International Economic Law and Policy Blog

More on Charming Betsy

In my last post, I raised the possibility that Charming Betsy could play a role in the challenges to the Trump administration's IEEPA tariffs. (There have been three new complaints filed since that post: State of Oregon v. Trump, Learning Resources v. Trump, and Princess Awesome v. CBP. By my count, that makes eight cases in total.) Recall that the Charming Betsy canon of interpretation, as articulated by the U.S. Supreme Court in 1804, states that "[a]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains." That was a long time ago, and in a 2020 article, law professor Justin Hughes explains some later refinements:

Just a few years after [the 1982 case of Weinberger v. Rossi], the Restatement (Third) of United States Foreign Relations Law expressed the doctrine in words that track Justice Marshall but expands it to include all public international law:

Where fairly possible, a United States statute is to be construed so as not to conflict with international law or with an international agreement of the United States.

The Restatement Third tweaks Marshall's interpretative standard ("fairly possible") while also clarifying that the canon - couched in the nineteenth century idea of the "law of nations" - applies to both customary international law and the specific international legal obligations that the United States undertakes through agreements.

(footnotes omitted)

As noted in the earlier post, a key issue in the IEEPA complaints is whether the statute allows for the use of tariffs. There are two main aspects to the Charming Betsy analysis on this issue: Is the statute ambiguous on this question? And if so, how might international obligations guide the interpretation of the statute?

With regard to whether the IEEPA allows tariffs, I think there is a good argument that it does not, which would put an end to all this. But at the least, I would say the statute is ambiguous on this point, which brings in Charming Betsy. I won't go into the details on that point here, though, because I want to focus on the role of international obligations in providing interpretive guidance. In this regard, let me turn to an issue on which I raised questions in my earlier post: What exactly are the "international obligations" at issue here, and how should a U.S. court ascertain their meaning?

When determining what the "obligations" in an international agreement are, I think it's clear that you have to look at both the obligations and any exceptions that qualify them. As I noted in the earlier post, the key WTO obligations at issue are GATT Articles I and II, and for our purposes I don't think there is much doubt about the application of these provisions to the IEEPA tariffs (the tariffs are in violation). Rather, the focus here will be on interpretive questions related to the Article XXI security exception: How should a U.S. court think about whether the tariffs are justified under that exception?

There are several approaches I can imagine here:

• The court could accept the official U.S. government position that the security exception is totally self-judging, and on this basis find that the tariffs would not violate the international obligations of the U.S. on the basis that the U.S. has invoked Article XXI.
• The court could do its own interpretation of the text of Article XXI, in order to decide whether (1) it is totally self-judging or (2) it requires some type of good faith/objective analysis to determine whether a particular measure is justified; and in the case of (2), the court could then do that analysis and determine whether the IEEPA tariffs are justified under the Article XXI exception.
• As a variation on the second approach, the court could take into account WTO dispute settlement rulings that interpret and apply Article XXI, and use those interpretations to help it determine whether the IEEPA tariffs are justified under the Article XXI exception.

(An additional consideration would arise if there were a panel ruling on the IEEPA tariffs themselves. If such a ruling existed, the courts could just rely on that to determine that the tariffs are or are not consistent with international obligations. But we are not there yet.)

In thinking about how courts should approach these issues under Loper Bright (i.e., in a post-Chevron world), Jacobson and Finan argue that "if applicable international law is too ambiguous to guide the interpretation of an ambiguous statute, only then should courts give agencies’ interpretations 'respect' to the extent they have the 'power to persuade.'" How would Article XXI be treated under this approach? I think it's fair to say that the Article XXI text itself, on its face, is a bit ambiguous in terms of how much deference to national governments it requires. If we were ignoring the WTO panel interpretations of this provision that clarify it (I'll get to those later), we could then turn to the post-Loper Bright approach that Jacobson and Finan lay out:

Notably, the Supreme Court in Loper Bright “warmly embraced Skidmore v. Swift & Co., which calls not for deference, but for respectful attention to the views of the relevant agency.”  The Court held that interpretations “‘made in pursuance of [an agency’s] official duty’ and ‘based upon . . . specialized experience,’ ‘constitute[d] a body of experience and informed judgment to which courts and litigants [could] properly resort for guidance,’ even on legal questions.”²⁷ Courts should use the Skidmore factors to weigh whether the agency’s interpretation is entitled to such “respect.”  Factors for a court to consider include the “thoroughness evident in [the agency’s] consideration, the validity of [the agency’s] reasoning, [the interpretation’s] consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”  Under this approach, courts can fulfill their duty to interpret statutes, while relying on agencies’ expertise as a guide when both the statute and applicable international law present true ambiguity, in line with the standard established in Loper Bright.

