Trade and Tariffs

A central feature of the Trump Administration’s trade policy approach in his first term was the use of tariffs as a national security measure – and that trend is anticipated to continue in his second term in office. 

Trump has signaled that tariffs as a matter of trade policy will again be on the agenda. Howard Lutnick (Commerce Secretary designee), Jamieson Greer (USTR designee), and Robert Lighthizer (identified as “Trade Czar) all have a track record of aggressive negotiation of trade agreements, paired with the use of tariffs as a national security matter. What is less clear is whether President-elect Trump’s campaign promise to impose dramatically increased tariffs across the board will be fully realized. Bilateral trade policy (even in the context of the North American trifecta of Canada, Mexico, and U.S. trade), instead of the multilateralism that was a hallmark of the Biden administration, will likely see a resurgence in 2025.

The following are the most likely trade remedy tools to be deployed in the second Trump term:

• The International Emergency Economic Powers Act: This statute offers the broadest authority for the president to impose economic sanctions or restrictions based on national security.  It was not used substantively in the context of tariffs, although the first Trump administration did threaten to impose tariffs on Mexico in 2019 to combat illegal immigration. If other tools prove to be less effective than anticipated or there is a desire to move more swiftly than other remedies permit, IEEPA could be deployed in the context of trade.
• Section 201 of the Trade Act of 1974: This authority allows for the imposition of temporary tariffs where a surge in foreign imports of a particular product class negatively impacts U.S. production.
• Section 232 of the Trade Expansion Act: The “232 Tariffs” previously targeted steel and aluminum imports and contained a process by which affected companies could petition to have their imports excluded. The 232 process does require the Commerce Department to issue a finding that specific imports impair national security.
• Section 301 of the Trade Act of 1974: The “301 Tariffs” derive their authority from the ability of the president to protect domestic industry from unfair trade practices. This process, too, included an exclusion procedure in the first Trump Administration, which could be continued in the coming term. 

The other trade area of intense focus, given the ongoing conflict in Ukraine, broad global concern over the influence of China, and other national security considerations, is the use of trade sanctions to influence behavior. In the first Trump term, there was a dramatic increase in the use of sanctions under the Global Magnitsky (GLOMAG) program to target non-US companies and individuals for human rights abuses or as an anti-corruption measure. Given the protectionist nature of the first Trump administration, sanctions are expected to remain a critical foreign policy tool in the coming term.