Tariffs and Trade Update
Randy Wolken, President & CEO

On his first day in office, President Trump outlined the contours of his “America First Trade Policy” in an Executive Order (EO). His proclaimed primary objectives are to reduce dependence on foreign nations for critical supply chains, promote investment and productivity, and enhance our nation’s industrial and technological advantages. While this EO didn’t announce the implementation of tariffs, it did instruct key agencies to begin efforts to identify underlying concerns of unfair or unbalanced trade, specifically regarding trade with China, and matters related to economic security.

President Trump has stated that he hopes to build on his past success. He’s cited the China “Phase One” deal, the United States–Mexico–Canada Agreement (USMCA), and Section 232 tariffs as successful elements of his first term agenda. His EO instructed the U.S. Trade Representative to begin its public consultation processes in preparation for the six-year review of the USMCA and to assess the impacts of U.S. participation in the agreement.

The President also tasked federal agencies with securing three comprehensive reports by April 1^st. These reports investigate persistent trade deficits, unfair trade practices, currency manipulation, importation of counterfeit products and contraband, China’s compliance with the “Phase One” deal, and a U.S. export control system review. So far, an area of focus has been tariffs on Canada, Mexico, and China.

Here’s the latest on where things stand on tariffs:

• Steel and aluminum: A 25% U.S. tariff on steel and aluminum imports from all countries took effect on March 12^th.
• European Union (EU): The EU responded to the tariff on steel and aluminum with counter-tariffs on $28 billion in U.S. goods starting in April, bringing Trump’s trade war across the Atlantic. However, the EU delayed the implementation of some of those tariffs until mid-April, including a 50% tariff on American whiskey, which prompted Trump to threaten a 200% tariff on European spirits.
• Canada and Mexico: Trump’s 25% across-the-board tariffs on its U.S. neighbors went into effect on March 4^th. Two days later, Trump confirmed that the U.S. would pause tariffs on goods and services compliant with the USMCA until April 2^nd. For its part, Canada announced retaliatory measures on about $20 billion of U.S. goods. The two countries have agreed to new trade talks.
• China: Trump has enacted new blanket tariffs of around 20%, on top of the existing 10% that went into place during Trump’s first term. China has responded with up to 15% tariffs on U.S. farm goods such as chicken and pork, which went into effect on March 10^th.

The introduction of reciprocal tariffs, where the U.S. matches other countries’ import taxes dollar for dollar, is expected next week. The President has repeatedly said, “If they charge us, we charge them.” The intent seems to be to use tariff hikes as a corrective against abusive practices by U.S. trading partners. Reuters reported Tuesday that India, which has higher tariff rates on U.S. imports compared to what the U.S. taxes its exports, was preparing to lower tariff rates ahead of April 2^nd.

At MACNY, we’re observing the impact of the Trump administration’s agenda regarding trade and trade agreements. We aim to keep our members informed and help them navigate their trade needs and responses.

Next week, we’ll provide a survey tool to help us understand what challenges you’re facing in your business. We’ll also assemble a cohort of companies who can help each other understand and prepare for ongoing adjustments needed in this new environment. Please keep an eye out for the survey but in the meantime if you’re interested in learning more, please contact me or our Director of Government Relations, Tiffany Latino-Gerlock, at [email protected].