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27 January 20258 minute read

“America First Trade Policy”: President Trump orders review ahead of potential tariffs on China and other trading partners

Tariffs on Canada, Mexico, and China could go into effect on February 1; agencies have until April 1 to report findings and provide recommendations

“My message to every business in the world is very simple: Come make your product in America and we will give you among the lowest taxes of any nation on Earth. But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff.”

President Donald Trump,

virtually addressing the World Economic Forum in Davos, Switzerland, January 23, 2025

Overview

Just hours after his inauguration on January 20, 2025, President Donald Trump issued a memorandum ordering federal agencies to conduct a comprehensive review of US trade policy, with particular attention devoted to US–China trade relations. Most federal agencies have until April 1, 2025 to report their findings and provide recommendations.

As he was signing the trade memorandum, along with a flurry of other executive orders, the President told an assembled group of journalists in the Oval Office that he intended to impose a 25-percent tariff on products from Canada and Mexico and could take that action on February 1. He singled out the two neighboring countries due to concerns about mass migration and fentanyl trafficking.

In his unscripted remarks, President Trump also indicated that he was considering a universal tariff on all imports, saying that “essentially all countries take advantage of the US.”

Laying the groundwork for future tariffs

While the January 20, 2025 memorandum on trade stops short of imposing new tariffs, it sets the foundation for a broad range of potential significant actions on trade in the near future. It mandates that the investigations that are often necessary as a first step toward imposing new tariffs must occur on a compressed timeline, by April 1, 2025. This only allows about two months for assessments required by the Trump memorandum on topics such as unfair trade practices, currency manipulation, existing US export controls (particularly in the tech sector), and foreign barriers to trade.

Importantly, the memorandum specifically mentions the International Emergency Economic Powers Act (IEEPA) statute as one of the key trade tools that is available to the President. As described in a prior alert, there needs to be an “unusual or extraordinary threat” to national security, foreign policy, or the US economy to use IEEPA to regulate international commerce. While IEEPA has historically been deployed to promulgate US economic sanctions (and never, to date, to impose tariffs), President Trump could use IEEPA to impose tariffs if he declares a national emergency.

On January 26, President Trump threatened to impose both economic sanctions and tariffs under IEEPA against Colombia – a major US ally – for refusing to accept deported migrants; later that day, Colombia reversed its position. The outcome of the tit-for-tat suggests the White House will likely continue to threaten and potentially exercise its emergency powers under IEEPA to impose tariffs to achieve its foreign policy goals.

Focus on China

The memorandum devotes an entire section (Sec. 3) to “Economic and Trade Relations with the People’s Republic of China (PRC).” It orders the US Trade Representative (USTR) to review the prior US–China Economic and Trade Agreement to assess Chinese adherence to the terms of the agreement, which could be a precursor to the imposition of additional tariffs under existing Section 301 actions. This suggests China is still at the top of the list of countries likely to have additional tariffs imposed on their products. The President has also stated that he is interested in exploring if there is a possible “Deal” that could be reached with China, and thus the tariffs could be a way to obtain leverage in those negotiations. But, during the first Trump Administration, he imposed Section 301 tariffs that were maintained and expanded during the Biden Administration.

The Department of Commerce will also look into the status of US intellectual property (IP) rights conferred on PRC persons and make recommendations to ensure reciprocal and balanced treatment of IP rights with the PRC – one of the issues that prompted President Trump to impose multiple rounds of Section 301 duties during his first term.

While such investigations may result in future tariffs on China, the President could also use the emergency powers under IEEPA to impose tariffs on China that would take effect immediately. The illegal flow of fentanyl from China to the US could be one of the bases for such an emergency – a move the President has previously said he is contemplating.

Additionally, the memorandum directs the Department of Commerce and USTR to assess legislative proposals regarding Permanent Normal Trade Relations (PNTR) with the PRC and make recommendations. Following publication of the memorandum, bipartisan legislation was introduced in the House on January 23, 2025 revoking China’s PNTR status. Revocation of China’s PNTR status would subject all Chinese imports to “Column 2” general duty rates, which are often much higher than the “Column 1” general duty rates that apply to countries with PNTR status. In 2022, the Biden Administration revoked Russia and Belarus’ PNTR status in response to the war in Ukraine.

Canada and Mexico

A specific target of investigation called for in the memorandum is the United States–Mexico–Canada Agreement (USMCA). USTR is tasked with leading an assessment of the agreement and its effect on the American economy in preparation for the scheduled July 2026 review of the North American trade pact. That report is due on April 1.

Although the USCMA review is over a year away, the President has also indicated that he may impose tariffs of up to 25 percent on Canada and Mexico as early as February 1, 2025. One of the other Executive Orders that the President signed was to declare an “emergency” at the Southern Border – a sign that he may be laying the foundation to use the broad authority under IEEPA (which requires a declaration of a national emergency) to impose new tariffs. Some observe that this could also be an attempt to obtain some leverage ahead of the planned negotiations.

Additional, broad tariff actions

In addition to the country-specific measures outlined above, the memorandum instructs the Secretaries of Commerce and the Treasury, as well as USTR, to assess the US’s persistent trade deficits and associated effects on the economy and national security and recommend remedies “such as a global supplemental tariff or other policies.”

It also tasks agencies with assessing whether “it is necessary to initiate investigations to adjust imports that threaten the national security of the United States.” The Assistant to the President for Economic Policy will lead an interagency assessment of the exclusions, exemptions, and other import adjustment measures on steel and aluminum. This review could lead to changes to the Section 232 tariffs imposed by President Trump on multiple countries during his first term, which were adjusted under President Joe Biden.

Consistent with President Trump’s apparent plans to expand existing tariffs and implement new and varied tariff regimes, the memorandum instructs multiple government agencies to lay the groundwork for creation of an External Revenue Service (ERS) to collect tariffs. Tariffs are currently collected by Customs and Border Protection from importers of record (most often US companies), so it is not yet clear how a potential ERS would collect tariffs from foreign manufacturers.

Additional investigations

Additionally, the memorandum calls upon the Commerce Secretary to conduct a review of policies and regulations governing application of antidumping and countervailing duty (AD/CVD) laws, including with regard to transnational subsidies, cost adjustments, affiliations, and “zeroing” (a controversial method used to calculate antidumping duties on foreign products).

The Department of Commerce and other agencies will also review the implications of the current $800-or-less, duty-free de minimis exemption under Section 321 to assess loss of tariff revenue and the risk of increased counterfeit product and contraband drug imports under the program. Since the imposition of Section 301 tariffs on Chinese goods during President Trump’s first term, the Section 321 program has frequently been used to import e-commerce shipments duty-free. But, just days prior to President’s Trump inauguration and issuance of his memorandum on trade, CBP proposed a parallel rule that would eliminate Section 321 eligibility for imports subject to Section 301 duties. Our January 21, 2025 alert covers the details of the proposed change and highlights the opportunity for companies to submit comments to CBP regarding its effects.

While the January 20, 2025 memorandum on trade stops short of imposing new tariffs, its timing and scope illustrate the Trump Administration’s commitment to trade policy reform and the use of tariffs as both a foreign policy tool and source of revenue.

While most of the results of the investigations initiation by the memorandum are due on April 1, the President has indicated he may take action as soon as February 1 and has a number of authorities available to him to do so, including IEEPA. As the second Trump Administration’s trade policy takes shape over the next weeks and months, DLA Piper’s Government Affairs and Public Policy group and National Security and Global Trade team will continue to monitor developments and remain available to help companies navigate this changing landscape.

Please reach out to the authors or your DLA Piper relationship partner with any questions.