Former President Trump, as the presumptive Republican nominee, is in pursuit of his second presidential term. But what does this mean for the international trade community? Trump has provided a few indications regarding his intended trade policies if elected in November 2024.
U.S. trade policy significantly shifted during Trump's first term with his "America First" agenda; his primary focus with respect to trade was to no longer tolerate "trade abuse" that damaged the American economy and decrease the national trade deficit. During his first months in office, Trump withdrew the United States from the Trans-Pacific Partnership and initiated the renegotiation of the North American Free Trade Agreement ("NAFTA"), now ratified and known as the United States-Mexico-Canada Agreement ("USMCA").1 Trump also withdrew the U.S. from the Joint Comprehensive Plan of Action ("JCPOA"), the 2015 agreement on Iran's nuclear program, and reinstated sanctions on Iran that had been waived under the JCPOA. In addition, Trump imposed tariffs on foreign steel and aluminum imports in March 2018, citing national security concerns. These tariffs elicited negative reactions from various world leaders, specifically China who in return pledged to impose retaliatory tariffs on U.S. products and to decrease the amount of agricultural products imported from the U.S. Separately, the United States imposed a 25% tariff on Chinese-origin goods to combat China's practices related to unfair technology transfers. Collectively, these actions ignited a trade war between the two countries, which led to back-and-forth implementation and increase of tariffs.
On his reelection campaign trail, Trump has described his trade policy agenda for his potential second term. In a campaign video, Trump announced the "Trump Reciprocal Trade Act," which is intended to ensure reciprocal and fair trade by requiring other countries to remove tariffs on U.S. products or receive a reciprocal tariff on their countries' products. The goal of the proposed reciprocal tariff strategy is to "return jobs and wealth to the United States, launch an economic boom that will lift our middle class, and eliminate our dependence on China and other countries."
In addition to the reciprocal tariffs, during an interview on Fox Business Network, Trump proposed a 10% tariff increase on all foreign imports to eliminate the trade deficit. The 10% tariff increase prompted an outpouring of negative responses from political and world leaders. Treasury Secretary Janet Yellen stated that the plan to increase tariffs "would certainly raise the cost of a wide variety of goods that American businesses and consumers rely on."2 Canada's Ambassador Kirsten Hillmen stated in an interview that Trump's "promise to hike import tariffs could trigger retaliation from other nations including trade partners."3 White House Deputy Press Secretary Andrew Bates stated in response to the proposed 10% tariff, "President Biden strongly opposes plans to hurt hardworking families with higher prices and higher inflation."4
Trump's stance on China has intensified since his first term, and he has publicized that he would stop China from "owning America." His proposed strategy includes a four-year plan to phase out all Chinese imports of essential goods, such as electronics, steel, and pharmaceuticals. The agenda will focus on impeding Chinese companies from investing in vital U.S. infrastructure like energy, technology, and agriculture, while also forcing the "Chinese to sell any current holdings that put our national security at risk."6 Trump has also proposed the imposition of a tariff of 60% or higher on all Chinese imports.6
We encourage the trade community to monitor the 2024 U.S. election as changes to U.S. trade policy may be coming in 2025. If Trump returns to the presidency, be prepared for increased tariffs, reconsideration of supply chains, potential changes to foreign investment restrictions, and many other potential trade and investment-related shifts.
Footnotes
1. See our previous article, The New NAFTA 2.0—The United States-Mexico-Canada Agreement (USMCA) (Oct. 22, 2018), available at https://www.torrestradelaw.com/posts/The-New-NAFTA-2.0%E2%80%94The-United-States-045%3BMexico-045%3BCanada-Agreement-%28USMCA%29/163.
2. David Lawder, Yellen Says Trump's Tariff Plan Would Hike Costs for U.S. Consumers, Reuters (Jan. 10, 2024), https://www.reuters.com/business/energy/yellen-says-trumps-tariff-plan-would-hike-costs-us-consumers-2024-01-10/.
3. Eric Martin and Iain Marlow, Canada Warns Trump 10% Tariff Risks Sparking Global Retaliation, BNN Bloomberg (Apr. 5, 2024), https://www.bnnbloomberg.ca/canada-warns-trump-10-tariff-risks-sparking-global-retaliation-1.2055834.
4. Brett Samuels, White House Knocks Trump Proposal for 10 Percent Tax on Products Entering US, The Hill (Aug. 23, 2023), https://thehill.com/homenews/administration/4167729-white-house-knocks-trump-proposal-for-10-percent-tax-on-products-entering-us/.
5. President Trump Will Stop China From Owning America, Donald J Trump for President 2024, Inc. (Jan. 18, 2023), https://www.donaldjtrump.com/agenda47/president-trump-will-stop-china-from-owning-america.
6. Trump Praises Xi but Warns China Could Face Heavy Tariffs If Elected, YouTube (Feb. 5, 2024) https://www.youtube.com/watch?v=WAg99owBB6w.
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