During his campaign, President Trump often stated that he would be implementing an “America First” international trade policy, which he said explicitly would include higher tariffs, potentially on imports from the entire world. On January 20, President Trump issued a presidential memorandum taking the first steps toward implementing this agenda. This “America First Trade Policy” memorandum directs that multiple federal agencies report back to him by April 1, 2025, on a number of potential measures designed to help implement “a robust and reinvigorated trade policy that promotes investment and productivity, enhances our nation’s industrial and technological advantages, defends our national security, and — above all — benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.”

While the memorandum mostly is cast as a request for informational trade reports, the best way to view this memorandum is as a potential roadmap to the international trade priorities of the new administration. The wide range of issues covered, including the causes of the U.S. annual trade deficits in goods, the economic and national security implications and risks of such deficits, a specific focus on all aspects of trade with China, and an evident desire to reshore significant amounts of goods produced abroad by U.S. companies indicate that nearly all aspects of U.S. international trade are under scrutiny.

As detailed in Part I of our three-part series on Managing Import Risks Under the New Trump Administration, many multinational companies are actively engaged in risk planning the potential impact of the new administration on their international supply chains. The issuance of this new memorandum underscores the urgency of proceeding along these lines. Thus, a thorough understanding of the potential implications of this new memorandum is essential for risk planning a response. Below we list the implications of each of the ordered study items:

“Addressing Fair and Unbalanced Trade”

• The memorandum directs an investigation of the “causes of our country’s large and persistent annual trade deficits in goods,” as well as the national security implications of the same. This, as well as the other actions indicated in this section, calls on agencies to address unfair and unbalanced trade by investigating trade deficits, unfair practices, and currency manipulation, and to recommend appropriate measures to combat the same. The most likely implication of this report will be to start establishing a basis for increasing tariffs, potentially on many or all global trading partners.
• The memorandum directs an assessment of the feasibility of establishing, and recommendations regarding the “best methods for designing, building, and implementing, an External Revenue Service to collect tariffs, duties, and other foreign trade-related revenues.” In other words, Trump is seeking guidance on the best way for the U.S. government to collect external trade revenue, including tariffs. While many commentators expressed puzzlement regarding the purpose of this new way of collecting tariffs — since Customs & Border Protection already is set up to collect these tariffs — it is possible that this request expresses dissatisfaction with CBP oversight of the use of Chinese parts and components for third-country assembly, which the new administration reportedly has viewed as an end-run around the Section 301 tariffs. It also could open the way to other ways of taxing non-U.S. companies that would fall outside of the collection of tariffs.
• The memorandum directs early preparations for the trilateral United States-Mexico-Canada Agreement (USMCA) review, including an assessment of the “the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses.” The focus on the USMCA raises questions about how these potential changes may impact U.S.-Mexico economic relations and Mexico’s role as an essential U.S. trading partner. If the U.S. finds Mexico’s trade practices to be noncompliant with the terms of the USMCA or unfairly advantageous, Mexican goods may be subject to new tariffs. Further, with President Trump elsewhere promising new 25 percent duties on Canada and Mexico as retaliation for a perceived lack of urgency regarding immigration and fentanyl exports to the United States, there is a strong possibility that changes could upend trade within the USMCA region on a far quicker timeframe.
• The memorandum directs an investigation of exchange rate policies of trading partners. Here, Trump is seeking an assessment of any potential currency manipulation or misalignment that prevents effective balance of payment adjustments or that provides trading partners with an unfair competitive advantage in international trade. Trump also calls for the identification of any countries that should be designated as currency manipulators, which almost certainly is directed at countries that maintain large trade deficits with the United States, particularly China. This could mark the end of the longstanding “strong dollar” informal trade policy of the United States, which dates back to the Clinton administration and could mark a return to Reagan-era intervention in currency markets on a multi-country basis to lower the value of the dollar.
• The memorandum directs a review of all current free trade agreements, as well as countries “with which the United States can negotiate agreements on a bilateral or sector-specific basis to obtain export market access.” In other words, Trump is calling for a review, and potential revision, of all of America’s free trade agreements, with a view toward obtaining reciprocal and mutually advantageous concessions.
• The memorandum directs a review of policies and regulations regarding the application of antidumping and countervailing duty laws, including with regard to transnational subsidies, cost adjustments, affiliations, and zeroing. The United States already maintains a record inventory of antidumping and countervailing duty orders, which could effectuate any changes to calculation methodologies in annual administrative reviews. Changes designed to increase calculated margins also could encourage more industries to file new antidumping and countervailing duty petitions, particularly against China (the most frequent target of such actions by far).
• The memorandum directs an assessment of the “loss of tariff revenues and the risks from importing counterfeit products and contraband drugs” that result from the current implementation of the de minimis exemption, as well as any necessary modifications to that exemption. This provision, among others, signals the Trump administration’s attention toward the flow of fentanyl and counterfeit goods across U.S. borders, including those originating from or passing through Mexico. Depending on the outcome, this could cause significant economic challenges for Mexico’s largely export-driven economy and severely impact U.S.-Mexico trade relations, particularly because it is impossible to divorce this issue from the upcoming trilateral review of the USMCA.
• The memorandum directs an investigation into whether any foreign country subjects U.S. citizens or corporations to discriminatory or extraterritorial taxes. Given the expansive use of Section 301 in the first administration, such reports could serve as a basis for expansive action in return, much as the Section 301 investigation into Chinese intellectual property practices morphed into a decision to raise tariffs on more than half of all imported Chinese goods.
• The memorandum directs a review of all trade agreements on “the volume of Federal procurement” related to the Buy American and Hire American executive orders. By calling for recommendations to ensure such agreements are being implemented in a manner that favors domestic workers and manufacturers, Trump indicates potential restrictions on the use of foreign firms that supply the U.S. government.

