Trump’s Trade Policies — Continuing to Go Backward, More Unilateral, Confrontational and Unpredictable.

Posted on February 11, 2025 by Stuart Malawer

     The Trump administration continues to upset existing trade relations by imposing universal tariffs on steel and aluminum and by digging deeper into U.S. trade law by relying on older legislation.  In particular, by focusing on national security and foreign policy (for steel tariffs), on reciprocity for bilateral tariff increases (going back to an obscure 1930’s legal provision). and now refusing to prosecute violations of foreign corruption under the 1977 Foreign Corrupt Practices Act. These aggressive trade and international business policies mirror in many ways his foreign policy pronouncements (Greenland, Panama Canal, Gaza) and demonstrates his disregard of U.S. and international trade law.

“Tariffs have never been universally low, reciprocal, or predictable. The current multilateral trading system, first put into place in 1947 and expanded in 1995 with the creation of the World Trade Organization (WTO), accomplished a lot in lowering tariffs among member countries and establishing a system of adjudication and enforcement that (most of the time) kept tariffs from spiraling back up over many decades. But it has had much less success in bringing all tariffs down. The last substantial tariff cuts now date back nearly 30 years, to the WTO Information Technology Agreement. This failure is one factor in generating grievances over the lack of reciprocity in tariff levels between nations. In fact, some of the large emerging economies that benefit most from exports to the United States continue to maintain high tariff rates. Then it should not be surprising that a reckoning with this imbalance might be overdue. Reciprocity has been a longstanding policy and tradition in American trade politics …. current average tariff levels continue to vary substantially among WTO members …. The good news is that tariffs remain at generally historic lows. However, the lowest tariffs are increasingly reserved for countries in preferential trade agreements …. …. The United States under both Trump and Biden justified higher tariffs exceeding WTO commitments by arguing that national security and dependable supply chains were at stake, which triggered complaints over whether such moves were legal in the judgment of the WTO. The complaints, however, do not take into account the fact that other members, such as India, Indonesia, and South Africa, can raise their tariffs without violating WTO rules because their bound commitments, negotiated decades ago and justified as necessary to reflect their developing economy status.” “Reciprocal Tariffs and WTO.” Hinrich (2.11.25).

“President Trump announced sweeping tariffs on foreign steel and aluminum re-upping a policy from his first term. The president signed two official proclamations that would impose a 25 percent tariff on steel and aluminum from all countries (universal tariffs) …. Trump said that he also planned to move forward this week with so-called reciprocal tariffs, which would raise certain U.S. tariff rates to match those of foreign countries …. The largest supplier of steel to the United States in 2024 was Canada, followed by Brazil, Mexico, South Korea and Vietnam …. In his first term, Mr. Trump levied tariffs on foreign steel and aluminum using a national security provision called Section 232 of the Trade Expansion Act …. The United States imports very little steel or aluminum directly from China, since Chinese exports have long been blocked by a variety of anti-dumping and anti-subsidy tariffs. But some argue that China’s excess steel production is still flooding other markets and pushing down global prices …. Mexico, Canada and the European Union have all drawn up lists of American products they could strike with their own levies in response to U.S. measures.” “Trump’s Tariffs on Steel and Aluminum.” New York Times (2.11.25).

“Trump has imposed 25 per cent tariffs on all steel and aluminum imports from March ….  widening his global trade conflicts. Retaliation threats have started to roll in, with the EU …. While Mexico and Canada were given a 30-day reprieve from blanket levies earlier this month, they’re right back in the US president’s crosshairs. In 2023, the two nations were, along with China, the biggest exporters of steel and aluminum products to the US. These tariffs could also potentially hit countries such as Brazil, Germany and South Korea. “Trump’s Tariffs on Steel Broadens Atack on Global Trade.” Financial Times (2.10.25).

“The steel and aluminum tariffs are expected to go into effect March 12, leaving some time for possible negotiation …. For Europe, the steel and aluminum tariffs are only the first shoe to drop. Trump has made it clear in recent days that he could announce more wide-ranging “reciprocal” tariffs.” “EU Response to Trump’s Tariffs.” New York Times (2.12.25).

“Trump could announce his reciprocal tariff plan soon …. Trump said that he planned to slap reciprocal tariffs on “every country” that imposes import duties on the U.S. “Very simply it’s if they charge us, we charge them,” “Reciprocal Tariffs Coming.” CNBC (2.12.25).

