health insurance and other policies are crucial in a modern economy. Supporting people as they navigate a fast-flowing river will be more successful than vainly trying to control the river through tariffs.

The same applies to helping the U.S. communities hardest hit by import competition. Although open trade generally benefits U.S. workers, consumers, and exporters, the costs of import competition can fall disproportionally on particular towns or regions. Historically, displaced workers were expected to move to where the jobs were, and towns were allowed to decline. As mill towns in New England declined, however, new jobs were created in the Sun Belt. If U.S. policymakers are serious about bringing jobs to the people and maintaining the economic viability of every U.S. town, they will need a broad suite of place-based subsidies—far beyond tariffs—to accomplish that immense goal.

Trump’s goal of more reciprocal trade relations, on the other hand, can be achieved through tariff threats and negotiations.

Although tariff levels among the United States and its major trading partners are more balanced than Trump suggests, Americans can reasonably expect more reciprocity from U.S. trading partners. The World Trade Organization (WTO) is unlikely to deliver such reciprocity, as the failed Doha negotiations revealed. Because WTO rules already lock in low U.S. tariffs, the United States has no leverage in WTO negotiations to pressure other countries to lower their tariffs. The United States should strongly support the WTO as the cornerstone of the global trading system, but tariff levels should be established on a bilateral basis rather than on a global basis. 

Rather than relying on the WTO to establish tariff levels, the Trump administration should leverage the immense U.S. market to negotiate so-called Trump trade agreements (TTA) that would have three core features.

First, each country would commit to not discriminating against goods from the other country. The terms of such a commitment could be so straightforward and transparent as to fit on a postcard.

Second, attached to that simple agreement would be a transparent and balanced list of exceptions to the nondiscrimination pledge. Ideally, there would be no or few exceptions. (The U.S. list of exceptions would also provide a roadmap for draining the swamp by identifying many examples of crony capitalism.)

Third, as with actions to combat subsidized imports, U.S. workers and companies would be able to bring U.S. legal actions when harmed by other countries’ failure to comply with TTA terms.

An orderly process of negotiating TTAs and submitting them to Congress would lessen the risk of Trump’s reciprocity goals devolving into a trade war. Foreign leaders cannot ignore Trump’s tariff threats because losing access to the U.S. market would cause serious economic harm for their exporters. By the same token, they cannot appear to be kowtowing to a bullying U.S. president. Although foreign leaders will feel compelled to impose their own tariffs in response to new U.S. tariffs, leading to a tit-for-tat escalation of tariffs, those leaders would have difficulty opposing an orderly and good-faith process to secure reciprocal terms of trade.  

Ideally, TTAs would lead to much lower tariff levels with few exceptions to the general rule of nondiscrimination. That move would align Trump’s trade agenda with his broader promise of shifting power away from Washington, DC. Just as Trump argued correctly that Washington regulators should not dictate the water flow–rate of showerheads in American homes, regulators also should not dictate who makes those showerheads.

By elucidating his trade goals and coordinating them with other policy goals, Trump could advance U.S. interests and achieve lasting improvements to the world trading system. His instinct to pursue trade goals by leveraging access to the U.S. market rather than appealing to adherence to WTO rules is correct. However, tariff threats need to correlate to matters that are meaningfully connected to tariffs. Otherwise, those threats risk becoming more of a destructive force than a constructive one.

To read the full article as it was published by Council on Foreign Relations, click here.

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MEMORANDUM FOR THE SECRETARY OF STATE

THE SECRETARY OF THE TREASURY

THE SECRETARY OF DEFENSE

THE SECRETARY OF COMMERCE

THE SECRETARY OF HOMELAND SECURITY

THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET

THE UNITED STATES TRADE REPRESENTATIVE

THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY THE SENIOR COUNSELOR FOR TRADE AND MANUFACTURING

SUBJECT: America First Trade Policy

Section 1. Background. In 2017, my Administration pursued trade and economic policies that put the American economy, the American worker, and our national security first. This spurred an American revitalization marked by stable supply chains, massive economic growth, historically low inflation, a substantial increase in real wages and real median household wealth, and a path toward eliminating destructive trade deficits.

My Administration treated trade policy as a critical component to national security and reduced our Nation’s dependence on other countries to meet our key security needs.

Americans benefit from and deserve an America First trade policy. Therefore, I am establishing a robust and reinvigorated trade policy that promotes investment and productivity, enhances our Nation’s industrial and technological advantages, defends our economic and national security, and — above all — benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.