“Economic and Trade Relations with the People’s Republic of China”

• The memorandum directs a review of the Economic and Trade Agreement Between the U.S. and the Government of the People’s Republic of China (PRC) to determine whether the PRC is acting in accordance with this agreement. By seeking recommendations on appropriate actions to be taken based on the findings of this review, “up to and including the imposition of tariffs or other measures as needed,” Trump is signaling that new tariffs may be imposed on Chinese goods if the U.S. finds the PRC is not acting in compliance with the agreement.
• The memorandum directs an examination of potential additional modifications to the Section 301 tariffs on China, particularly with respect to industrial supply chains and circumvention through third countries. It is widely viewed that China failed to act in accordance with the earlier, partial settlement of certain Section 301 tariffs, which were suspended in the first Trump administration. It is likely this review will be used as a basis for further increasing the Section 301 tariffs on many Chinese products.
• The memorandum directs an investigation into other acts, policies, and practices by the PRC that may be unreasonable or discriminatory and that may burden or restrict U.S. commerce, and recommendations regarding appropriate responsive actions. Again, Trump here is signaling that changes to the U.S.-PRC trading landscape are imminent if the U.S. finds the PRC is engaging in discriminatory acts that restrict U.S. commerce. The likely endpoint is an expansion of earlier Section 301 tariffs based on a far wider-ranging set of grievances with Chinese trading practices.
• The memorandum directs a study of legislative proposals, and any needed changes to them, regarding permanent normal trade relations status for imports from China. There is bipartisan agreement in Congress regarding taking a skeptical approach to China, in matters of trade and otherwise. In addition to telegraphing a desire to permanently enshrine restrictions on trade with China into U.S. law (which would be much more difficult for a future administration to reverse), these efforts could reach related trade issues such as further restrictions on trade with China based on the treatment of the Uyghur people and their role in producing products intended for sale in the United States.
• The memorandum directs an assessment of the status of U.S. intellectual property rights such as patents, copyrights, and trademarks conferred upon PRC persons. In other words, changes may be implemented to “ensure reciprocal and balanced treatment of intellectual property rights with the PRC.”