Applying that approach here, does the U.S. government view of whether the tariffs are justified under Article XXI merit the Skidmore respect? Was its consideration of these issues "thorough", "valid", and "consistent"? I'm really not sure how a court would see this. Maybe the judges would defer to the Executive branch here, or maybe they would want to do their own analysis of Article XXI. I can imagine that the views of the U.S. Supreme Court justices would vary on these issues, but I'm not familiar enough with these views to make a prediction on how they would come out.

Regardless of how U.S. courts would approach an analysis of the text of Article XXI on its own, in my view there is a strong argument that the courts should take into account WTO dispute settlement rulings on these issues, which have removed much of the ambiguity from Article XXI. The DSU has a specific provision that explains the role of the dispute settlement system as "clarifying" the meaning of the agreements through "the customary rules of interpretation of public international law":

The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.

The Uruguay Round Agreements Act Statement of Administrative Action has a similar statement, making it clear that U.S. negotiators were on board with this approach. As a result, in thinking about what Article XXI means, U.S. courts should take into account the clarifications provided through WTO dispute settlement (which, of course, may be ambiguous themselves at times). I won't walk through it all in this post, but applying the clarifications set out by WTO panels, I think a court should find that the IEEPA tariffs are not justified under Article XXI. And consequently, under Charming Betsy, to avoid a conflict with international law, the court should reach an interpretation of the IEEPA that does not allow tariffs.

The IEEPA Lawsuits and Charming Betsy

By my count, so far there have been five lawsuits filed in U.S. court related to either the IEEPA fentanyl tariffs or the IEEPA "reciprocal"/universal tariffs:

- Barnes v. U.S., CIT (complaint) (fentanyl tariffs)

- Emily Ley Paper v. Trump, U.S. district court, N.D. Florida (complaint) (fentanyl tariffs)

- Webber v. DHS, U.S. district court, D. Montana (complaint / amended complaint) (reciprocal/universal and fentanyl tariffs, as well as Section 232 steel/aluminum tariffs)

- V.O.S. Selections v. Trump, CIT (complaint) (reciprocal/universal tariffs)

- California v. Trump, U.S. district court, N.D. California (complaint) (reciprocal/universal and fentanyl tariffs)

(There have been motions filed to transfer the California, Florida, and Montana cases to the CIT).

An issue I haven't seen mentioned in any of the lawsuits is Charming Betsy. As a new Harvard International Law Journal online piece by Michael Jacobson and Stephen Finan, entitled "The Charming Betsy Canon: Time to Ride the Tide of Loper Bright," reminds us, "[t]he Charming Betsy canon of interpretation, articulated by the U.S. Supreme Court in 1804, states that '[a]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains.'"

So how might Charming Betsy apply in the context of these IEEPA lawsuits? The authors don't address that question explicitly, but they do put forward "a three-phase approach that courts should employ when reviewing agency interpretations of statutes where international law is at play": 

a. Step 1

     First, courts should determine whether a statute is clear.  If the statute lacks ambiguity, in particular if Congress expressly declared its intention to legislate in a manner that contradicts an international obligation, courts should apply the statute as written, irrespective of international law.  Where Congress has clearly spoken, Charming Betsy is inapplicable. 

b. Step 2

     Second, if the statute is ambiguous, courts should look to international law to guide their interpretation of the best meaning of the statute.  In accordance with Charming Betsy, courts should interpret the domestic statute in a manner that comports with the United States’s international obligation, with the goal of avoiding conflict between domestic law and international law wherever possible.  This interpretive exercise should take precedence over agency interpretation of a statute, in accordance with the Supreme Court’s clear directive in Loper Bright that courts should seek the best meaning of a statute, irrespective of agency interpretation.  Courts have long applied Charming Betsy as an aid in the statutory interpretation process in this way.  Unbridled by Chevron, Charming Betsy should be a primary tool employed to interpret ambiguous statutes where coinciding international obligations exist. 

