Trump Sets Stage for Future Tariffs and Trade Actions

On his first day in office, President Trump rolled out a sprawling set of directives to the heads of numerous government agencies charged with shaping U.S. trade policy.  While stopping short of enacting new tariffs, the Presidential Memorandum defining an “America First Trade Policy” lays the investigative groundwork for potentially sweeping changes to tariffs and the existing trade environment.   The Memorandum requires various agencies—including, e.g., the Department of Commerce, the Department of the Treasury, and the Office of the U.S. Trade Representative (“USTR”)—to issue upward of twenty reports by April 1, 2025, each one covering a unique trade-related issue pertaining to certain key themes, including unfair and unbalanced trade with all U.S. trading partners, the relationship and impact of trade relations with the People’s Republic of China, and the state of economic security matters relevant for goods entering and exiting the United States. 

The Presidential Memorandum suggests that the administration may leverage several trade policy tools to carry out a wide-ranging agenda, including the International Emergency Economic Powers Act (“IEEPA”); trade actions under Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, and Section 338 of the Tariff Act of 1930; trade remedies mechanisms; export controls; and others.  The directives outlined below stand to have a significant impact on U.S. importers, exporters, and other supply chain stakeholders.

Tariffs Under Novel Laws

The Memorandum requires various agencies to investigate unfair foreign trade practices and recommend any actions to counteract such practices under a number of federal statutes.  Many of the authorities cited in the Memorandum have rarely, or ever been used to impose import duties.

These authorities include:

• The International Economic Power Act (IEEPA, 50 USC § 1701 et seq). Under IEEPA, the President has the authority to impose unlimited import duties to remedy a foreign threat in conjunction with a national emergency.  While IEEPA has been used by numerous administrations to issue sanctions on various countries, industries, and individuals, to date IEEPA has not been used to implement tariffs. 
• Section 338 of the Tariff Act of 1930 (19 USC § 1338). Section 338 authorizes the President to impose new and additional duties on imports from foreign countries that are discriminating against U.S. commerce. The new or additional rate of duty imposed cannot exceed 50 percent ad valorem.  This statute has not been used by a Presidential administration since the early 1900s.
• 15 U.S.C. § 73: This statute provides the authority to issue duties under federal antitrust laws.  The Department of Treasury has the authority to enact any regulations to enforce this authority.
• 15 U.S.C. § 75: This statute gives the President the authority to retaliate against the prohibition of US imports with reciprocal tariffs. 

Section 301

Section 301 of the Trade Act of 1974 delegates to the USTR authority to take actions (e.g., implementing tariffs or withdrawing from trade agreements) against countries that are engaging in unfair trade practices and violating U.S. trade agreements.  President Trump utilized Section 301 tariff actions in his first term, and the tariff scheme is still in place today.  While the January 20 Presidential Memorandum does not announce immediate action on the existing Section 301 regime it may lay the groundwork for new and expanded Section 301 tariff implementation.

• Identify Potential Section 301 Targets: USTR, the Department of Commerce, and the Senior Counselor for Trade and Manufacturing will review unfair trade practices and potential remedies.
• Review Existing Trade Agreements with China: USTR will review the U.S.-China Economic and Trade Agreement to determine if China is acting in accordance with the agreement. Based on the review, USTR can recommend actions such as imposing new tariffs, potentially under Section 301.
• Revise Existing Section 301 Actions against China: USTR will assess the Four-Year review of the Section 301 investigation into China’s Technology Transfer, Intellectual Property, and Innovation practices and policies that was recently completed by the Biden administration. Following its review, USTR will consider modifications to the existing tariffs, especially in regard to industrial supply chains and circumvention through third countries.  USTR will also update estimated costs imposed by China’s unfair trade practices.
• Identify Potential Additional Section 301 Actions against China: USTR will investigate and recommend actions in response to other practices and policies from China that could be unreasonable or discriminatory and that may burden U.S. Commerce.
• Review of China’s IP Policies: The Department of Commerce will review the status of U.S. intellectual property rights granted to PRC persons and recommend actions for a reciprocal treatment of IP rights with China.

Section 232

The Memorandum addresses several “additional economic security matters” and signals that the President may utilize Section 232 of the Trade Expansion Act (which grants the President the authority to impose tariffs or other trade restrictions on imports that threaten national security) remedy several of these economic security matters.

