WASHINGTON.- President Donald Trump will issue a sweeping trade memorandum on Monday that stops short of imposing new tariffs on his first day in office but orders federal agencies to evaluate U.S. trade relations with China, Canada and Mexico, he said. a government official.
After weeks of intense global speculation about what tariffs Trump would impose immediately after being sworn in as US president, news that he would take more time on tariffs sparked a relief rally in global stocks and a drop in the dollar against the main currencies.
Trump did not mention any specific tariff plans in his inaugural address, but he repeated his intention to create the External Revenue Service, a new agency to collect “massive amounts” of tariffs, duties and other revenue from foreign sources.
“I will immediately begin reforming our trade system to protect American workers and families,” Trump said.
“Instead of taxing our citizens to enrich other countries, we will impose tariffs and taxes on foreign countries to enrich our citizens,” he added.
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Trump indicated that his policies would make the United States “once again a manufacturing nation.”
During his election campaign, Trump promised to impose high tariffs of 10% to 20% on global imports to the United States and 60% on products from China to help reduce a trade deficit that now exceeds $1 trillion annually.
After his election in November, Trump stated that he would sign “all necessary documents” upon taking office to impose an immediate 25% tariff on imports from Canada and Mexico if they did not restrict the flow of illicit drugs and migrants entering illegally into USA.
Such tariffs would break long-standing trade agreements, disrupt supply chains and increase costs, trade experts say.
The official, confirming a Wall Street Journal report that cited a summary of Trump’s memo, said the new president will instead direct agencies to investigate and remedy persistent trade deficits and address “unfair” trade and monetary policies of others. nations.
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The memo will single out China, Canada and Mexico for scrutiny but will not announce new tariffs, the official said.
Trump will order an evaluation of China’s trade compliance
Trump will instruct agencies to assess Beijing’s compliance with its 2020 trade deal with the United States, as well as the status of the USMCA, the official said.
The U.S. dollar largely tanked on the news against a basket of currencies of major trading partners, with particularly strong gains in the euro, Canadian dollar, Mexican peso and Chinese yuan.
The MSCI index of world stock markets rose. U.S. financial markets are closed for the Martin Luther King Jr. Day holiday.
Some industry groups and trade lawyers in Washington had speculated that Trump would invoke the International Emergency Economic Powers Act, a law with broad powers to control imports in times of national emergency, to impose immediate tariffs.
But the upcoming trade memo indicates a more methodical approach that would likely involve trade investigations under other legal bodies, such as Section 232 of the National Security Trade Act and Section 301 of the Unfair Trade Practices Statute.
Trump invoked these laws during his first term, and investigations into steel and aluminum and Chinese imports took months to complete.
“It seems like maybe he’s been listening to people telling him that immediate tariffs would really hurt financial markets,” said William Reinsch, a trade expert at the Center for Strategic and International Studies.
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But Reinsch and other trade analysts say they still expect Trump to go ahead with a global tariff early in his administration.
“The universal tariff was a central part of the economic plan he put forward, and I think he’s going to do what he said he would do,” said Kelly Ann Shaw, a former White House trade adviser during Trump’s first term.
“This is an idea that he has supported for a long time,” Shaw, now at law firm Hogan Lovells, said in an interview last week.
In his first term (2017-2021), the Trump administration used investigations to impose tariffs on steel and aluminum imports and launch tariffs on some $370 billion worth of Chinese imports, sparking a tariff war between the two. largest economies in the world.
Read: Trump says he will impose tariffs on other countries to ‘enrich’ Americans
The United States and China ended the conflict in 2020 with an agreement for Beijing to increase its purchases of American exports, from agricultural products to airplanes, by $200 billion annually, but it was never fulfilled when the pandemic hit.
The upcoming memo indicates that the Trump administration will try to pressure China to honor those commitments.
Trump had also threatened to abandon the 1994 North American Free Trade Agreement, blaming it for draining American manufacturing jobs to Mexico and prompting a renegotiation of the trade pact with stricter rules of origin for automobiles and stronger labor and environmental standards.
Trump obtained a sunset clause in the renewed USMCA that will allow him to renegotiate it again in 2026, and trade analysts consider that the tariff threats against Mexico and Canada are a tactic to open those talks sooner.
With information from Reuters
