It has only been a few hours since the election results came in, so at this point I have lots of questions but few answers as to what the incoming Trump administration will do on trade policy. Here are a few of the questions.
Personnel
Who will Trump put in key positions at USTR and the White House NSC/NEC? I don't know if this is a definitive list, as I might have missed a couple people, but at USTR last time we had Robert Lighthizer as U.S. Trade Rep., Dennis Shea, C.J. Mahoney, and Jeffrey Gerrish as Deputies, Stephen Vaughn as General Counsel, and Jamieson Greer as Chief of Staff; and at the White House we had Everett Eissenstat, Clete Willems, and Kelly Ann Shaw. Will these people reprise their roles? Or will there be some new people brought in?
Tariffs
As you may have noticed, Trump talked a lot about tariffs during the campaign. Actually, let me amend that: Trump talked A LOT about tariffs during the campaign. So, we should probably expect some more tariffs, and we shouldn't be surprised if he pushes the boundaries of the power that has been delegated to him by Congress. What are the main statutory authorities he might use for this purposes? Here are a few:
- Trade Remedies (AD/CVD/Safeguards)
- Section 301 of the Trade Act of 1974
- Section 232 of the Trade Act of 1962
- Section 338 of the Tariff Act of 1930
- Section 122 of the Trade Act of 1974
- International Emergency Economic Powers Act (IEEPA) of 1977
Exactly how far will he push? And what will the courts have to say about it? It's very hard to say at this point.
What will they do with the Biden administration's industrial policy?
The Biden administration took some serious steps towards industrial policy. What will the Trump administration do with these measures? With the Republicans likely to control Congress, both the Chips Act semiconductor subsidies (Trump sounded skeptical about them here) and the various Inflation Reduction Act incentives could be at risk, although we may end up with tweaks rather than a wholesale repeal.
What will they do with the Biden administration's trade-adjacent policies?
The Biden administration trade folks put a lot of effort into things like protecting labor rights (through the USMCA rapid response labor mechanism) and coordinating supply chains (through the IPEF and critical minerals partnerships). What will the Trump administration think of these initiatives? Will they pursue them, and to what extent?
Trade Negotiations and Renegotiations
In the first Trump administration, we saw the Phase 1 deal negotiated with China, NAFTA renegotiated into the USMCA, a slight revision to the KORUS FTA, and an agreement with Japan covering a few products and digital trade. USMCA is set to be reviewed automatically in 2026, so we know some sort of renegotiation is coming there. Will the other ones be reopened? Will there be a Phase 2 agreement with China? Will Phase 1 see any enforcement actions? (There are no public reports of any Phase 1 enforcement actions so far).
And will there be any new trade negotiations or market access pushes? Trump is mostly focused on protecting U.S. manufacturers from foreign competition, but some of the people who have given money to him and some of the people likely to work for him seem concerned about barriers to selling in foreign markets. Will they push U.S. trading partners on this? If so, how will they do it? Section 301? Something else?
Finally, there is a group of Republicans that has been pushing for a trade deal with the UK. I've always been skeptical that Trump would sign a trade liberalizing deal of any sort, and now the UK is governed by the Labour Party, so I have doubts about the prospects for this.
I'm not sure how much, if anything, other countries are going to be willing to concede to Trump in negotiations this time around. Retaliation may be more likely than a negotiated deal. Traditionally, U.S. trading partners have targeted U.S. agriculture interests, but based on the experience during the first Trump administration, I'm not sure how effective that will be. Instead, when threatened with tariffs, other countries might try to go after his coalition of supporters (e.g., Elon Musk and Tesla).
What will they do at the WTO?
Last time around, the Trump administration raised China's non-market practices at the WTO General Council. That effort seems to have died under the Biden administration. Will the Trump folks revive it?
And what position will they take on the upcoming WTO DG appointment? On dispute settlement reform? On the e-commerce negotiations? Fisheries subsidies?
Security issues
And finally, how will Trump and his administration see the various trade and security issues? I would imagine the connected car regulations the Biden administration is working on will move forward. On the other hand, unlike the many Republicans who seem wary of Chinese investment in the U.S., Trump often sounds like he supports it. How will this internal debate play out? Does he really believe what he says when he talks about China building car factories in the U.S.? Will the people he hires find a way to convince him otherwise or just somehow take policy in a different direction?