c. Step 3

     Third, if applicable international law is too ambiguous to guide the interpretation of an ambiguous statute, only then should courts give agencies’ interpretations “respect” to the extent they have the “power to persuade.”  Notably, the Supreme Court in Loper Bright “warmly embraced Skidmore v. Swift & Co., which calls not for deference, but for respectful attention to the views of the relevant agency.”  The Court held that interpretations “‘made in pursuance of [an agency’s] official duty’ and ‘based upon . . . specialized experience,’ ‘constitute[d] a body of experience and informed judgment to which courts and litigants [could] properly resort for guidance,’ even on legal questions.”²⁷ Courts should use the Skidmore factors to weigh whether the agency’s interpretation is entitled to such “respect.”  Factors for a court to consider include the “thoroughness evident in [the agency’s] consideration, the validity of [the agency’s] reasoning, [the interpretation’s] consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”  Under this approach, courts can fulfill their duty to interpret statutes, while relying on agencies’ expertise as a guide when both the statute and applicable international law present true ambiguity, in line with the standard established in Loper Bright.

In the IEEPA context, we are not dealing with an agency interpretation, but nevertheless the same principles could apply to the Trump administration's interpretations of the statute. 

To illustrate how Charming Betsy might come up in an IEEPA lawsuit, looking at their step 2, there is some uncertainty about whether the IEEPA allows for the imposition of tariffs, which are not explicitly mentioned as a possible government action authorized by the statute. Arguably, then, this ambiguity means that under Charming Betsy, international law -- as articulated through international trade agreements -- should play a role in interpreting this aspect of the statute. Applying Charming Betsy to this interpretive issue, U.S. courts should look for constructions of the IEEPA that avoid a violation of these trade agreements.

If the courts were to find that the fentanyl and reciprocal/universal tariffs are permitted under the statute, that will certainly lead to violations of GATT obligations (e.g. MFN and tariff bindings). Whether these violations are justified under the Article XXI security exception is a more difficult issue, but there are strong arguments that they would not be. As a result, pursuant to Charming Betsy, it could be argued that, in order to avoid a violation of international law, the courts should adopt an interpretation of IEEPA that does not allow the imposition of tariffs.

In addition to issues related to ambiguity in the statute, there is also the question of whether the international law in this area is clear enough to guide the statutory interpretation (their step 3). If the international obligations are ambiguous, more "respect" for the government's interpretation may be required. With regard to the meaning of the relevant international obligations here, how exactly should a U.S. court approach the issue of whether the IEEPA tariffs violate GATT Articles I or II and whether they would be justified under Article XXI? While the violations of Articles I and II are probably clear to everyone, would a court think the text of Article XXI is too ambiguous to reach a conclusion on the security justification? Should WTO panel interpretations in past cases play a role in this consideration by U.S. courts? Should the U.S. courts do the WTO legal analysis themselves, making their own determination of whether the the tariffs are consistent with GATT obligations or justified by the Article XXI exceptions? And then there's the issue of a WTO complaint against the specific IEEPA tariffs at issue. Would a WTO panel ruling that the IEEPA tariffs themselves violate GATT obligations and are not justified by the Article XXI exception make the applicable international law in this case more clear?

None of the complainants have made an argument based on Charming Betsy yet, but despite the uncertainty as to how it would apply in this context, I can see some value in putting it out there for courts to consider.

Dark Globalization: Authoritarian Arbitrage in the Case of Kilmar Abrego Garcia

One dimension of the current case of Kilmar Abrego Garcia concerns the dark side of globalization:  arbitrage by authoritarians to subvert constitutional and human rights protections.    

