On January 20, 2025, President Donald Trump issued an executive order entitled America First Trade Policy – The White House, (EO) which sets out the Administration's priorities for establishing a "robust and reinvigorated trade policy" that promotes investment and productivity, defends US economic and national security interests, and benefits American workers and businesses. On the same day President Trump also signaled that he may impose a 25% tariff on Canadian exports as early as February 1, 2025.
The EO requests the delivery to the President by April 1, 2025, a series of reports from US Cabinet officials regarding recommendations to implement a host of US measures to remedy unfair trade practices, US trade deficits, national security threats, currency manipulation, loopholes in existing export controls, bilateral trade relations with China, outbound investment, unfair trade agreements, and other US concerns.
Although the Executive Order does not immediately impose tariffs on Canadian exports to the United States, it clearly lays the groundwork for the imposition of tariffs and other protective measures after April 1, 2025. These new measures will expand beyond the imposition of the initial round of 25% US tariffs (may be imposed as early as February 1, 2025) as discussed in our earlier alert, US Threatens 25% Tariff on Canadian Exports in Looming Trade Storm, to include many other measures which have the potential to have significant impacts on the operations of Canadian companies, investors, borrowers, lenders, global supply chains and industry sectors including supply managed sectors, aluminum and steel, automotive and technology.
The Executive Order instructs delivery to the President by April 1, 2025, of reports
- By the Secretary of Commerce, with recommendations on:
- appropriate measures, such as a global supplemental tariff or other policies, to remedy the US trade deficits in goods.
- whether it is necessary to initiate investigations to adjust imports that threaten the national security of the United States including its industrial and manufacturing base;1
- measures to ensure the effectiveness of the exclusions, exemptions, and other import adjustment measures on steel and aluminum;2
- the elimination of "loopholes" in existing export controls on the transfer of strategic goods, software, services, and technology and the enhancement of export control enforcement;
- on trade and national security measures to resolve the unlawful migration and fentanyl flows including from Canada, Mexico, the PRC.
- By the Secretary of the Treasury, with recommendations on:
- the implementation of an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues;
- measures to counter currency manipulation that prevents effective balance of payments adjustments or that provides trading partners with an unfair competitive advantage in international trade;
- modifications to the current implementation of the $800 or less, duty-free de minimis exemption under section 1321 of title 19, United States Code;
- potential modifications to the Outbound Investment Security Program, whether Program Executive Order 14105 of August 9, 2023 (Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern) should be modified or rescinded and replaced, and whether the final rule entitled "Provisions Pertaining to US3 Investments in Certain National Security Technologies and Products in Countries of Concern," includes sufficient controls to address national security threats.
- By the United States Trade Representative, with recommendations
on:
- actions to remedy unfair trade practices by countries;
- the United States' participation in the United States-Mexico-Canada Agreement;
- revisions that may be necessary to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries;
- countries with which the US can negotiate agreements on a bilateral or sector-specific basis to obtain export market access for Americans.
The ramifications of the new Administration's trade policy priorities are significant, far reaching, and present potential adverse consequences to Canada and its trading partners. Canada is currently preparing to retaliate against any adverse measures imposed by the US, and companies are encouraged to monitor developments in this regard. The Cassels International Trade Group will continue to monitor these developments and issue alerts to assist businesses in preparing for these uncharted waters that lie ahead.
Footnotes
1 Pursuant to Title 19, Code 1862 which prohibits the decrease or elimination of duties or other import restrictions if such reduction or elimination would threaten to impair national security.
2 Ibid.
3 89 Fed. Reg. 90398 (November 15, 2024).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.