As anticipated from campaign promises, on Monday, January 20, President Donald Trump issued an executive order (EO) commencing the process to levy a host of new trade tariffs as part of his "America First Trade Policy." New tariffs have not yet been issued but are expected in the coming weeks and months. The EO calls for review under seven different tariff authorities, with the implication that actual tariff measures will follow.
Tariffs via National Security Instruments
Novel to the U.S. tariff landscape, Trump called for a review under the International Emergency Economic Powers Act (IEEPA), the law that underpins many of the economic sanctions programs administered by the Department of the Treasury, Office of Foreign Assets Control (OFAC). The IEEPA has not been used as a legal vehicle for trade tariffs to date, but its predecessor law, the Trading with the Enemy Act, was used for temporary tariffs by President Nixon. Generally, in its traditional use, the law provides a president with flexible and broad authority for regulating—or prohibiting—economic relationships with other countries. Also on January 20, Trump declared a national emergency at the southern border, which is a prerequisite to, and serves as a rationale for, the implementation of tariffs under IEEPA. As a tariff authority IEEPA remains untested in the U.S. courts, which may change after the type, target, and scope of any forthcoming IEEPA tariffs are announced.
Invocation of Traditional Tariff Measures
Trump also called for review of "unfair and unbalanced trade" under more traditional tariff authorities, some of which he employed during his first administration to impose, for example, duties on China (on a long list of commodities) or on specific imports, such as washing machines and solar. Those authorities include the Tariff Act of 1930 (measures focused on responding to discrimination in U.S. commerce (Section 338) or imposing intellectual property protections (Section 337)) and the Trade Act of 1974 (temporary safeguard measures (Section 201), or responses to conduct that is burdensome to U.S. commerce—the China-focused tariffs of the first Trump administration (Section 301)). In addition to the IEEPA review noted above, Trump ordered review of imports that impair U.S. national security, pursuant to the Trade Expansion Act of 1962 (Section 232).
Trump Identifies Potential First Targets
For the most part, the EO does not outline the countries or commodities to be targeted by tariffs, the exception being specific invocation of Canada, China, Mexico, "and any other relevant jurisdictions" with respect to "unlawful migration and fentanyl flows." This week, Trump made public statements asserting that he would impose 10% tariffs, as soon as February 1, on imports from China and 25% tariffs on imports from Canada and Mexico. However, the return dates on the trade reviews called for in the EO are not until April 2025, which indicates that tariffs published before that date may occur before the trade reviews are completed.
The America First Trade Priorities
The America First Trade Policy includes a number of other international trade relevant priorities, including review of revenue losses from de minimis imports, tightening of U.S. export controls, a feasibility study on establishing the "External Revenue Service" to collect foreign trade-related revenues, an exchange rate assessment, review of antidumping and countervailing duty (AD/CVD) policies, and investigation of extraterritorial taxes on U.S. citizens. Trump has expressed and acted on skepticism toward international agreements across an array of policy issues. As part of the America First Trade Policy, he called for a public consultation process on the United States-Mexico-Canada Agreement (USMCA), an agreement that stands to be imperiled by any forthcoming North American tariffs, and a review of existing trade agreements and identification of trade agreement opportunities.
Venable's International Trade and Logistics Group is has experience across the spectrum of the trade issues referenced above. Please reach out to the authors for guidance on how new and forthcoming trade law and policy may impact your business.