Abrego Garcia has been strategically disenfranchised through jurisdictional arbitrage implemented by physical transfer to El Salvador.  If he remained in the U.S., he would have had important due process rights and would be entitled to better treatment and perhaps release.  But the U.S. now claims that it has no jurisdiction/power to correct its error and bring him back, and rejects judicial interference with its foreign policy powers on constitutional allocation of powers grounds.  For El Salvador’s part, President Bukele says he has no power to return Abrego Garcia to the U.S.  With power comes responsibility:  the disavowal of power by the U.S. and El Salvador is a disavowal of responsibility resulting in the stripping of rights from Abrego Garcia.  Furthermore, the Abrego Garcia case is a test case for a broader strategy that can be applied to all residents and citizens.  President Trump has stated that it might be applied to “home grown” criminals.  This would nullify constitutional rights of citizens. 

The Trump administration is asserting the power wantonly to physically move people in order to subvert their constitutional rights.  MNCs have long moved physically or notionally to seek legal treatment more favorable to them.  The Trump administration’s innovation here is to utilize the power of government arbitrarily to move people in order to accord legal treatment less favorable to them. Effective constitutional and human rights will require constraints on this power, either in national law or In international law. As Jeffrey Dunoff and I explained in our 2013 volume, Ruling the World, “Constitutional subsidiarity implies that under some changes in technological or social circumstances, the vertical level at which it is appropriate to guarantee certain constitutional values may change. Supplemental constitutionalization responds to gaps in the domestic law constitutional framework that are created or accentuated by globalization.”

Questions About the Upcoming Trade Deals

There have been a lot of U.S. tariffs in recent months, and it's getting hard to keep track of them all. This post deals with the IEEPA "reciprocal tariffs" announced on April 2, rather than the earlier IEEPA fentanyl tariffs or the various Section 232 tariffs or any other tariffs. Soon after imposing the April 2 tariffs, President Trump announced a 90 day pause on a portion of the tariffs, starting on April 9 (except for tariffs on Chinese imports, which were increased because China had retaliated). That modification left us with a 10% baseline tariff in place on all countries except China, with the Trump administration indicating that negotiations would now begin on issues related to the tariffs and non-tariff barriers of these countries. An administration official suggested they could sign "90 deals in 90 days."

I have a few questions about the trade deals that may (or may not) result from these negotiations.

1. What will the content of these agreements be? A recent Washington Post article identified the following possibilities for things the U.S. will be pushing for:

• Lower tariffs on U.S. exports
• Purchases of U.S. natural gas
• Removal of barriers for U.S. agriculture exports
• Lower taxes on U.S. tech companies
• Coordination on limiting imports from China
• Stopping transshipment of goods from China

You can also imagine coordination on export controls and investment screening being in there; weakening of the regulations affecting U.S. tech companies; and language related to currency manipulation.

2. Will the U.S. undertake obligations too? Presumably a big ask of the other countries will be to remove the reciprocal/baseline tariffs, but they may push for other things as well.

3. Relatedly, how will these agreements play in the domestic politics of other countries? Will governments be accused of caving to U.S. demands if they can't show they got something more than just the tariff rates that existed prior to Trump raising the tariffs?

4. Will there be any formal process for outside input into the negotiation of these agreements? At the moment, it does not seem like there will be.

5. Will these agreements be durable? Will there be a text, or will it be more of a handshake agreement?

6. Assuming there will be a text, will there be some sort of dispute settlement mechanism in the agreements? The 2019 U.S.-Japan trade agreement had a simple request for consultations procedure, with nothing further spelled out. The U.S.-China Phase One deal had what I have characterized as an internationalized version of Section 301, under which one party can declare the other to be in violation and then impose duties. And then standard FTAs have an adjudication mechanism under which panels assess formal complaints of violation filed by a party. Will any of these be used? Or will there be nothing at all included in these agreements about dispute settlement?

7. Will there be a formal process for the Trump administration to make its assessments of compliance with the agreements? How transparent will this decision-making be? Will they seek public comments?

8. What role will Congress play here? Will they hold hearings? Will they offer a formal endorsement like they did with the U.S.-Taiwan trade deal legislation in 2023? Would that kind of action shift these new agreements from being purely trade executive agreements into something with a stronger domestic legal foundation?

9. How many agreements will there be? Over on Bluesky, I guessed 5-20. Will that prediction be close to the reality?

10. What statutory authority will the administration cite for negotiating these deals? The tariffs were imposed under IEEPA. Is IEEPA broad enough to allow for negotiating trade deals of this sort?