Sec. 2. Addressing Unfair and Unbalanced Trade. (a) The Secretary of Commerce, in consultation with the Secretary of the Treasury and the United States Trade Representative, shall investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits.

(b) The Secretary of the Treasury, in consultation with the Secretary of Commerce and the Secretary of Homeland Security, shall investigate the feasibility of establishing and recommend the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.

(c) The United States Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Commerce, and the Senior Counselor for Trade and Manufacturing, shall undertake a review of, and identify, any unfair trade practices by other countries and recommend appropriate actions to remedy such practices under applicable authorities, including, but not limited to, the Constitution of the United States; sections 71 through 75 of title 15, United States Code; sections 1337, 1338, 2252, 2253, and 2411 of title 19, United States Code; section 1701 of title 50, United States Code; and trade agreement implementing acts.

(d) The United States Trade Representative shall commence the public consultation process set out in section 4611(b) of title 19, United States Code, with respect to the United States-Mexico-Canada Agreement (USMCA) in preparation for the July 2026 review of the USMCA. Additionally, the United States Trade Representative, in consultation with the heads of other relevant executive departments and agencies, shall assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses and make recommendations regarding the United States’ participation in the agreement. The United States Trade Representative shall also report to appropriate congressional committees on the operation of the USMCA and related matters consistent with section 4611(b) of title 19, United States Code.

(e) The Secretary of the Treasury shall review and assess the policies and practices of major United States trading partners with respect to the rate of exchange between their currencies and the United States dollar pursuant to section 4421 of title 19, United States Code, and section 5305 of title 22, United States Code. The Secretary of the Treasury shall recommend appropriate measures to counter currency manipulation or misalignment that prevents effective balance of payments adjustments or that provides trading partners with an unfair competitive advantage in international trade, and shall identify any countries that he believes should be designated as currency manipulators.

(f) The United States Trade Representative shall review existing United States trade agreements and sectoral trade agreements and recommend any revisions that may be necessary or appropriate to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries.

(g) The United States Trade Representative shall identify countries with which the United States can negotiate agreements on a bilateral or sector-specific basis to obtain export market access for American workers, farmers, ranchers, service providers, and other businesses and shall make recommendations regarding such potential agreements.

(h) The Secretary of Commerce shall review policies and regulations regarding the application of antidumping and countervailing duty (AD/CVD) laws, including with regard to transnational subsidies, cost adjustments, affiliations, and “zeroing.” Further, the Secretary of Commerce shall review procedures for conducting verifications pursuant to section 1677m of title 19, United States Code, and assess whether these procedures sufficiently induce compliance by foreign respondents and governments involved in AD/CVD proceedings. The Secretary of Commerce shall consider modifications to these procedures, as appropriate.

(i) The Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, and the Senior Counselor for Trade and Manufacturing, in consultation with the United States Trade Representative, shall assess the loss of tariff revenues and the risks from importing counterfeit products and contraband drugs, e.g., fentanyl, that each result from the current implementation of the $800 or less, duty-free de minimis exemption under section 1321 of title 19, United States Code, and shall recommend modifications as warranted to protect both the revenue of the United States and the public health by preventing unlawful importations.

(j) The Secretary of the Treasury, in consultation with the Secretary of Commerce and the United States Trade Representative, shall investigate whether any foreign country subjects United States citizens or corporations to discriminatory or extraterritorial taxes pursuant to section 891 of title 26, United States Code.

(k) The United States Trade Representative, in consultation with the Senior Counselor for Trade and Manufacturing, shall review the impact of all trade agreements — including the World Trade Organization Agreement on Government Procurement — on the volume of Federal procurement covered by Executive Order 13788 of April 18, 2017 (Buy American and Hire American), and shall make recommendations to ensure that such agreements are being implemented in a manner that favors domestic workers and manufacturers, not foreign nations.

Sec. 3. Economic and Trade Relations with the People’s Republic of China (PRC). (a) The United States Trade Representative shall review the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China to determine whether the PRC is acting in accordance with this agreement, and shall recommend appropriate actions to be taken based upon the findings of this review, up to and including the imposition of tariffs or other measures as needed.

(b) The United States Trade Representative shall assess the May 14, 2024, report entitled “Four-Year Review of Actions Taken in the Section 301 Investigation: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” and consider potential additional tariff modifications as needed under section 2411 of title 19, United States Code — particularly with respect to industrial supply chains and circumvention through third countries, including an updated estimate of the costs imposed by any unfair trade practices identified in such review — and he shall recommend such actions as are necessary to remediate any issues identified in connection with this process.