“The ambitions veiled in this trade policy document are far-reaching. It provides the clearest indication of a coordinated game plan as the Trump administration searches for the best legal weapons for its desired trade policies …. Disguised in bureaucratic language, Trump 2.0’s first presidential memo promises major adjustments to US trade policy which will have global consequences. Tariffs are a clear and visible danger, but this memo on Day One provides evidence of a much larger trade strategy in the pipeline …. The memo also declares that there are both economic and national security risks that come from these goods deficits …. The America First trade document goes on to urge government agencies to use any and all existing legal avenues (including older, often obscure provisions) to address topics such as unfair trade practices; currency manipulation; application of trade rules and remedies like anti-dumping and countervailing duties; export controls; determination of losses from counterfeit and illicit trade including through provisions such as de minimis; adjustment of imports that threaten the national security of the United States (including steel and aluminum); and inbound and outbound investment rules …. It is striking that a memo about trade policy includes so many different regulatory agencies across the US government. For example, in addition to Commerce, USTR, Treasury, and State, the document tasks the Director of the Office of Management and Budget to assess foreign government financial contributions and subsidies …. But tariffs are a centerpiece of Trump’s approach, including the use of tariffs to support fiscal balance, serve as a method of threat and punishment against all and sundry in the rest of the world, act as a bargaining chip for different types of negotiation, foster domestic manufacturing, or be a symbol of America First power.” “Trump’s ‘America First Trade Memo’.” Hinrich (2.13.25).

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Trump’s Attack on both the International Trade & Political Systems — Trying to Destroy them? U.S. is now Unpredictable (Domestically and Internationally).

Posted on February 5, 2025 by Stuart Malawer

     At this point China’s retaliatory actions to Trump’s new tariffs on Chinese imports are fairly broad (antitrust, imports, exports, however, no restrictions on agricultural imports). But these actions are not that aggressive.

     What is most important, at this point, is how the U.S. position in the international relations system has very quickly become very precarious and transactional. It has also become unpredictable and erratic.  Trump’s use of tariffs under the International Emergency Economic Powers Act is very questionable and is subject to litigation. Such tariffs are also very questionable under WTO law. (China has just filed a WTO case against the U.S. for its new 10% tariffs.)

     Now have proposals in Congress to do away with “most-favored-nation’ treatment” for China. Trump’s trade policy toward China has been spelled out, kind of, in his memo “America First Trade Policy.” Indeed, the farm sector is the most at risk of damage because of retaliatory actions.

     Tariffs on our closest allies Canada, Mexico and the EU is only a part of his broad base and chaotic attack on the post-war system.  They will only lead to retaliatory tariffs and other trade actions (for example, restricting U.S. services). Note also Trump’s comments on Greenland, Panama, Canada and now Gaza and the UN, the ICC, the WHO as well as his actions concerning the U.S. domestic system (DOGE, Guantanamo and attacks on the civil service). This is only after two weeks of the new Trump administration.

“A crucial objection to what Trump is doing is the uncertainty he creates. The decisions by Canada and Mexico to enter a free trade agreement with the US, just like other countries chose to open their economies within the General Agreement on Tariffs and Trade and the World Trade Organization, were bets on policy stability …. Before Trump killed the WTO dispute settlement mechanism in 2019, countries used to bring and win cases against the US. The rules-governed order was not a fantasy. But it is now — thanks to Trump. The economics are at the heart of Trump’s abuse of the tariff weapon. But it is about far more than economics. The unpredictability of the US affects every aspect of its international relations …. If the US threatens friends, the latter must stand up to it. That is how to deal with bullies.” “Trump’s Tariffs.” Financial Times (Feb. 5, 2025).

“China unleashed a burst of retaliatory measures in response to President Trump’s tariff increase, resuming a long-simmering trade war between the world’s two largest economies ….  State Council, imposed 15% tariffs on U.S. coal and liquefied natural gas imports, while raising levies on crude oil, agricultural machinery and certain vehicles (but not on agricultural exports from the U.S.) …. China’s antitrust regulator opened a probe into Google, a high-profile symbol of American technological dominance, for possible antitrust violations, while adding PVH, the parent company of Tommy Hilfiger and Calvin Klein, to a list of “unreliable entities,” which could be used to restrict or ban firms from trading with or investing in China (also imposed export  restriction on rare earth minerals).” “China Retaliates.” Wall Street Journal (Feb. 5, 2025).