11. Will there be adjacent issues that exist separately from the trade part of the agreements, such as agreements to purchase specific U.S. military equipment?

Stephen Miran on the U.S. Providing Global Public Goods

Last week, Stephen Miran, the Chairman of the Council of Economic Advisers, gave a speech at the Hudson Institute in which he explained that the U.S. deserved compensation for certain "global public goods" it provides to the world. In his opening remarks, he identified two such public goods:

Today I’d like to discuss the United States’ provision of what economists call “global public goods,” for the entire world.  First, the United States provides a security umbrella which has created the greatest era of peace mankind has ever known.  Second, the U.S. provides the dollar and Treasury securities, reserve assets which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known. 

He then explained the costs to the U.S. of providing these public goods:

Both of these are costly to us to provide.  On the defense side, our men and women in uniform take heroic risks to make our nation and the world safer, preserving our liberties generation after generation.  And we tax hardworking Americans mightily to finance global security.  On the financial side, the reserve function of the dollar has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits.  These trade deficits have decimated our manufacturing sector and many working-class families and their communities, to facilitate non-Americans trading with each other.

Focusing on the financial side, he elaborated on how "our financial dominance comes at a cost":

While it is true that demand for dollars has kept our borrowing rates low, it has also kept currency markets distorted.  This process has placed undue burdens on our firms and workers, making their products and labor uncompetitive on the global stage, and forcing a decline of our manufacturing workforce by over a third since its peak and a reduction in our share of world manufacturing production of 40%.

At this point, given the high costs he laid out, you might think he would be making the case for the U.S. to stop providing these public goods. But instead, he wants the U.S. to keep doing it but get more compensation from others:

President Trump has made it clear that he will no longer stand for other nations free-riding on our blood, sweat, and tears, whether in national security or trade. ...

...

In my view, to continue providing these twin global public goods, there needs to be improved burden-sharing at the global level.  If other nations want to benefit from the U.S. geopolitical and financial umbrella, then they need to pull their weight, and pay their fair share. ...

The best outcome is one in which America continues to create global peace and prosperity and remain the reserve provider, and other countries not only participate in reaping the benefits, but they also participate in bearing the costs.  By improving burden sharing, we can enhance resilience, and preserve the global security and trading systems for many decades into the future.

Let me stop with the quotes for a moment and talk about some of what he has said so far.

Are the U.S. security umbrella and financial umbrella best described as "global public goods"? Or could they also be thought of as "policies that the U.S. government sees as being to its advantage and wants to continue doing"? I'm not totally sure about the right characterization, and I think opinions vary considerably around the world (and within the U.S. as well). There are a handful of countries that face specific security threats and thus have a strong desire for U.S. military support. But I think this is a minority, and in most countries opinions on these U.S. policies are pretty mixed. As a result, asking other countries to pay more for the U.S. to do these things may not be well received, as a fair number of people might prefer the U.S. stop doing them entirely.

I feel like the way the Trump administration is approaching this is to say: "These are some services we are providing, and you have to pay us what we think they are worth." But in terms of creating a stable international economic and security system, a better approach might be to ask: "Do you want us to provide these services? If so, let's talk about how the costs should be allocated." Because as things stand now, it comes across to many as if the U.S. government is doing something it believes is in its interest, and then asking for compensation.

Getting back to his remarks, he provides the following examples of the burden sharing he would like to see:

What forms can that burden sharing take?  There are many options, here are a few ideas:

- First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision.  Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods.

- Second, they can stop unfair and harmful trading practices by opening their markets and buying more from America;

- Third, they can boost defense spending and procurement from the U.S., buying more U.S.-made goods, and taking strain off our servicemembers and creating jobs here;

- Fourth, they can invest in and install factories in America.  They won’t face tariffs if they make their stuff in this country;

- Fifth, they could simply write checks to Treasury that help us finance global public goods.

I have several questions/comments here.

On the idea that other countries should accept U.S. tariffs without retaliation, it's important for people in the U.S. to understand that other countries have domestic politics too. Looking weak in the face of U.S. economic demands could hurt a foreign government's standing with its people, and that's not good for the future prospects of the leaders of that government.