(c) The United States Trade Representative shall investigate other acts, policies, and practices by the PRC that may be unreasonable or discriminatory and that may burden or restrict United States commerce, and shall make recommendations regarding appropriate responsive actions, including, but not limited to, actions authorized by section 2411 of title 19, United States Code.

(d) The Secretary of Commerce and the United States Trade Representative shall assess legislative proposals regarding Permanent Normal Trade Relations with the PRC and make recommendations regarding any proposed changes to such legislative proposals.

(e) The Secretary of Commerce shall assess the status of United States intellectual property rights such as patents, copyrights, and trademarks conferred upon PRC persons, and shall make recommendations to ensure reciprocal and balanced treatment of intellectual property rights with the PRC.
Sec. 4. Additional Economic Security Matters. (a) The Secretary of Commerce, in consultation with the Secretary of Defense and the heads of any other relevant agencies, shall conduct a full economic and security review of the United States’ industrial and manufacturing base to assess whether it is necessary to initiate investigations to adjust imports that threaten the national security of the United States under section 1862 of title 19, United States Code.

(b) The Assistant to the President for Economic Policy, in consultation with the Secretary of Commerce, the United States Trade Representative, and the Senior Counselor for Trade and Manufacturing, shall review and assess the effectiveness of the exclusions, exemptions, and other import adjustment measures on steel and aluminum under section 1862 of title 19, United States Code, in responding to threats to the national security of the United States, and shall make recommendations based upon the findings of this review.

(c) The Secretary of State and the Secretary of Commerce, in cooperation with the heads of other agencies with export control authorities, shall review the United States export control system and advise on modifications in light of developments involving strategic adversaries or geopolitical rivals as well as all other relevant national security and global considerations. Specifically, the Secretary of State and the Secretary of Commerce shall assess and make recommendations regarding how to maintain, obtain, and enhance our Nation’s technological edge and how to identify and eliminate loopholes in existing export controls -– especially those that enable the transfer of strategic goods, software, services, and technology to countries to strategic rivals and their proxies. In addition, they shall assess and make recommendations regarding export control enforcement policies and practices, and enforcement mechanisms to incentivize compliance by foreign countries, including appropriate trade and national security measures.

(d) The Secretary of Commerce shall review and recommend appropriate action with respect to the rulemaking by the Office of Information and Communication Technology and Services (ICTS) on connected vehicles, and shall consider whether controls on ICTS transactions should be expanded to account for additional connected products.

(e) The Secretary of the Treasury, in consultation with the Secretary of Commerce and, as appropriate, the heads of any other relevant agencies, shall review whether Executive Order 14105 of August 9, 2023 (Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern) should be modified or rescinded and replaced, and assess whether the final rule entitled “Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern,” 89 Fed. Reg. 90398 (November 15, 2024), which implements Executive Order 14105, includes sufficient controls to address national security threats. The Secretary of the Treasury shall make recommendations based upon the findings of this review, including potential modifications to the Outbound Investment Security Program.

(f) The Director of the Office of Management and Budget shall assess any distorting impact of foreign government financial contributions or subsidies on United States Federal procurement programs and propose guidance, regulations, or legislation to combat such distortion.

(g) The Secretary of Commerce and the Secretary of Homeland Security shall assess the unlawful migration and fentanyl flows from Canada, Mexico, the PRC, and any other relevant jurisdictions and recommend appropriate trade and national security measures to resolve that emergency.

Sec. 5. Reports. The results of the reviews and investigations, findings, identifications, and recommendations identified in:

(a) sections 2(a), 2(h), 3(d), 3(e), 4(a), 4(b), 4(c), 4(d), and 4(g) shall be delivered to me in a unified report coordinated by the Secretary of Commerce by April 1, 2025;

(b) sections 2(b), 2(e), 2(i), 2(j), and 4(e) shall be delivered to me in a unified report coordinated by the Secretary of the Treasury by April 1, 2025;

(c) sections 2(c), 2(d), 2(f), 2(g), 2(k), 3(a), 3(b), and 3(c) shall be delivered to me in a unified report coordinated by the United States Trade Representative by April 1, 2025; and

(d) section 4(f) shall be delivered to me by the Director of the Office of Management and Budget by April 30, 2025.
Sec. 6. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

To read the full memorandum as it is published on the White House webpage, click here.