“Talk has finally turned into action and the first shots of the 2025 trade war have been fired. President Trump has used the International Emergency Economic Powers Act (IEEPA) to place 25 percent tariffs on products from Mexico and Canada (10 percent on Canadian “energy resources”) and 10 percent on all products from China. For all three countries, the rationale for these measures is to motivate action to address the fentanyl crisis in the United States—a pressing economic security priority that deserves immediate attention. However, counter to their intended goal, the tariffs on Mexico and Canada (which have since been delayed by one month) in particular risk undermining U.S. economic security by their direct economic repercussions; their inadequacy in motivating policy change by our partners, and their likelihood of degrading partnerships essential to countering global threats, in particular from China.” “IEEPA and Tariffs.” Petersen Institute (Feb. 5, 2025).

“American foreign policy under Trump is widely described as transactional. And rightly so. The president’s mindset could only be described as hugely inimical to international co-operation.   Trump has little regard for global norms or institutions — witness his immediate withdrawal, on taking office, of the US from the Paris climate accord (once again) and the World Health Organization. His world view is zero sum, focused on short-term wins rather than grand strategy.  The narrowness of the president’s conception of security and economic interests is exemplified by his threats to wage a 1930s-style tariff war on friends, neighbors and foes alike. And, more colorfully, by his view of alliances as protection rackets.” “Trump and Transactional Age.” Financial Times (Feb. 7, 2025).

“The chaos unleashed by Trump’s demands brought back memories of the trade battles during his first term in office. The hardline trade hawks within the new administration, led by Peter Navarro, Trump’s manufacturing and trade adviser, are setting the agenda, with the voices of more cautious officials such as Bessent muted — for now …. As it became clear over the weekend that Washington intended to impose sweeping levies without exemptions — apart from a lower rate of 10 per cent for Canadian oil — the backlash began.” “Trade Chaos.” Financial Times (Feb. 7, 2025).

“Farmers understand that trading relationships go up on a stairway, where you work hard to build them up, but go down on an elevator — very, very fast” …. Suddenly, farmers were facing the specter of retaliatory tariffs and the prospect of a full-scale conflict that some fear could decimate America’s rural heartland …. Farmers in an area of the country that has become a bedrock of support for Trump now worry that the president’s tariffs, though suspended at the last minute, have permanently damaged the image of the US in the eyes of its most important trading partners …. Free trade is the backbone of the economy in the Midwest …. Yet the prospects for farm finances could get even gloomier if Trump makes good on his threat of import levies.” “U.S. Farmers and Trade War.” Financial Times(Feb. 7, 2025).

“Weeks into Donald Trump’s second term as U.S. President, his vision of American foreign policy appears even more transactional and unilateral than during his first administration.” “Trump’s American Foreign Policy.” Foreign Policy (Feb. 9, 2025).

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Trump Launches Trade War — Protectionism & Economic Nationalism — ‘Expansive’ Use of U.S. Laws & Attacks Rules-Based Trading System (as Expected).

Posted on February 3, 2025 by Stuart Malawer

     Trump’s trade war now includes his use of the International Economics Powers Act and his rejection of the de minimis exception.  Overall, his actions amount to rejection of the post-war system of trade relations and toxic unilateral action, using trade and economic coercion for non- trade purposes. One thing is guaranteed — more domestic and WTO litigation.

“Trump unleashed aggressive new tariffs on imports from Canada, Mexico and China, a day after threatening the EU with high levies. Trump is gambling that he can pressure US trading partners to comply with Washington’s wishes …. These tariffs herald a new era of US trade protectionism that will affect all American trading partners, whether rivals or allies, and will significantly disrupt international commerce …. This could be a trade war on steroids …. The first round was more targeted. Now they seem to be going across the board ….  Trump now wants to use tariffs to generate revenue to pay for the extension of trillions of dollars of tax cuts …. As Trump doubles down on tariffs, he faces little resistance from business groups and free-market Republicans.”  “Trade War on Steroids’: New Age of US Protectionism.” Financial Times (Feb. 2, 2025).

