Global Taxes are the new battlefield announced by President Trump during his first week in office. Trump threatens new tariffs and new taxes on foreign companies. His threat of new taxes is the newest threat in his onslaught on the trading system. This relies on a never used obscure tax provision (and is a specific attack on the OECD). He also threatened new tariffs if foreign companies don’t move production to the U.S. Further promoting ‘America First’ and protectionism and immigration policy. This is a major use of economic coercion in U.S. foreign policy for many domestic and non-international goals. Questionable under both domestic and international law — As well as a major divergence of U.S. foreign policy (even beyond many 19th and 20th century U.S. presidents). And a major divergence from the international rules developed since the end of World War II.

“A presidential memo called on federal agencies to remediate “unfair trade practices” and identify “currency manipulators”. Trade pacts with China, Canada, Mexico and all other partners were placed under review” ….  Trump’s proposals could take the average tariff rate on all imports to its highest since the 1930s …. Mexico has overtaken China and Canada to become the largest provider of US imports …. Weaponizing trade to achieve different ends. Trump has linked tariffs to other policy goals, beyond reducing trade deficits. “Trump’s Trade Salvo.” Financial Times (January 22, 2025).

“Trump has threatened to double tax rates for foreign nationals and companies in the US to hit back at “discriminatory” levies on American multinationals, in a move that threatens to trigger a global confrontation over tax regimes …. In a memo outlining his “America First” trade policy, the US president referred to an obscure 90-year-old provision of the US tax code — Section 891 — that empowers him to retaliate against foreign countries by imposing punitive taxes on their citizens and businesses in America …. “This [invoking Section 891] is the most extreme option …. Trump also issued a separate policy memo withdrawing US support for last year’s OECD global tax pact, which allows other countries to levy top-up taxes on US multinationals …. Trump’s memo on the OECD also includes investigating “whether any foreign countries are not in compliance with any tax treaty with the US or have any tax rules in place, or are likely to put tax rules in place, that are extraterritorial or disproportionately affect American companies ….The global deal agreed at the Paris-based OECD in 2021 and partly introduced by several countries last year was expected to raise the tax take from the world’s biggest multinationals by up to $192bn a year. Under “pillar two” of the OECD deal, if corporate profits were taxed below 15 per cent in the country where the multinational was headquartered, signatories could potentially charge top-up levies …. We are seeing international taxation moving from a multilateral domain to a bilateral one based on strong unilateral assertions. “Trump and Global Tax.” Financial Times (January 22, 2025).

“Trump is taking aim at a tax scheme cooked up at the Organization for Economic Cooperation and Development (OECD). The first part of the deal, known as pillar one, imposes a surtax on the world’s largest companies and is aimed primarily at American tech and pharma firms. Pillar two creates a minimum global effective tax rate of 15%. Governments such as France or Germany could impose “top-up” taxes on U.S. companies whose tax bills at home are too low …. The global tax deal also gets a veiled mention in a separate executive order on trade. That order instructs officials to examine whether other governments impose “discriminatory or extraterritorial” taxes on U.S. citizens or companies—followed by a menacing mention of section 891 of the tax code. That provision allows the U.S. to double the tax bills of foreign companies or individuals whose governments single out American companies for heavier taxation. It’s the nuclear option of global tax policy.” “End of the Global (OECD) Tax Affair.” Wall Street Journal (January 22, 2025).

“Trump said he planned to put a 25 percent tariff on products from Canada and Mexico beginning on Feb. 1, claiming that the countries were allowing “mass numbers of people and fentanyl” to come to the United States. Trump said he would also put an additional 10 percent tariff on Chinese products by the same date, accusing China of sending fentanyl to Mexico and Canada, which was then crossing into the United States …. Mexico, China and Canada account for more than a third of the goods and services that are imported to or bought from the United States, supporting tens of millions of American jobs. Together, the countries purchased more than $1 trillion of U.S. exports and provided nearly $1.5 trillion of goods and services to the United States in 2023, the last year government data is available …. While tariffs have long been used by the United States as punishment for unfair trading practices, Trump’s first use of them is aimed at an entirely different outcome: tightening American borders against immigrants and illegal drugs.” “Trump Tariff Countdown.” New York Times (January 23, 2025).

”Trump — Come make your product in America and we will give you among the lowest taxes of any nation on Earth …. But if you don’t make your product in America … you will have to pay a tariff. Expressing frustration at tariffs the European Union places on American farm products and cars, Trump said the They put tariffs on things that we want to do.” “Trump – Produce U.S. or Tariffs.” Wall Street Journal (Jan. 24, 2025).

“In 1815, as the Napoleonic Wars ended and a fear of cheap grain imports arose, the landowner-protecting British Parliament passed the Corn Laws, imposing tariffs on foreign wheat and maize. This helped some farmers, but the Industrial Revolution was just starting, and workers who had flooded into cities faced shortages and high bread prices. There were many riots …. Why do presidents have the power to tariff anyway? Article I, Section 8 of the Constitution plainly states: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises. . . . To regulate Commerce with foreign Nations.” In June 1930, Herbert Hoover signed the disastrous Smoot-Hawley Tariff Act, imposing almost 900 duties. After that mistake, in 1934 during the avoidable depression, Franklin D. Roosevelt signed the Reciprocal Trade Agreement Act, enabling presidents to negotiate trade agreements and apply tariffs themselves …. The General Agreement on Tariffs and Trade was created in 1947 and drove massive postwar trade and growth. But, worried about the Soviets, Congress passed the Trade Expansion Act of 1962 and specifically Section 232, which allowed presidents to restrict imports they deemed a threat to national security. Section 301 of the Trade Act of 1974 authorized presidents to impose tariffs on countries that violate agreements or burden U.S. commerce. The International Emergency Economic Powers Act 1977 allows presidents to regulate trade during national emergencies. Congress sure loves giving its power away. No wonder Mr. Trump has a crush on the word “tariff.” “Trump Tariffs.” Wall Street Journal (January 26, 2025).

“Trump is now wielding tariffs to achieve a broader set of goals than during his first term, when he focused largely on reducing the trade deficit and countering what he described as unfair Chinese trade practices …. Businesses that vigorously fought tariff proposals during Trump’s first term have largely accepted the fact that more are coming. Their hope now is less to persuade the president to abandon his plans than to be smart about implementing them …. Compared with 2018, the global landscape today reflects greater concern over fragile supply chains, geopolitical tensions and structural factors like aging populations and high levels of public debt – all of which could contribute to higher inflation.” “New Trade War.” New York Times (January 26, 2025).

“Strikingly, Trump reached for an obscure, 90-year-old provision in the US tax code to threaten a doubling of tax rates for foreign nationals and companies if their home countries were deemed to have imposed “discriminatory” taxes on American multinationals. …. Yet, outside the US, the threat of a widening array of trade barriers and conflicts over tax policies is weighing on the economic outlook …. “The New Economic War.” Financial Times (January 25, 2025).

“Trump has long wielded tariffs as a weapon to resolve trade concerns. But the president is now frequently using them to make gains on issues that have little to do with trade …. Trump is also not limiting himself to the trade-related laws he relied on to impose tariffs in his first term …. Trump has appeared willing to deploy a legal statute — the International Emergency Economic Powers Act of 1977, or IEEPA — that gives presidents broad powers to impose trade and sanctions measures if they declare a national emergency …. The W.T.O. carves out exceptions for its members to act on issues of national security, and governments have used that exception more liberally in recent years when imposing tariffs or limiting certain kinds of trade.” “Trump Tariffs for any Cause.” New York Times (Jan. 29, 2025).