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The USMCA is set to terminate in 2036 at the close of its sixteen-year term. When the trio meets in July 2026, they can renew the agreement for a second sixteen-year term. However, if any one of the three decide not to renew the agreement, the trio will meet every year until they either agree to renew the USMCA—or run out of time before it expires in 2036. Although cumbersome, this process is designed to provide an opportunity for the three countries to regularly adapt the terms as they see fit. No other trade agreement has such an adaptable structure, providing an unprecedented opportunity to optimize trade within North America.

It’s possible that few other trade agreements will also have as much political pressure as the USMCA in 2026, with a range of issues now attached to its renewal including immigration, shipment of illegal drugs, and concerns about Chinese goods subject to tariffs making their way freely to the United States through the USMCA. The incoming administration’s fixation on the United States’ trade deficits with Mexico and Canada is perhaps the most traditional topic under review. 

The Trump administration’s proposed approach to these concerns is to create uncertainty through higher tariffs in order to negotiate better terms in the agreement. If the Trump administration does increase any tariffs on USMCA partners, except due to national security concerns, it will violate the terms of the agreement under Article 2.4. Canada and Mexico would likely retaliate by levying import duties of their own, effectively removing the free trade advantages provided by the USMCA. This will prove expensive and destabilizing for any company dependent on the highly integrated North American supply chains. These are the very same exporters on whom the administration relies for support. Before the administration would need to take that approach, it’s important to understand the economic leverage—and dependencies—each country has with the others. 

At the negotiating table

Canada and Mexico rely on the US economy far more than the United States relies on either of them—although the relationship is important for all three. Mexico and Canada sold 80 percent and 76 percent, respectively, of their exports to the United States in 2023. Comparatively, 32 percent of US exports in 2023 went to Canada and Mexico combined. 

The asymmetry here engenders a higher level of political importance for the USMCA within Mexico and Canada. Employment in Mexico is especially dependent on trade with the United States. When negotiations begin in 2025, Mexican President Claudia Sheinbaum will be under an entirely different level of pressure from her citizens to maintain favorable trade relations with the United States and Canada. The cards are favorably stacked for the United States to have the heaviest hand in negotiations––even without the threat of higher tariffs.

In support of US jobs

Even so, the United States has deep political interests in maintaining the USMCA. From Washington’s side, the agreement’s guiding objectives—creating more balanced trade in support of high-paying jobs in the United States—has been a point of continuity for businesses, receiving bipartisan support throughout the last four years. Of all the jobs in the United States that are supported by exports abroad, 33 percent are supported by exports to Mexico and Canada. No other regional trade relationship has a larger impact on US exporter jobs.

Although jobs supported by the USMCA make up only roughly 2 percent of total jobs in the United States, the agreement has outsized importance within key Republican constituencies. The incoming Trump administration, with its promise of creating a “manufacturing renaissance” with “millions of jobs” will need to consider that exports support roughly 40 percent of manufacturing jobs in the United States.

As for the USMCA, roughly a quarter of the US jobs supported by exports to Canada and Mexico are in manufacturing, with automobile manufacturing employing the most individuals. Manufacturing export jobs have a relatively greater importance on employment in red states—as well as key swing states such as Michigan and Wisconsin. These linchpin states helped the incoming president win the 2024 election; trade disruptions here could have high domestic political costs for the administration.

If the United States increases import tariffs and Canada and Mexico apply retaliatory tariffs, US exports will be more expensive and less profitable. Oxford Economics estimates that the proposed 25 percent tariffs would decrease trade in North America by 50 to 60 percent, which would push Canada into a recession in 2025. US exports to Canada, and, by extension, export-supported jobs would likewise falter due to slow demand. If the incoming Trump administration wishes to improve the odds for US exporters, it should maintain favorable trade conditions with the top buyers of US goods: Canada and Mexico.

Manufacturers are also importers

Of course, Mexico and Canada are not only buyers of US goods, but are also suppliers of US inputs. Tariffs will increase the cost of importing these goods, which will weigh on manufacturers’ overall production costs. Historically, higher input costs have been shown to have a negative impact on manufacturing employment. The increased input costs from the March 2018 steel tariffs directly lead to the loss of approximately 75,000 manufacturing jobs by the middle of 2019. 

Furthermore, trade within North America is highly integrated to the point that it might best be described as “circular.” Supply chains are so connected in part because of the incentive structure provided by the USMCA and its predecessor, the North American Free Trade Agreement. To qualify for duty-free trade, goods must meet rules-of-origin requirements, which generally require at least 60 percent of the value of a good to be made with regional inputs, or “content.” This influences companies to develop supply chains that cross North American borders multiple times throughout the production process—locating each phase of production where they can optimize costs. As a result, for each dollar that the United States imports from Mexico in manufactured goods, close to 30 cents is likely made up of US content, according to assessments based on the structure of these supply chains. The United States’ trade deficits with Mexico and Canada, therefore, might be viewed as much less problematic than deficits with other partners because the imports from these countries help generate demand for exports to these partners and are made up of US goods.