“Why is free trade such a hard sell? Even though virtually every economist since the sixteenth century has agreed with the case for open markets …. Polls show only tenuous public support for free trade and even less understanding of its virtues …. There is a fundamental disconnect between economic theory and the worldview of the general public …. Perhaps the public sees the central goal of an economic system as providing well-paid jobs, not producing cheap goods …. If so, the standard case for free trade evaporates.” “Free Trade Paradox.” Foreign Affairs (Feb. 2, 2025).

“No president since World War II has been more determined to scuttle the remnants of globalization for unvarnished economic nationalism …. The entire process of trade liberalization was wiped out. “Trumps Tariffs is the End.” New York Tims (Feb. 2, 2025).

“Trump is the first president to use the International Emergency Economic Powers Act to impose tariffs, teeing up likely legal battles that will test his executive authority …. The International Emergency Economic Powers Act, passed in 1977, grants the president broad authority over economic transactions, and a wide range of abilities to deal with “any unusual and extraordinary threat,” stemming in whole or in part from foreign sources. Presidents, including Trump’s predecessor Joe Biden, have used the law to impose economic sanctions on other countries, including on Russia after it launched its 2022 war on Ukraine. But the closest a president has come to citing a national emergency to impose tariffs was when President Richard Nixon used a different law — the Trading with the Enemy Act of 1917 — to levy a temporary universal tariff on all imports in 1971. Trump justified his new by pointing to “the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl …. Trump’s use of IEEPA to justify his trade actions doesn’t really pass the red-face test …. The question will be, can you find a judge who will write an injunction to stay the tariffs from going into effect that will be hard, because you’re asking a federal judge to essentially say, ‘I know more than the President does about what an emergency is’ ….  What about the WTO? China has already threatened to file a complaint with the World Trade Organization and take unspecified “corresponding countermeasures to firmly safeguard its own rights and interests.” The WTO has previously ruled that the U.S. has illegally imposed duties on China and other countries.” “Trump’s Tariffs and IEEPA.” Politico (Feb. 3, 2025).

“President Trump’s tariff measures included a significant change to trade rules that could increase costs for many products bought online, including on Amazon, Shein and Temu …. This obscure provision of trade law underpins major business models. Shein, Temu and many sellers on Amazon have used the de minimis exemption to bypass tariffs. The exemption allows packages to be shipped from other countries without paying tariffs, as long as the shipments do not exceed $800 per recipient per day.” “De Minimis Knocked Out by Trump.” New York Times (Feb. 3, 2025).

“Soft power is out. Hard power is in. Since returning to the White House, Trump has demonstrated that he prefers to bludgeon, not bargain, his way to foreign policy goals …. Trump has shown a willingness to use American power in a way that most of his modern predecessors have not. His favorite blunt instrument is not military force but economic coercion, like the tariffs. “Favoring Tough Guy in Trade and Foreign Policy.” New York Times (Feb. 2, 2025).

“A growing number of countries, including American allies, are striking trade deals as the Trump administration erects a higher fence around its global commerce …. In just the last two months, the European Union concluded three new trade deals …. By punishing longtime allies with tariffs, Trump is encouraging other nations to form trading blocs and networks that exclude the United States …. The trend is not necessarily anyone’s preference, he said, but the arrangements offer a “second best” option given America’s rejection of a more open economic order.” “Countries Striking Trade Deals.” New York Times (2.2.25).

“The postwar bipartisan consensus that the U.S. prospers by fostering cooperation and integration with allies and neighbors is gone. In its place looms the prospect of continuous trade war driven not by traditional alliances and ideology, but the priorities of the day …. He used a statute, the International Emergency Economic Powers Act, usually reserved for terrorists and rogue states. It imposes almost no waiting period, is unusually broad and is difficult to block by Congress or via the courts. It effectively allows Trump to wage economic war with virtually no notice, oversight or expiration date.” “Trade Threat with Abandon.” Wall Street Journal (2.4.25).

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Trump’s Tariffs (China, EU, Mexico & Canada), Little to do with Trade — Broader Goals — More Retaliation, Domestic & International Litigation.

Posted on January 29, 2025 by Stuart Malawer

     Trump is now relying on obscure or little used legislation as a basis for this tariff actions and threats. These will undoubtedly result in domestic and international litigation. Most likely making new domestic law addressing the Congress’ exclusive authority to regulate trade and impose tariffs. Trump’s actions will also result in more international litigation (WTO & USMCA). 

