WHITE HOUSE MEMORANDUM
On January 20, 2025, President Trump published a memorandum (memo) introducing the America First Trade Policy as a strategy designed to reshape U.S. trade relationships and address long-standing trade challenges. The memo outlines a strategic review of trade agreements, tariffs, and international trade practices with a focus on boosting American economic growth, national security, and job creation.
“Americans benefit from and deserve an America First trade policy. Therefore, I am establishing a robust and reinvigorated trade policy that promotes investment and productivity, enhances our Nation’s industrial and technological advantages, defends our economic and national security, and — above all — benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.”
Donald Trump | U.S. President | America First Trade Policy Memorandum
AMERICA FIRST TRADE POLICY OVERVIEW
According to the Memorandum, the America First Trade Policy targets several critical areas that will directly impact global trade, U.S. businesses, and the supply chain including:
1. Trade Practices and Tariffs
Efforts to reassess current trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA), could lead to new measures like tariff with a 25% tariff on imports from Mexico and Canada possible as early as February 1, 2025. The memo implies the potential for renegotiations to better align agreements with U.S. economic priorities, though this may strain trade relations. Additionally, other trade agreements will be assessed to ensure they continue supporting U.S. interests. If necessary, adjustments will be made to align these agreements with current economic and national priorities.
2. China and Intellectual Property Protection
The U.S. will hold China accountable for trade violations, particularly around intellectual property rights. This could mean additional tariffs on Chinese goods, which might affect U.S. businesses that depend on Chinese manufacturing and tech. However, stronger enforcement could help U.S. industries in the long run by curbing unfair competition.
3. Currency Manipulation
A focus of the policy is combating currency manipulation by foreign nations. The Secretary of the Treasury will investigate foreign currency misalignments that give trading partners an unfair advantage in international trade. If manipulation is found, corrective actions, including trade restrictions, may be implemented. These actions could increase costs for U.S. businesses with global supply chains, particularly those dependent on international pricing structures.
4. Export Control Systems
Export controls on sensitive technologies and materials will be strengthened to protect national security. While this may be necessary for security, it could also disrupt high-tech companies by limiting access to essential resources, creating challenges for businesses that rely on these materials to stay competitive.
5. Counterfeit Goods and Drug Imports
A key objective is to slow the influx of counterfeit goods and illegal drugs, such as fentanyl, entering the U.S., including a review of the $800 de minimis exemption for small shipments. The memo suggests the new policy will strengthen consumer protections and address public health risks; however, it may lead to more strict customs enforcement, especially for small parcel shipments resulting in slow goods movement and increased operational costs for businesses that rely on fast, low-cost imports.
POTENTIAL GLOBAL SUPPLY CHAIN IMPACT
The implementation of the America First Trade Policy will create significant shifts in the global supply chain. Companies across industries must assess the potential disruptions or opportunities resulting from these changes.
If new tariffs are imposed, countries worldwide may retaliate with tariffs, export restrictions to the U.S., or a decrease in American exports. This pattern was evident in past trade disputes, such as those between the U.S. and China, where both nations imposed tariffs on hundreds of billions of dollars’ worth of goods. The European Union and other nations have also used retaliatory tariffs to counter U.S. trade policy.
Below is a table summarizing key areas of impact and their potential effects on the global supply chain:
LOOKING AHEAD
The America First Trade Policy outlines a series of actions aimed at reshaping U.S. trade relationships and addressing national security concerns. By reviewing and potentially adjusting trade relationships and practices, the policy is likely to have a significant impact on U.S. industries, international agreements, and the global supply chain.
Given the complexity and uncertainty of these policy shifts, businesses should conduct risk assessments and adapt their supply chain strategies accordingly to minimize disruptions. As these policy changes unfold, industries reliant on global trade must closely monitor developments, as the full impact of the policy remains to be seen.
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