White House Executive Orders impacting tax and trade – developments of the week of February 10, 2025
Last week, the Trump Administration issued several Executive Orders (EOs) that paused enforcement of the Foreign Corrupt Practices Act (FCPA), allowed adjustment of steel and aluminum imports “in such quantities and under such circumstances as to threaten to impair the national security of the United States,” and more.
In this weekly alert, we discuss relevant tax and trade EOs out of the White House and federal agencies, as well as potential legislation. For more information on the Administration’s Executive Actions and our coverage of those actions, see DLA Piper’s President Trump Executive Orders hub.
Notable EO updates from the week of February 10, 2025
- 2025.02.10 - EO pausing FCPA enforcement
- 2025.02.10 - EO adjusting steel imports
- 2025.02.10 - Fact sheet: Restoring Section 232 tariffs
- 2025.02.11 - EO adjusting imports of aluminum
- 2025.02.13 - United States-India joint leaders' statement
- 2025.02.13 - Memorandum: Reciprocal trade and tariffs
- 2025.02.13 - Statement: President Trump demands fair, reciprocal trade
Last week in taxes
Although a joint budget resolution is needed in order to commence the tax budget reconciliation process, the House of Representatives and US Senate Budget Committees marked up their respective resolutions last week.
Key issues affecting the tax budget reconciliation
The Chambers remain divided on both the manner and substance of the two resolutions. The primary differences are as follows:
- One reconciliation bill pathway versus two reconciliation bills: The House marked up its budget resolution that would cover tax reform, energy, and defense, and propose mandatory spending cuts; the Senate budget resolution maintained that tax reform should be addressed in a draft reconciliation bill at a later date.
- Method of scoring and breadth of pay-fors needed: While the House Budget Committee was able to pass its resolution out of Committee on February 13, 2025 and made no mention in any of the supporting documents (linked below) regarding “current policy” or law baseline scoring for tax, Committee members prioritizing the budget demanded a significant price in exchange for their votes:
- House: In exchange for giving the House Ways and Means Committee $4.5 billion in leeway to make tax cuts, Committee members prioritizing the budget demanded at least $2 trillion in mandatory spending cuts. Notably, the House does not support the Senate’s proposal to use the “current policy” baseline of scoring for tax in a reconciliation bill. According to the House, extending the 2017 Tax Cuts and Jobs Act (TCJA) tax cuts would result in approximately $4.6 trillion in federal outlays or costs over the ten-year budget window, so the $4.5 trillion afforded to the Ways and Means Committee for spending would not be sufficient.
- Senate: As the House processed its budget resolution under the guise of a resulting “one, big beautiful reconciliation bill” covering defense, energy, immigration, and taxes, the Senate Budget Committee maintained its commitment to the two-bill approach to reconciliation that would punt tax reform to the second reconciliation opportunity later this year. The Senate Budget Committee also continued to maintain its posture that since the 2017 TCJA individual tax rates are effective through the end of the year – and both Chambers in Republican control are aligned in maintaining those rates – the scoring should reflect intent rather than the current law assumption that those rates would automatically revert to pre-TCJA levels, assuming the revenue increase stemming from that increase.
Where the budget reconciliation stands
The two Chambers are still quite far from consensus on some key points across both the number of reconciliation bills and methodology of scoring, which ultimately dictates how far and wide they may need to look for tax offsets.
What happens from here remains to be seen: Will both bills go to their respective Chamber floors for a vote? From there, how do the two Chambers then reconcile the budget resolution to pass the same version in both Chambers, which is required in order to move forward from the budget resolution phase? We are closely monitoring this process for subsequent updates.
To view each of the budget resolutions and associated tables, see below:
Perspectives on tax scoring
The House’s budget resolution markup last week struck an interesting chord with those inside the beltway in the assertion that the “macroeconomic impacts of the bill over 10 years would generate $2.6T” in revenue and economic activity.
This is important because the range of prior estimates from the Congressional Budget Office, as well as reputable think tanks like Cato Institute and Tax Foundation, has been largely between $200 billion and $700 billion, far less than the House’s current estimate of $2.6 trillion.
It’s rumored that the House is internally counting potential revenue from tariffs, which, as discussed in prior alerts, isn’t viable to count toward offsetting the score of a tax bill, as current tariffs have been imposed from the Executive Branch and White House. In order to be countable as an “offset,” the tariffs would need to be congressionally approved and imposed.
However, we mentioned last week the introduction of bills in Congress to impose “reciprocal tariffs,” which could be viable to count as real offset revenue and arguably could be part of the angle the House is taking in how it might offset the cost of a broader tax bill.
This fact makes the implementation of the reciprocal taxes much more viable. Stay tuned.
Trade, tariffs, and President Trump
On February 10, 2025, President Donald Trump signed proclamations to impose 25-percent tariffs on imports of steel and aluminum into the US from all countries without exception, rolling back exemptions for Canada, Mexico, the European Union (EU), the United Kingdom (UK), Japan, South Korea, and other allied nations.