      His most recent tariff actions against China, Mexico and China (and threatening the EU) are kicking off a totally unnecessary trade war — with no real economic or trade objective. Primarily motivated by domestic political concerns to rile up his base — no real national security or trade reasons. Grievances and threats are simply no way to conduct sensitive foreign policy. We don’t need a return to the power politics of the 1930’s.

“In an extraordinary act of unity, 1,028 American professional economists in the spring of 1930 signed a letter urging Congress to reject and President Herbert Hoover to veto the Smoot-Hawley Tariff Act. Yet that June, Congress passed it and the president signed it into law. The Smoot-Hawley Tariff helped turn a stock market rout and a building financial crisis into a worldwide depression and triggered a global trade war that halved American exports and imports …. In sum, tariffs don’t have a predictable effect of reducing trade deficits, and trade deficits aren’t necessarily an adverse economic development. Indeed, trade deficits often arise as foreign investors choose the U.S. as a preferred destination for their capital.” “Economists to Trump.” Wall Street Journal (January 31, 2025).

“President Trump will fire his first tariff salvo against those notorious American adversaries . . . Mexico and Canada. They’ll get hit with a 25% border tax, while China, a real adversary, will endure 10%. This reminds us of the old Bernard Lewis joke that it’s risky to be America’s enemy but it can be fatal to be its friend …. Take the U.S. auto industry, which is really a North American industry because supply chains in the three countries are highly integrated. In 2024 Canada supplied almost 13% of U.S. imports of auto parts and Mexico nearly 42%. Industry experts say a vehicle made on the continent goes back and forth across borders a half dozen times or more, as companies source components and add value in the most cost-effective ways …. Tariffs will also cause mayhem in the cross-border trade in farm goods …. Then there’s the prospect of retaliation, which Canada and Mexico have shown they know how to do for maximum political impact. “Dumbest Trade War in History.” Wall Street Journal (Feb. 1, 2025).

“Trump has said he will hit the EU with tariffs, adding the bloc to a list of targets including Canada and Mexico and bringing the US to the brink of new trade wars with its biggest trading partners …. Hitting the US’s biggest trading partners with steep tariffs sharply raises the risks of igniting full-blown trade wars just days into Trump’s second term as president. Both Canada and Mexico have prepared packages of retaliatory tariffs and are ready to implement them. The EU has also said it would defend itself with retaliatory tariffs, as it did in Trump’s first term. “Trumps New Tariffs and Trade War.“ Financial Times (February 1, 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).

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Trump Threatens New Tariffs & Int’l Taxes — The Newest Onslaught on the Global Economy.

Posted on January 22, 2025 by Stuart Malawer

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).

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Is Trump the New McKinley on Tariffs & Protectionism?

Posted on January 20, 2025 by Stuart Malawer

     I taught global trade law many years. I must say no one was very interested in actual tariffs and I discussed them very little. Except perhaps trying to figure out the Harmonized Tariff Schedule, and only in passing. This sets out the tariff rates for all imported goods. It’s something like trying to figure out the Internal Revenue Code. You need to figure out the classification of the imported product to determine the tariff rate and tariff (tax on the imported goods that the importer pays). Now of course tariffs are the number one international issue for Trump 2.0. Knowing the history of US. tariffs and U.S. presidents is very illuminating — From McKinley to Hoover to Reagan to Nixon. The question now is will Trump be the new McKinley?

 

 

“Displaying a somewhat improbable interest in the intellectual history of taxes on imports, Donald Trump has several times cited the 19th century as an inspiration. Specifically, he’s a fan of William McKinley, president from 1897 to 1901. To free-traders, the McKinley tariff of 1890, is almost as notorious as the Smoot-Hawley one — though Smoot-Hawley kicked off a global surge in protectionism while the McKinley tariff came at a time of enormous industrial expansion …. If Trump is a new McKinley, we’re in for some really quite serious long-term protectionism and a reordering of the US economy. This is unlikely to make the US better off …. Reagan pushed forward the development of the international system through the Uruguay Round of trade talks that ultimately helped to create the World Trade Organization …. If Trump undertakes similar unilateral action, he will be very likely to use the International Economic Emergency Powers Act, a law that grew out of the Trading with the Enemy Act employed by Nixon …. Nixon ran a rambunctious administration with abrasive advisers and enjoyed unsettling other governments to force them into concessions.” “Trump Trade 2.0 – From McKinnley to Reagan to Nixon.” Financial Times (Jan. 20. 2025).