“Additional Economic Security Matters”

• The memorandum directs a full economic and security review of the U.S. industrial and manufacturing base to assess whether to initiate investigations to adjust imports that threaten national security. This review of U.S. manufacturing and industrial vulnerabilities will inform new policies aimed at insulating domestic industries from reliance on imports. There is a high likelihood that this could lead to further revisions to CFIUS (Committee on Foreign Investment in the United States) reviews, which were considerably tightened in recent years.
• The memorandum directs an assessment of the effectiveness of the exclusions, exemptions, and other import adjustment measures on steel and aluminum in responding to threats to the national security of the United States. This provision, like the above, illustrates Trump’s goal of safeguarding domestic industrial and manufacturing industries from relying on imports.
• The memorandum directs a review of the U.S. export control system and advice regarding necessary modifications in light of developments involving strategic adversaries or geopolitical rivals, as well as all other relevant national security and global considerations. With an eye toward “identifying and eliminating loopholes in existing export controls, especially those that enable the transfer of strategic goods, software, services, and technology to strategic rivals and their proxies,” this provision implicates potential changes to the U.S. export control landscape, with the technology sector being most vulnerable to such changes. Trump’s call for recommendations of “enforcement mechanisms to incentivize compliance by foreign countries, including appropriate trade and national security measures,” illustrates the administration’s inclination to use trade measures as negotiation tools.
• The memorandum directs a review of the rulemaking by the Office of Information and Communication Technology and Services (ICTS) on connected vehicles, and consideration of expanding the controls. In other words, this provision marks the potential expansion of controls on ICTS transactions to connected products other than vehicles.
• The memorandum directs a review of the legal landscape regarding U.S. investments in certain national security technologies and products in countries of concern. If the U.S. finds this legal landscape does not contain sufficient controls to address national security threats, changes may be implemented, including potential modifications to the Outbound Investment Security Program.
• The memorandum directs an assessment of any distorting impact of foreign government financial contributions or subsidies on U.S. federal procurement programs. In other words, Trump is seeking guidance, regulations, or legislation to combat any such distortion to protect federal procurement programs from unfavorable impacts of foreign governments.
• The memorandum directs an assessment of the “unlawful migration and fentanyl flows from Canada, Mexico, the PRC, and any other relevant jurisdictions” and seeks recommendations of appropriate trade and national security measures “to resolve that emergency.” This provision raises the prospect that new tariffs or other measures may be imposed to pursue Trump’s broader policy goals of combating unauthorized migration and fentanyl flows from other countries, with the focus being on Canada, Mexico, and the PRC. Elsewhere, Trump has promised 25 percent tariffs to incentivize solving these concerns, beginning potentially as soon as February 1, 2025.

Implications

While the memorandum outlines a vast series of reviews of U.S. trade policy and investigations of trade imbalances and unfair practices, it is not yet clear how this very broad laundry list of international trade objectives will play out. Potential outcomes range from using the threat of tariffs to accomplish other goals (e.g., immigration, fentanyl) to setting up renegotiations of Free Trade Agreements on more favorable terms (particularly for the USMCA), to the establishment of permanently higher tariffs. Notably, the memorandum raises questions as to the future of U.S.-Mexico trade relations, a focus that takes on increased urgency given the impending trilateral review when combined with President Trump’s focus on immigration and fentanyl from Mexico and Canada. The focus on revisiting the USMCA threatens increased restrictions or provisions that may disadvantage Mexico’s export-driven economy and impact Mexico’s role as a key U.S. trading partner, with particularly strong implications for the U.S. automotive sector.

Given these concerns, Part III of this series will focus on concrete steps that multinational companies can take to risk plan for potential major changes in the international trade environment, particularly with regard to the topics of potential changes to tariff rates, potential changes to the USMCA, and potentially greater scrutiny of supply chain integrity requirements, particularly as they relate to China and imports using Chinese parts and components.