As to the unfair and harmful trading practices, sure, it would be great to address those, but other countries are going to want to address similar U.S. practices (there are loads of these). That's how normal trade negotiations and agreements work.

On boosting defense spending for U.S. goods, some U.S. allies are feeling conflicted about that right now as a result of certain of the Trump administration's foreign policy moves.

And as to foreign investment in U.S. factories, with China being a big target of the U.S. tariffs, the question arises as to whether Chinese companies can build factories in the U.S. My sense is that Trump himself might be OK with that. I'm not so sure that most top officials in the administration (or many members of Congress) would agree though.

Miran also offered the following thoughts on tariffs and trade deficits:

One reason the economic consensus on tariffs is so wrong is because nearly all of the models that economists use to study international trade assume either no trade deficits at all, or assume that deficits are short-lived and quickly self-correct through currency adjustments.  According to standard models, trade deficits will cause the dollar to weaken, which reduces imports and boosts exports, eventually wiping out the trade deficit.  If that happens, tariffs may be unnecessary, because trade will balance itself over time and, in this view, intervening with tariffs can only make things worse.

However, that view is at odds with reality.  The United States has run current account deficits now for five decades, and these have widened precipitously in recent years, going from about 2% of GDP in the first Trump Administration to a high of nearly 4% of GDP in the Biden Administration.  And this has happened all while the dollar has appreciated, not depreciated!

The long run is here, and the models are wrong.  One reason is that they fail to account for the U.S. provision of the global reserve currency.  Reserve status matters and, because demand for the dollar has been insatiable, it has been too strong for international flows to balance, even over five decades.

My view is that there are two main reasons U.S. trade balances have not adjusted more during the longstanding period of U.S. trade deficits: (1) the relatively low U.S. savings rate, and (2) the role of the U.S. dollar as the reserve currency. He doesn't mention the first one, which I think is a big omission. On the second one, he makes clear that he wants the dollar to remain the reserve currency (during the Q & A, he said "dollar dominance is a great thing"), but it's clear that such a policy will limit the prospects for any adjustment taking place. Maybe he is saying that his "burden sharing" options can operate as an alternative way to reduce deficits, even with the dollar remaining as the reserve currency, but that has the problems noted above (among others). Or do they have in mind a plan to weaken the value of the dollar while keeping its role as the reserve currency? Would Trump be OK with that plan? I hope someone presses them on these questions.

Guest Post: Japan Signals a Possible Shift Away from the WTO Dispute Settlement System in Response to U.S. “Reciprocal Tariffs”

This is a guest post from Yoshimichi Ishikawa, Associate Professor, University of Shizuoka, Japan

For decades, Japan has adhered to the principle that trade disputes should be addressed strictly within the WTO dispute settlement framework. This long-standing position may now be facing a turning point.

On April 2, 2025, the United States announced a new “reciprocal tariff” scheme. In response, China swiftly declared its intention to impose retaliatory tariffs, while the EU and Canada signaled they were exploring similar measures. In Japan, recent polls show that 57% of respondents support imposing retaliatory tariffs. Against this backdrop, a noteworthy exchange in Japan’s Diet may signal a legal shift in the country's traditional approach to trade disputes.

During a session of the Financial Affairs Committee of Japan’s House of Representatives on April 4, a member of the ruling party asked Finance Minister Katsunobu Kato whether Japan could legally impose retaliatory tariffs against the United States. Minister Kato replied:

“Speaking generally about our tariff system… given that parts of the WTO’s dispute settlement procedures are currently not functioning, we believe that—while seeking to resolve disputes through the WTO to the extent possible—it is legally possible to impose retaliatory tariffs as stipulated under the Customs Tariff Act.” (emphasis added; original in Japanese, spoken at around 13:20 in this Diet committee video)

This statement is striking. Under Article 6 of Japan’s Customs Tariff Act, the imposition of retaliatory tariffs in response to WTO violations is permitted only after the approval of the WTO Dispute Settlement Body is obtained. This domestic provision reflects Japan’s alignment with Article 23 of the WTO Dispute Settlement Understanding (DSU), which obliges Members to address covered agreement violations exclusively through the WTO dispute settlement system. In line with this approach, Japan has only once implemented retaliatory tariffs—against the United States in 2004 in response to the Byrd Amendment—following WTO authorization.