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Dr. Stuart Malawer on Int’l Trade & Int’l Law — Op-Eds in Richmond Times-Dispatch (2011-2025).

Posted on January 15, 2025 by Stuart Malawer

Dr. Stuart Malawer — Op-Eds in Richmond Times-Dispatch (2011-2025).

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‘Laissez-Faire Globalization’ Needs a Redo (a New Industrial Policy and New China and Global Tax Policies) — So They Say.

Posted on January 14, 2025 by Stuart Malawer

     The Biden administration’s trade policy and Trump 1.0 (and now Trump 2.0) focused on redoing U.S. trade policy and developing a newer industrial policy promoting U.S. industry, workers and national security. (So they say …) Clearly, trade policy and in particular tariff policy have undergone and continue to undergo significant rethinking by many in the U.S. Biden’s reassessment was significant.

     This was built upon Trump’s earlier attack on the existing trade policies. The promise of Trump 2.0 seems to be even exponentially greater than both Trump 1.0 and Biden’s policies, especially as to China. Here’s a recent statement of the outgoing Biden’s USTR (Kathrine Tai) on trade policy generally and comments on China and the intertwining of new global tariff threats and new global tax rules. China has instituted new laws concerning retaliation and national security and the U.S. has recently opened a Section 301 investigation into Chinese maritime industry practices.

 

“The effects of trickle-down policies have become all too clear. They have left working people behind all over the world, pitting those in one economy against those in another as the private sector prioritizes short-term profit …. Laissez-faire globalization has left the United States and other democracies vulnerable and less secure …. China, in particular, is actively intervening in the marketplace to dominate key sectors and to strengthen its ability to coerce others to leverage more favorable political and economic decisions …. Trade policy must work hand in hand with domestic economic policy, not be placed in a separate silo …. Executing a fair competition agenda after decades of laissez-faire policies is not a simple task …. The world is moving past the paradigms of the Chicago school and the so-called Washington consensus, and that gives the United States the chance to shape trade and international economic policy so that it is more equitable for the underserved at home and abroad.”  “Purpose of Trade Policy.” Foreign Policy (Jan. 2025).

“A long series of tit-for-tat measures and countermeasures risks growing into an all-out trade war, and this would cause substantial damage to the world economy …. Washington’s long quest to punish China — carried from Trump’s first administration into President Joe Biden’s, and now into a second Trump term — rests on some muddled thinking about the challenge Beijing presents. Gripes about trade and fears stemming from lost U.S. manufacturing jobs have gotten mixed up with concerns about the threat that China’s rise could pose to national security …. This moment calls for increased collaboration to protect a global economy that remains tightly intertwined despite years of brewing hostility between its two dominant powers.” “How Not to Deal With China.” Washington Post (Jan. 13, 2025).

“The imposition of tariffs in response to global tax measures could hamper economic growth by raising operational costs for businesses and increasing prices for consumers …. A key part of the OECD deal is known as the undertaxed profits rule and often referred to as the UTPR, is viewed as discriminatory. The rule allows countries to increase taxes on a local subsidiary of a multinational group if the multinational pays less than 15 per cent of corporate tax in any other jurisdiction. The rule would mean other countries would be able to levy top-up taxes on US companies.” “Tariffs and  Global Tax War.” Financial Times (January 14, 2025).

“A strategy for a world barraged by Trump’s promised tariffs is to ignore them. Incensed as countries might be about U.S. bullying, leaders abroad should look for paths around America and work to rebuild the global trading system …. Rather than shooting themselves in the foot, countries might instead copy one thing China did when it was hit by tariffs during Trump’s first term: It lowered tariffs on imports from other countries. This disadvantaged American exporters and benefited the Chinese economy by attracting cheaper imports from the rest of the world …. This sort of strategy might even temper Trump’s hand. The United States is a big market, but it accounts for only 13 percent of global imports. Many countries could replace lost access to the United States fairly easily.” “Fighting a Trade War.” Washington Post (January 18, 2-25).