The proclamations increase the tariff rate on aluminum to 25-percent from the previous 10-percent rate that President Trump enacted in 2018 and reinstate the 25-percent tariffs on steel that had previously been authorized but were subsequently relaxed for many countries by both the Trump and Biden Administrations.
Other product-specific tariff exclusions for both metals will also be eliminated. The tariffs, which are being imposed pursuant to Section 232 of the Trade Expansion Act of 1962, will take effect on March 12, 2025.
In addition to the new tariffs on key metals, President Trump issued a February 13, 2025 memorandum directing a rapid review process to determine country-specific “reciprocal tariffs” for US trading partners based on each partner’s perceived unfair trade and economic practices. The memorandum states that the “lack of reciprocity is one source of our country's large and persistent annual trade deficit in goods – closed markets abroad reduce United States exports and open markets at home result in significant imports.”
President Trump directed the Secretary of Commerce and the US Trade Representative (USTR) to work with the Treasury and Homeland Security Secretaries to provide assessments, for each trading partner (“both friend and foe”), of:
1. Tariffs on US exports
2. Unfair taxes imposed on US companies
3. Other policies that impose costs on US businesses and consumers
4. Exchange rate policies, and
5. Any other unfair practices.
The assessments may also focus on countries that have a significant trade imbalance with the US. This directive places a sweeping range of policies under potential scrutiny, including digital services taxes (DSTs), Value-Added Taxes (VATs), Carbon Border Adjustment Mechanisms (CBAMs), subsidies, technical barriers to trade and discriminatory regulation, and monetary interventions, to name a few. The inclusion of trade barriers beyond tariffs indicates that the Administration will take an expansive view of “what countries charge the United States of America” for purposes of determining reciprocal measures.
In many ways, the breadth of this memorandum doubles down on the broad scope of the “America First Trade Policy” memorandum issued at the outset of President Trump’s term. That order set a deadline of April 1, 2025 for federal agencies to prepare and deliver reports to the President that in turn could provide the legal basis for new tariffs.
The February 13, 2025 memorandum sets forth two additional steps under Section 3, which is called “Taking Action.”
First, it requires that, after submission of those reports in early April, the Secretary of Commerce and USTR “shall initiate, pursuant to their respective legal authorities, all necessary actions to investigate the harm to the United States from any non-reciprocal trade arrangements adopted by any trading partners.” Presumably, the “necessary actions” mentioned could include new Section 301 or Section 232 investigations, or the use of other legal authorities or mechanisms.
Second, the memorandum also directs the Secretary of Commerce and USTR, upon completion of such “necessary actions,” to submit to the President a report detailing proposed remedies. These remedies could be proposed tariffs or other trade measures. Additionally, within 180 days of the February 13, 2025 memorandum, the US Office of Management and Budget shall assess “all fiscal impacts” of the proposed actions and submit a report to the President.
Our National Security and Global Trade team is closely following these developments and remains well positioned to advise clients on how to plan for and respond to the evolving tariff landscape.
Key tax/trade bills introduced the week of February 10, 2025
S.510 - A bill to amend the Internal Revenue Code of 1986 to extend the publicly traded partnership ownership structure to energy power generation projects and transportation fuels, and for other purposes.
S.536 - A bill to amend the Internal Revenue Code of 1986 to establish a tax on the sale of electric vehicles and batteries.
H.R.1253 - To amend the Internal Revenue Code of 1986 to establish a tax on the sale of electric vehicles and batteries.
S.541 - A bill to amend the Internal Revenue Code of 1986 to repeal the credit for new clean vehicles, and for other purposes.
H.R.1284 - To amend the Tariff Act of 1930 to increase civil penalties for, and improve enforcement with respect to, customs fraud, and for other purposes.
S.559 - A bill to amend the Internal Revenue Code of 1986 to permanently extend the allowance for depreciation, amortization, or depletion for purposes of determining the income limitation on the deduction for business interest.
H.R.1328 - To amend the Internal Revenue Code of 1986 to establish the critical supply chains reshoring investment tax credit.
H.R.1347 - To amend the Internal Revenue Code of 1986 to permanently extend the allowance for depreciation, amortization, or depletion for purposes of determining the income limitation on the deduction for business interest.
Key federal communication to note
E.C. 386 - A communication from the Federal Register Liaison, Internal Revenue Service, Department of the Treasury, transmitting, pursuant to law, the report of a rule, entitled, "Treasury Decision (TD): Credit for Production of Clean Hydrogen and Energy Credit" (RIN1545-BQ97) received in the Office of the President of the Senate on February 6, 2025; to the Committee on Finance.
Learn more
We look forward to bringing you timely updates in the near future. To learn more about these rapidly evolving developments, please contact Evan Migdail or Melissa Gierach, or check out our resource page with related materials focused on the tax implications of recent tax and trade proposals.