Assuming Mexico and Canada would retaliate in the event of US tariffs, each time a good moved across borders throughout the production process, the importer would have to pay a tariff, raising costs at every stage of the production process. A US company operating in Mexico, for example, might then be incentivized to relocate fully to the United States to avoid the tariff. On the other hand, the cost differential in doing so could be so great for some products that it might be more profitable to continue producing outside of the United States—even with the tariffs in place. In this case, consumers would still pay higher prices while supply chains stay intact.

With any increased barriers to trade among the United States, Mexico, and Canada, the administration should expect businesses to face added costs and risks from secondary effects. This includes the added costs companies would face purely from navigating the new legislative changes and in adjusting supply chains accordingly. For example, companies would likely attempt to receive exemptions from tariffs while adjusting production plans in the interim, which has labor costs and may cause production delays. These costs will weigh on small- and medium-size companies the most, as they have fewer resources to dedicate to managing their global supply chains.

Igniting a manufacturing “renaissance”

If the incoming administration wants to accomplish its goal of a US “manufacturing renaissance,” it should consider updating how the USMCA incentivizes manufacturing and fairer wages within the continent.

One such incentive is the regional content requirement. To improve the agreement in a way that generates political support, the United States should better enforce these requirements by evaluating nonregional (i.e. Chinese) companies that operate in North America to better determine if the content is truly local. The United States, Mexico, and Canada should consider if a 100 percent Chinese-owned business should be able to reap the benefits of the USMCA. It also matters how this legislation is written; the 2026 negotiations should prioritize closing any loopholes in its description of regional content.

Automotive manufacturing has the most advanced incentive structure under the USMCA and might be used as a model for a wider range of commodities. Under the USMCA, each vehicle must be produced with 75 percent regional content to satisfy the rules-of-origin requirements. Furthermore, 40 to 45 percent of the value-added content in any auto import must be made by workers making at least sixteen dollars an hour. This reduces offshoring incentives by making production in the United States more competitive, allaying a key fear.

To meet its objective of supporting US jobs, the White House could advocate for higher value-added content requirements or add a minimum wage requirement for critical manufactured products beyond automotive goods. To minimize disruptions to businesses and supply chains, the administration could propose a phased approach, whereby regional content and wage requirements would increase gradually throughout the next decade. This would still have to be targeted, of course, in order to make supply chains cost-effective, but would be a more business-friendly way to change the incentive structures to favor US and North American manufacturing.

The incoming administration has a strong enough advantage for the coming negotiations that it can expect to improve the agreement––and ensure the USMCA remains in place long after Trump leaves office.

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U.S. President-elect Donald Trump has threatened tariff hikes on the United States’ largest trading partners, but China seems to be in the most immediate line of fire as his inauguration approaches. Late last year, Trump announced plans to impose an additional 10 percent tariff on Chinese imports, citing Beijing’s inadequate efforts to curtail the fentanyl trade.

Trump has repeatedly argued that China has stolen U.S. jobs and industries and taken advantage of the United States, leading him to threaten increased tariffs of 60 percent or more on the campaign trail. The tariff proposals don’t stop there: There is growing interest within Congress to revoke China’s current “permanent normal trade telations” (PNTR) tariff status—a move supported by Trump’s nominee for U.S. trade representative, Jamieson Greer.

As the threats pile up, the incoming administration’s endgame is not clear. Are Trump and his allies issuing these tariff threats to lure China to the negotiating table, or are they more about further disentangling the world’s two largest economies? Scott Bessent, Trump’s nominee for treasury secretary, has espoused the former view, suggesting that tariffs can be an important bargaining chip. On the other hand, Greer has talked more about the importance of “strategic decoupling from China,” even if it causes “short-term pain.”

The U.S.-China Phase One trade agreement was concluded during Trump’s first term, in the wake of an escalating trade war. At the time, he lauded the “historic” agreement as “righting the wrongs of the past.” He was proud of securing China’s commitment to purchase at least $200 billion worth of U.S. goods and services over a two-year period. The agreement went even further, obligating China to strengthen its intellectual property regime, curtail technology transfer requirements, lift barriers to U.S. agriculture exports, and refrain from currency manipulation. China lived up to most of these commitments but fell short on its purchasing obligations.