In the past, Beijing’s responses were measured. But its words and actions are growing sharper, and the targets of its retaliatory blows are widening to include supply chain vulnerabilities, critical minerals and individual companies …. Likewise, Beijing’s punitive actions increasingly mirror Washington’s …. China has quietly passed its own laws that ban compliance with laws, sanctions or boycotts in other countries. The commerce ministry has the authority to deem commercial decisions as a threat to China’s national security.” “China and Retaliatory Trade Sanctions.” New York Times (January 19, 2025).

“The new Biden investigation, issued by the US trade representative under Section 301 of the Trade Act, lays out how China has used non-market practices to dominate the global maritime industry …. More importantly, there are legitimate national security and commercial supply chain reasons to build more non-Chinese maritime capacity …. Of course, increasing maritime capacity is a long-term, heavy lift. And yet, the success of the Chips Act, which has rebooted US semiconductor production in less than two and a half years, shows that it is possible to create more resiliency and redundancy in critical industries when there is political will.” “Trumps Challenge on Trade.” Financial Times (January 19, 2025).

 

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TRADE LAWYERS & LOBBYISTS IN TRUMP 2.0 — EXPONENTIALLY IN DEMAND.

Posted on January 8, 2025 by Stuart Malawer

     No doubt about it. One of the hottest areas in law and lobbying in D.C. for the next four years will be tariffs and trade.  (Once a backwater of policy issues in Washington.) The domestic and global landscape is about to be changed greatly — greater chaos and unpredictability. More focus on the U.S. domestic economy and national security. The problem is this will generate a great deal more politicalization and rise of lawyers and lobbyists trying to make deals in any which way. One loser will certainly be the formulation and implementation of sound foreign policy.

“Law firms that thrived in the heavy regulatory environment of the Biden administration are quickly pivoting to capitalize on a host of different opportunities presented by a second Trump presidency …. Firms are being inundated by clients calling about Trump’s proposed policy shifts, asking how new tariffs will disrupt supply chains, whether relaxed antitrust and financial enforcement will spur deal activity ….. Trade is among the areas where demand for counsel is increasing quickly. With Trump pledging that he will impose tariffs on Mexico, Canada and China, firms are handling concerns about supply-chain disruptions and restrictions companies might encounter because of the tariffs. Top firms across the U.S. are also bracing for major changes in the antitrust landscape.” “Law Firms, Trade / Tariffs & Trump Landscape.” Wall Street Journal (Jan. 8, 2025).

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Jan. 2025 — Recent Trade Actions Will Provide Trump 2.0 with a Greater Platform for Even More Confrontational Trade Policies.

Posted on January 3, 2025 by Stuart Malawer

    Recent developments in the last few weeks leading up to Trump 2.0 indicate strongly that a new era in trade policy is being cemented. Biden’s recent extension of export controls on exports to China concerning technology, his blocking of the Nippon-U.S. Steel merger, and the withdrawal of U.S. corporate support for stable China trade and investment relations indicate clearly that the Trump administration will be able to rely upon these actions in extending even greater confrontational policies toward China and globally — promoting U.S. protectionism and isolationism.

 

” For more than a decade, the United States has been throwing sand in the gears of world trade. During his first term as president, Trump took the country out of the Trans-Pacific Partnership, emasculated the World Trade Organization’s dispute settlement mechanism, and slapped tariffs on imports from friends and foes …. At the end of his presidency, Biden has decided to block a Japanese company’s acquisition of U.S. Steel …. And now Trump 2.0 is promising tariffs on everybody …. The rest of the world doesn’t want to play ball, however. As the United States walls itself off from the global economy, other countries are instead trying to further entwine economically …. But its protectionism is spurring other countries to join together, to guarantee access to markets.  “U.S. Protective Trade Policies (Protectionism) and Isolationism.” Washington Post (January 10, 2025).

“On Dec. 2, the United States announced a new round of export controls on advanced semiconductors to China, and more restrictions are expected soon …. China, of course, never bought the “small yard, high fence” idea. It does not accept the premise that national security technology controls are distinct from broader economic competition between the two powers, and it could see the wide-ranging implications of these supposedly narrow restrictions. The Biden administration’s attempts at reassurance did not dissuade China from responding with retaliatory measures, including this month’s announcement that China would block the export of certain critical minerals to the United States. Trump, for his part, does not seek to separate economic and security competition and has shown little interest in minimizing disruption or cooperating with allies. His administration is poised to severely curtail trade and investment with China and pressure allies to do the same …. Will Trump’s more confrontational approach work better? His team will need to tackle the same challenges that the Biden administration faced.” “Small Yard, High Fences.” New York Times (Dec. 31, 2024).