• Review of Industrial and Manufacturing Imports: The Secretary of Commerce, in collaboration with the Secretary of Defense and other relevant agencies, will conduct a comprehensive review of the U.S. industrial and manufacturing base to determine if investigations are needed to adjust imports that may threaten national security, and evaluate the effectiveness of current exclusions, exemptions, and import adjustments on steel and aluminum and recommendations based on these findings.
• Illegal Migration and Fentanyl: The Memorandum further requires an assessment of illegal migration and fentanyl flows from Canada, Mexico, PRC, and any other relevant jurisdictions. In related breaking news, President Trump stated in a White House press conference on January 21 that he is considering applying a 10% tariff “on China” as early as February 1 in connection with illicit fentanyl smuggling. 
• Foreign Government Subsidies: The Director of the Office of Management and Budget will assess the impact of foreign government subsidies on U.S. Federal procurement programs and propose guidance to mitigate any distorting impact.

Re-Evaluate Section 321 De Minimis Treatment

The Department of Treasury, Commerce, Homeland Security, and the Senior Counselor for Trade and Manufacturing will assess losses in tariff revenues and risks in importing counterfeit products and contraband drugs resulting from the current de minimis exemption (Section 321), which allows imported shipments valued below $800 to enter the U.S. duty-free.

Trade Remedies

The Presidential Memorandum addresses several issues related to trade remedies proceedings, which encompass antidumping and countervailing duty investigations under the authority of the Department of Commerce.  

• Evaluating Exchange Rate Manipulation: The Department of Treasury will lead an investigation on policies and practices regarding major U.S. trading partners’ exchange rates between their home currencies and the U.S. dollar. The investigation may identify countries that could be currency manipulators and provide recommendations on actions to counter currency manipulation or misalignment accordingly.  Such investigations could have a significant impact on countervailing duty proceedings, specifically.  For example, in 2021, the Department of Commerce announced its first and only affirmative finding of currency-related subsidies relating to certain imports from Vietnam and imposed a countervailing duty on these products.
• Reviewing Regulations Regarding AD/CVD Laws and Verification Procedures: The Department of Commerce will review policies and regulations pertaining to the application of antidumping and countervailing duty (“AD/CVD”) laws, including transnational subsidies, cost adjustments, and affiliations. Commerce is also tasked with reviewing procedures related to the verification of questionnaire responses to assess whether such procedures adequately prompt compliance on behalf of foreign respondents and governments involved in AD/CVD proceedings, and if not, the Department of Commerce will provide modifications to the procedures and regulations as necessary.

Suspending China PNTR

The Memorandum also instructions the Department of Commerce and the USTR to assess legislative proposals regarding Permanent Normal Trade Relations with China.  Crowell has published an in-depth summary of these proposals, which were introduced prior to Trump’s inauguration.

Export Controls

The Memorandum instructs governmental reviews of the current export control system and its enforcement policies, which regulate the transfer of goods, technology, software, and services from the U.S. to foreign entities.

• Review of Existing Export Controls: The Departments of State and Commerce will review the current export controls and advise on potential modifications, with a special focus on maintaining domestic technology innovation and eliminating loopholes in existing export controls that may enable transfer of strategic goods, software, services and technology to strategic rivals and their proxies.
• Review of ICTS’s Role: The Department of Commerce will review and recommend actions on rulemaking by the Office of Information and Communication Technology (ICTS) regarding connected vehicles (defined in recent final rulemaking as vehicles driven or drawn by mechanical power and manufactured primarily for use on public streets, roads and highways, that integrate onboard networked hardware with automotive software systems to communicate via dedicated short-range communication, cellular telecommunications connectivity, satellite communication, or other wireless spectrum connectivity with any other network or device), and potentially other connected products.
• Review of EO 14105: The Departments of Treasury and Commerce will review Executive Order (“EO”) 14105 (Addressing U.S. Investments in Certain National Security Technologies and Products in Countries of Concern), which found that advancement by countries of concern in sensitive technologies/products critical for the military, intelligence, surveillance or cyber-enabled capabilities of such countries constituted a threat to U.S. national security, and declared a national emergency to deal with this threat.  The Departments will assess whether the final implementing rule includes sufficient controls to address the national security threats, and potentially modify the Outbound Investment Security Program, which regulates outbound investments by U.S. persons.