When the Phase One agreement was signed in January 2020, the United States and China envisioned a Phase Two negotiation to focus on unresolved issues, such as subsidies, state-owned enterprises, excess capacity, and cross-border data transfers. However, these talks never got off the ground due to the need to take a breather after the high-stakes Phase One negotiation; the complexity of the next set of issues; and the outbreak of the COVID-19 pandemic, which quickly raised tensions between the two countries.

Six years later, the challenges to negotiating a new trade agreement have become more formidable. Both sides have expanded trade and technology restrictions while taking steps to reduce their mutual dependence. Beijing has doubled down on increasing the role of the state in its economy by providing massive subsidies and expanding the reach of state-owned enterprises. Moreover, China is now unloading its excess domestic production capacity on foreign markets at unprecedented levels, leading to record global surpluses.

These developments, coupled with the unfulfilled commitments of the Phase One agreement, suggest that a negotiated trade solution between the United States and China is out of reach. However, Trump sees himself as a dealmaker with the skills and temperament needed to achieve what was not previously possible. As the president-elect made clear during his first term, he is prepared to ratchet up tariff pain to unseen levels, regardless of the cost to U.S. interests.

Facing its own economic challenges, China may conclude that a deal with the United States—even with unconventional provisions—is a better outcome than jeopardizing what remains of the $600 billion trade relationship. If Trump orders his trade team to reengage in negotiations with China, what should the United States ask for this time around, in light of past experiences and growing obstacles?

A first step would be to revisit Washington’s initial demands of Beijing during the Phase One talks to consider putting some of these requests back on the table—or updating them for 2025. This could include demanding more in terms of intellectual property protection, agriculture, and technology transfer while adding new areas of focus, such as cloud computing. Lessons could be drawn from the first go-around regarding purchasing commitments: making targets more realistic, conducting more regular progress monitoring, and realigning products of interest with what the U.S. private sector is ready to sell.

A new agreement should not stop there. U.S. negotiators should try to curb China’s use of subsidies and financial assistance and address the factors leading to excess production, such as limited domestic demand. But they shouldn’t be surprised if these efforts don’t gain traction. Washington might also consider an accommodation aimed at limiting U.S. imports of unfairly traded Chinese products. Rather than imposing unilateral high tariffs, this could be accomplished by setting quantitative limits on select Chinese exports, like batteries, that are subject to strong enforcement provisions (such as an immediate snapback to high tariffs).

But a deal that only addresses trade flows between the United States and China would miss the mark, as many Chinese companies are moving operations to Southeast Asia, Mexico, and elsewhere to avoid U.S. tariffs. To be durable, an agreement with Beijing must also consider its growing investments in third-country markets, particularly in the automotive and electronics sectors. Strengthened anti-circumvention measures, stricter rules of origin, greater operations transparency, and even export bans on specific Chinese companies would concretely address U.S. concerns about these investments.

Currency matters should also be an integral part of any U.S.-China trade deal. Even with the risk of capital outflows, Beijing may be tempted to allow yuan depreciation to soften the blow to its exporters. The Phase One agreement’s currency provisions should be strengthened—in terms of both transparency and enforceability—to ensure that currency swings don’t undermine the objectives of a potential deal.

Both sides should also consider unwinding tariff increases imposed in recent years in nonstrategic sectors. This could be pursued through a step-by-step approach, starting with low-value consumer goods and possibly broadening over time to include certain low-tech manufacturing goods and machinery. Finally, any deal would need strong enforcement provisions, allowing the United States to quickly respond with punitive measures should China slow-walk or violate its obligations.

These proposals would face challenges, including getting Beijing on board—and Chinese negotiators will have their own demands, many of which would be nonstarters for the United States, such as the relaxation of technology export controls. But one area certainly worth exploring is opening the door for select Chinese investments in the United States, a move that has already sparked Trump’s interest. At a rally last March, he welcomed Chinese automotive investments that would provide benefits to U.S. workers.

U.S. trading partners would certainly protest such a deal with China, claiming that it would reroute Chinese exports to their markets, discourage Chinese foreign direct investment in their countries, and violate World Trade Organization obligations. Washington should do its best to allay these concerns, persuade partners to align with its approach, and continue developing alternative supply chains.

Greer has been clear that Washington needs to be “committed to fundamentally changing the U.S. trade relationship with China.” These recommendations aim to do just that.