“Now, as Trump prepares for his second administration, American companies have largely gone silent about the importance of the U.S.-China relationship. That is because American businesses no longer see China as the land of opportunity. The promise of China’s market has faded as its once-booming economy hits trouble …. Washington has also made it harder for American companies to do business in China via both policies and the political atmosphere …. U.S. companies that have spent a lot of time and money in building businesses in China are no longer inclined to defend those investments with public lobbying campaigns in Washington.” “U.S. Corporations Backing Away from Supporting China.” New York Times (January 2, 2025).

“Biden blocked the sale of U.S. Steel to Japan’s Nippon Steel, fulfilling his pledge to keep the storied steelmaker domestically owned. Biden’s decision comes after the Committee on Foreign Investment in the U.S spent months reviewing the $14.1 billion deal for potential national-security risks. the White House required the companies to abandon the deal within 30 days unless Cfius agrees to extend the timeline …. Biden’s rejection of the deal is the latest sign of the U.S. government’s tilt toward protectionist policies to boost homegrown businesses …. Trump levied tariffs on steel imports in 2018 during his first term and has pledged to use tariffs aggressively again in his next administration. Biden expanded requirements for made-in-America metal on government-funded projects and viewed himself as an advocate for blue-collar workers and unions …. On Dec. 23, Cfius members notified the president that it had deadlocked over whether to recommend the deal. That left the decision up to Biden, who months ago said he was against foreign ownership of the Pittsburgh-based company.” “Biden Stops Nippon-U.S. Steel Merger.” Wall Street Journal (Jan. 3, 2025).

“Navarro concluded that with China in the WTO it was now impossible to create the type of level playing field that Ricardo had wanted, because Beijing had rigged the system. America, the piggy bank, will continue to be plundered by a trade deficit that transfers more than half a trillion dollars of American wealth a year into foreign hands . . . [through] industrial espionage, rampant cheating, intellectual property theft, forced technology transfer, state capitalism and currency misalignments …. Several key themes emerge. One, there is a widespread view in the Maga movement, including senior levels of President Trump’s circle, that neoliberal economics has failed and Ricardian economics is no longer relevant. We are in a populist nationalist fight. A second key theme is profound hostility to China, to a point where some Trumpian are reluctant to even see Beijing buy many Treasuries. A third is that if trade flows are reimagined, finance might also need to be, to protect American interests; the so-called Bretton Woods system created by western allies in 1944 to shape global finance might have to be rethought …. “Meganomics and Trump.” Financial Times (1.4.25).

“The US-China trade war is set to return with even greater intensity, likely overshadowing the first iteration …. The World Trade Organization’s dispute settlement system has been paralyzed since 2019 due to the US blocking appointments to its Appellate Body (AB). Despite pledges at the WTO’s 12th Ministerial Conference in 2023 to restore a “fully and well-functioning” system by 2024, progress on restoring the system remains elusive, with ambiguity surrounding the AB’s fate …. As the largest free trade agreement in the world, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) set a “gold standard” for trade deals from its inception, ironically nurtured and established by the US itself before Trump pulled the US out of its membership. On 16 September 2021, China formally applied to join the CPTPP …. As 2025 unfolds, the global trade system faces significant disruptions from the intensification of the US-China trade war to ongoing reform debates within the WTO and regional trade agreements like the CPTPP.”  “Trade Policy 2025.” Hinrich (Jan. 7, 2025).

“Trade-minded people in Asia need to pay particularly close attention to Trump’s pledge to fundamentally reverse the US’ traditional Asia-facing economic openness, manifested in the team of personalities the president-elect has assembled to manage his foreign policy. Some are neo-conservatives who want to devote more US resources to the projection of American power and take additional steps to constrain the rise of China. But others – including Donald Trump himself – lean isolationist and transactional, and apply “America First” principles when evaluating the question of “what’s in it for the United States?” Donald Trump’s transactional attitude extends into the trade and investment policy realm, reflecting a deep sense of national grievance about America’s trade deficits and dependence on manufactured imports. Trump firmly believes that America’s current external economic situation is “unfair,” and needs to be rectified.“ “American Trade Policy and Asia.” Hinrich (Jan. 7, 2025).

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