Maintaining his firm commitment to tariffs as a central policy tool to address ‘unfair and unbalanced trade’, President Trump’s second-term trade agenda expands on his previous approach, adopting a more assertive stance in tackling non-tariff barriers (NTBs) imposed by trade partners.
A unified report, coordinated by the Secretary of Commerce, the United States Trade Representative, and the Secretary of the Treasury, is due to the President on 1 April under the ‘America First Trade Policy‘ Memorandum (signed on 20 January). Companies must prepare to navigate the new framework outlined in the ‘Reciprocal Trade and Tariffs‘ Memorandum (signed on 13 February).
Elements of Trump’s Trade Policy 2.0
President Trump’s second-term trade agenda has expanded its focus in a few key areas.
A Comprehensive Review of US Trading Partners
The ‘Reciprocal Trade and Tariffs‘ Memorandum outlines five aspects of relationships with US trading partners to be assessed:
- tariffs imposed on United States products
- unfair, discriminatory domestic taxes, including a value-added tax
- NTBs, unfair policies/practices, subsidies, burdensome regulatory requirements
- policies and practices that cause exchange rates to deviate from their market value
- any other practice that imposes any unfair limitation on market access or any structural impediment to fair competition
The ‘comprehensive’ scope of these reviews – for all US trade partners, including those in digital trade – goes beyond previous reviews of its trade relationships, including those in Trump’s first term. Notably, even trading partners with tariff exemptions under existing trade agreements are subject to this review.
Estimating the Tangible Impact of NTBs
According to a Federal Register Notice by the US Trade Representative (USTR) on 20 February, public comments are being requested on ‘unfair market practices’ to assess the harm caused by non-reciprocal trade practices with certain partners. The notice specifies that submissions should quantify the harm or cost – whether actual or opportunity cost – to American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses resulting from the practice or trade arrangement of concern. Additionally, it requests that companies ascribe a dollar amount to the harm or cost, along with providing a description of the underlying methodology used to derive the estimate.
Accelerating Trade Measures
Trade measures have been executed with remarkable speed. On 1 February, President Trump signed executive orders imposing additional tariffs ranging from 10% to 25% on Canada, Mexico, and China under the International Emergency Economic Powers Act (IEEPA), which provides a significantly expedited process compared to other existing legal frameworks. Trump also reinstated tariffs applied according to Section 232 of the Trade Expansion Act on 10 February, restoring the full 25% tariff on steel imports and increasing tariffs on aluminium imports to 25%.
What does this new trade policy mean for companies?
The review undertaken under the ‘Fair and Reciprocal Plan’ is likely to form the basis of US economic talks with its trading partners moving forward. US companies and foreign-invested companies in the United States must consider both: 1) the opportunity to address barriers to market access in key export markets, and 2) the risks of eventual US tariffs that may arise from these discussions.
Market access opportunities: To address market access issues for exports, companies may consider developing supporting materials to highlight the impact of trade barriers on US manufacturing and jobs. Analysing NTBs and their impact on export market economies can help create greater opportunities as well.
Tariff Risks: Helping the US government to understand how specific companies or sectors tailor their supply chains to support US jobs and manufacturing can help mitigate the risk of tariffs. But companies need to be strategic about when and how to demonstrate their contributions to the US public interest – including any additional planned investments and reshoring of supply chains.
At Access Partnership, our economists conduct advanced economic modelling to assess the impact of trade and regulatory policies, producing studies for both Washington and global audiences. We quantify the economic effects of removing non-tariff barriers and other trade restrictions, while our strategists offer guidance on policy engagement and communication strategies tailored to individual companies’ supply chain footprints.
To find out more about how we can help your firm turn its challenges into opportunities, please get in touch.