There is no doubt that tariffs are coming in Trump’s second term, but the timing, magnitude, and the targeted economies remain unclear. The new administration’s endgame when it comes to tariffs against China is anyone’s guess; like other matters in Trump’s world, it may change week to week. In light of his transactionalism, a Phase Two trade negotiation—no matter how challenging—could be in the offing. It’s important that Washington gets it right this time.

The post How Trump Could Strike a Trade Deal With China appeared first on WITA.

“To me, the most beautiful word in the dictionary is tariff,” said Donald Trump during an interview at the Economic Club of Chicago last October.

Throughout his successful 2024 presidential campaign, Trump frequently spoke of tariffs—taxes on imported goods paid for by the importer—at rallies and in interviews. Tariffs, according to the 2024 Republican platform, are key to a vision that ensures global trade benefits Americans.

While the president-elect has proposed universal 10 to 20 percent tariffs on all goods imported to the United States, he threatened the United States’ top trade partners—Mexico, Canada, and China—with higher rates. On November 25, Trump announced that he will impose a 25 percent tariff on all goods from Canada and Mexico through an executive order on his first day in office. “This tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country,” he wrote on his Truth Social account. He also announced an additional 10 percent tariff on all goods from China, citing the same reason: fentanyl entering the United States. On November 30, Trump threatened to impose a 100 percent tariff on goods from countries that make up the BRICS, which includes Brazil, over the bloc’s proposal to create its own currency.

Trump’s proposed tariffs could mean big changes for industries in and outside the United States, North America’s supply chains, and U.S. trade partners in Latin America. The United States has six free trade agreements in effect with 11 Latin American countries. The region is home to some of the country’s largest sources of imports, including its biggest trade partner, Mexico. These potential trade barriers could become a sticking point when it comes to the scheduled 2026 review of the United States-Mexico-Canada Agreement (USMCA).

What could these tariffs mean for the United States’ trade partners in Latin America? And which relationships would feel the biggest impact? AS/COA Online looks at the proposed tariffs and the current trade relations between the United States and Latin American economies.

A universal tariff

During his campaign, Trump first promoted a 10 percent universal tariff on goods coming to the United States from every foreign country. He later suggested this number could increase to 20 percent.

While tariffs can be imposed for a variety of political and economic reasons, they are commonly set to increase the cost of importing goods and incentivize their domestic production. The company importing foreign goods pays the tariff, which can mean an increase in prices for consumers of these imported goods. According to the Peterson Institute for International Economics, Trump’s proposed tariffs could cost the average American household anywhere from $1,700 to over $2,600 annually, depending on what the tariff ends up being.

In 2023, goods imported into the United States from the Western Hemisphere totaled over $1 trillion. While Canada and Mexico represent the two largest shares of this amount, the majority of the hemisphere’s countries also have trade relations with the United States of over $1 billion. The United States is the largest trading partner of several countries in Latin America.

Higher tariffs on Mexico

In 2023, Mexico surpassed China as the main source of imports for the United States. The country currently stands as the United States’ largest overall trade partner. According to the Wilson Center, nearly five million jobs in the United States are dependent on trade with Mexico.

On November 4, less than 24 hours before election day, Trump held a rally in North Carolina, where he spoke directly about Mexican President Claudia Sheinbaum. “I’m going to inform her, on day one or sooner, that if they don’t stop this onslaught of criminals and drugs coming into our country, I’m going to immediately impose a 25 percent tariff on everything they send into the United States of America,” he said, a threat he announced—on November 25—will become an executive order on his first day in office.

The next day, November 26, Sheinbaum responded to Trump’s threats at a press conference, sharing a letter she was sending the president. “President Trump, it is not with threats or tariffs that the migration phenomenon or drug consumption in the United States will be addressed. Cooperation and reciprocal understanding are required to address these great challenges,” she wrote in the letter, “To one tariff, another will come in response and so on until we put common businesses at risk.”

Sheinbaum mentioned General Motors, Stellanis, and Ford Motors Company as successful businesses present in Mexico for many years. Vehicles, automotive parts, and trucks were the three largest imports from Mexico by value in 2023, as the automotive industry is a key component of Mexico-U.S. trade relationship. During his campaign, Trump proposed a 100 percent tariff—or even higher—on cars coming across the border from Mexico, which would violate USMCA and could become central to the treaty’s renegotiation, slated for 2026.

The automotive industry in Mexico accounts for about 5 percent of the country’s GDP and produces 3.5 million cars a year, with over 75 percent of those exported going into the United States. The industry was a major focus of the negotiation of USMCA, which went into force in 2020. Under the agreement, 75 percent of the value of cars must be made within North America to qualify for zero tariffs, which has encouraged integrated supply chains across the three countries.

