While tariffs have yet to be implemented by President Donald Trump soon after his inauguration—at least not yet—it is clear they will be a key cornerstone of his administration’s economic agenda.
What’s more, while new tariffs are not yet in effect, Trump said that will be changing, as soon as by February 1, with various reports indicating that Trump will place 25% tariffs on U.S.-bound imports from Canada and Mexico, effective February 1.
An Associated Press report stated that President Trump is placing a big bet that his executive actions can reduce energy prices and curb inflation “and that the tariffs will strengthen the economy instead of exposing consumers to higher prices. But it’s unclear whether his orders will be enough to foster the growing economy with lower prices that he promised voters.”
When the Trump administration first rolled out its tariff plan in mid-2018, it was comprised of a 25% tariff on $50 billion worth of goods imported from China, under the purview of an “America First” policy geared towards a more fair and beneficial position for U.S. companies, as well as focusing on: protecting domestic property and intellectual property; stopping noneconomic transfers of industrially significant technology and intellectual property to China; and enhancing access to the Chinese market. These tariffs subsequently ignited a trade war between the United States and China that continues today.
While holding off on imposing new tariffs, Trump is directing federal agencies to study trade relationships with China, Canada, and Mexico, the three main nations he made it clear he would implement new or increased tariffs on, as well as being the nation’s three biggest trading partners.
In a memo issued by the White House yesterday to various federal government and cabinet officials, focusing on an America First Trade Policy, including: the Secretaries of State, Treasury, Defense, Commerce, Homeland Security, the director of the Office of Management and Budget, the United States Trade Representative, the Assistant to the President for Economic Policy, and the Senior Counselor for Trade and Manufacturing, Trump said that his in 2017 his administration pursued trade and economic policies that put the American economy, the American worker, and national security first.
“This spurred an American revitalization marked by stable supply chains, massive economic growth, historically low inflation, a substantial increase in real wages and real media household wealth, and a path toward eliminating destructive trade deficits.
The memo outlined various steps the White House plans to take, regarding its America First Trade Policy, including:
- addressing Unfair and Unbalanced Trade, with the Secretary of Commerce, in consultation with the Secretary of the Treasury and the United States Trade Representative, investigating the causes the country’s large and persistent annual trade deficits in goods, and economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits;
- the Secretary of the Treasury, in consultation with the Secretary of Commerce and the Secretary of Homeland Security, investigating the feasibility of establishing and recommend the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues;
- the United States Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Commerce, and the Senior Counselor for Trade and Manufacturing, undertaking a review of, and identifying, any unfair trade practices by other countries and recommend appropriate actions to remedy such practices under applicable authorities;
- the United States Trade Representative commencing the public consultation process set out in section 4611(b) of title 19, United States Code, with respect to the United States-Mexico-Canada Agreement (USMCA) in preparation for the July 2026 review of the USMCA; and
- the United States Trade Representative reviewing existing United States trade agreements and sectoral trade agreements and recommend any revisions that may be necessary or appropriate to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries, among others
As previously reported by LM, the topic that received the most attention in the run-up to the election focused on tariffs, in terms of what may be coming, with Trump saying repeatedly on the campaign trail that he plans to increase the percentage of tariffs levied on companies importing into the United States, from where they have remained since they were implemented in 2018, during his first term in office. To that end, he has said he was committed to imposing a 10%-to-20% tariff on all imports regardless of what country they come from, and 60% or higher on goods entering the U.S. from China.
A recent Bloomberg report, issued prior to the inauguration, noted that members of Trump’s incoming economic team are discussing slowly ramping up tariffs, month by month, calling it a gradual approach aimed at boosting negotiating leverage while helping to avoid a spike in inflation
Matt Muenster, Chief Economist for Green Bay, Wisc.-based Breakthrough, an innovator in transportation management, dedicated to creating transparent and fair strategies for the world’s leading shippers, explained that from the perspective of the White House, using this incremental approach could be viewed as a negotiating tactic, while noting there is some signal of reality of tariffs coming into place, for a few different reasons.
“Trump administration officials have met with Canadian counterparts, for example, specifically on energy and other really core goods that are being traded in pretty considerable supplies across borders,” he said. “So, when it’s gone to that depth already…it does seem like these tariffs, will be real, at least for a little while.”
Matt Lekstutis, Director at Efficio, a global procurement and supply chain consultancy, said regardless of the specifics of applied tariffs, there will definitely be an increase in pricing for imported goods, which will push companies to look for alternative suppliers or manufacturing sites.
“The sourcing process can vary in complexity based on how resilient a brand the brand is to change,” said Lekstutis. “It can be anywhere from a few months to a few years to find alternative manufacturers and get them implemented. Due to the complexity of that, brands may choose to remain with their current manufacturers in order to maintain their reputation with their customers and not disrupt the supply chain.”