Trump’s current proposed tariffs on Mexico echo threats from his first term in office. In 2019, Trump threatened to impose a 5 percent tariff on all goods imported from Mexico due to the inflow of migrants from the Mexican border. He also threatened that they would increase, up to 10 percent or 25 percent, “until the illegal immigration problem is remedied.” After reaching an agreement with Mexican authorities on immigration enforcement, Trump “indefinitely suspended” the tariff before it was set to be implemented.

Higher tariffs on Canada

Trump’s announcement about the 25 percent tariffs also included Canada. Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland and the Minister of Public Safety Dominic LeBlanc issued a joint statement following Trump’s announcement, calling Canada’s relationship with the United States “balanced and mutually beneficial, particularly for American workers.” It also highlighted Canada’s significance for the United States’ energy supply. “Last year 60 percent of U.S. crude oil imports originated in Canada,” the statement read, detailing that Canada will continue discussions with the Trump administration.

On November 26, Canadian Prime Minister Justin Trudeau told reporters he “had a good call” with Trump. “This is a relationship that we know takes a certain amount of working on, and that’s what we’ll do,” Trudeau said. He had raised concerns before about the amount of Chinese investment into Mexico, suggesting a potential side deal with the United States. “Ideally, we do that as a united North American market, but pending decisions and choices that Mexico has made, we may have to look at other options,” he said.

Trudeau met with Trump at the Mar-a-Lago resort on November 29. On Truth Social, Trump called the meeting “productive” and said the two leaders discussed “fair trade deals that do not jeopardize American workers, and the massive trade deficit the U.S. has with Canada,” among other topics. Trudeau thanked Trump for dinner.

Trade agreements with Latin American countries

Trump’s proposed tariffs could impact the six free trade agreements the United States has in effect with 11 Latin American countries. These trade deals are USMCA, the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), and free trade agreements with Chile, Colombia, Panama, and Peru. While the details of each agreement vary, they all generally reduce or eliminate tariffs on qualified goods. “For the United States, the main goal of trade agreements is to reduce barriers to U.S. exports, protect U.S. interests competing abroad, and enhance the rule of law in the FTA partner country or countries,” lists the United States’ International Trade Administration website.

In 1993, the year before the North American Free Trade Agreement (NAFTA, the trade deal that USMCA replaced in 2020) came into force, trade in goods between Mexico and the United States totaled $81 billion. In 2023, this amount stood at $797 billion. While other factors were also at play over this 30-year period, NAFTA—and later USMCA—was key in the rise of trade between the three countries.

The direct effect of free trade agreements is difficult to parse out and exclusively attribute, but for most other countries in the region, the current volume of trade of goods is significantly higher than before each agreement’s implementation. For instance, for Chile, the growth in trade with the United States from the year before the free trade agreement, 2003, compared to 2023, was 435 percent.

Besides free trade agreements, the United States also has six Trade and Investment Framework Agreements (TIFAs) in effect with 20 countries in the region: Argentina, Brazil, Ecuador, Paraguay, Uruguay, and the member states of the Caribbean Community. Each of these framework agreements is different and their names vary, but they all have the same purpose of increasing cooperation, trade, and investment.

Tariffs in Trump’s first term

During his first term, Trump imposed several rounds of tariffs, mostly on goods coming from China, as the two countries were engaged in a trade war throughout his presidency. However, he also placed certain tariffs on imports from other countries.

In 2018, Trump imposed tariffs on all solar panels and washing machines produced outside the United States, as a measure to counter Chinese products produced outside of China. While tariffs on Chinese solar manufacturers were already in place before Trump’s administration, “China moved production elsewhere and evaded U.S. relief, while maintaining capacity,” according to the U.S. Trade Representative.

A couple of months later, Trump placed a 25 percent tariff on steel and 10 percent on aluminum coming into the United States from most countries, including Canada and Mexico. The two countries responded with retaliatory tariffs on certain U.S. imports. Canada’s tariffs were applied on steel, aluminum, and other products from the United States. Mexico’s tariffs also included steel products, as well as certain food items. All measures were eliminated in 2019.

President Joe Biden kept in place most tariffs imposed by Trump on China and, according to the Tax Foundation, Biden’s administration has collected more revenue from these tariffs than was collected under Trump. Biden also increased tariffs on $18 billion worth of goods from China, including electric vehicles, steel, aluminum, batteries, and semiconductors.

To read this article as it was published on the Americas Society/Council of the Americas webpage, click here.

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