Given this legal and policy background, Minister Kato’s use of the phrase “to the extent possible” implies that Japan may now consider imposing retaliatory tariffs without prior WTO authorization if its dispute settlement system remains paralyzed. This would mark a notable departure from Japan’s traditional stance, which has emphasized resolving trade disputes within the WTO framework and implicitly excluded the application of countermeasures under general international law (such as those contemplated in the Articles on State Responsibility).

While the Finance Minister’s remarks are significant, Japan cannot actually impose retaliatory tariffs without amending the Customs Tariff Act. In the absence of such reform, the statement risks being seen—as some domestic media have already suggested—as a political message aimed at the United States, rather than a concrete policy move (Kyoto News report, in Japanese).

What will truly matter is whether Japan moves to revise the law in the near future. That would signal not only how seriously it is weighing retaliation against the U.S. reciprocal tariffs, but also whether it is rethinking what has long been interpreted as its position: that WTO violations must be addressed exclusively within the WTO, without recourse to general international law.

It is also worth noting that Prime Minister Shigeru Ishiba has repeatedly downplayed the likelihood of retaliatory tariffs, and that during a phone call on April 8, President Trump and Prime Minister Ishiba agreed to appoint ministers in charge of the issue and to begin tariff negotiations. Thus, the actual imposition of retaliatory tariffs appears unlikely for now. Still, from the standpoint of both negotiation leverage and legal preparedness, it may be strategically important for Japan to revise the relevant provisions of its Customs Tariff Act—potentially by incorporating language such as “to the extent possible,” as suggested by the Finance Minister. Doing so would allow Japan to maintain the legal flexibility to impose retaliatory tariffs even in the absence of prior WTO authorization, particularly in situations where the WTO dispute settlement system is not functioning.

Andrew P. Vance Memorial Writing Competition Call for Papers

This is from the Customs and International Trade Bar Association (CITBA) and Georgetown Law School

 

The Customs and International Trade Bar Association (CITBA) and Georgetown Law School are pleased to announce 2024-2025 Andrew P. Vance Memorial writing Competition. The competition is welcoming papers with an in-depth analysis of a current issue relevant to customs and international trade law. Entrants must be currently enrolled in a J.D. or L.L.M. program at any of the nation’s law schools. Papers must be submitted here by June 2, 2025 at 11:59 p.m. ET.

Submissions should be typewritten, double-spaced on 8 ½ x 11-inch paper. The paper shall not exceed 40 pages in length, including footnotes. Papers must include footnotes, not endnotes. Papers should be in 12pt. Times New Roman font and have one-inch margins (right, left, top, and bottom).  Noncompliance with these requirements may affect evaluation or result in disqualification.  Please include the following on the cover sheet of your paper:

• Full name, address and telephone number
• Law school and year
• Date of submission of paper

Do not include any identifying information in the text of the paper itself.

A committee of practicing attorneys and professors with relevant expertise will judge the papers. The following factors will be considered:

• Legal analysis
• Thoroughness and depth of topic
• Evaluation of judicial precedents, statutes, and regulations
• Writing style
• Form and quality of citations
• Conformity with rules of competition

Two prizes will be awarded by CITBA:

• $1000.00 first prize
• $500.00 second prize

Guest Post: How to (legally) respond to the ‘reciprocal’ tariffs announced by the Trump administration?

This is a guest post from Antoine Comont, Ph.D Candidate at Laval University and the University of Bordeaux

If respecting international law is a virtue that still makes sense to you, the question for each of the countries affected by the tariffs announced yesterday by the administration is how to justify any retaliation.

The first idea would be to use the WTO DSS to request authorization to suspend certain obligations (Article 22 of the DSU). However, given the scale of the customs duties imposed by the United States, the slowness of the procedures could well cause irreparable damage to the economies of the various countries targeted. Added to this is the fact that the WTO's Appellate Body is currently blocked, and the United States could, in particular, allow the proceedings initiated against it in the appeal phase to lapse without any final decision being taken, thus depriving the complaining Members of their right to request suspensions of concessions or other obligations.

The second idea would therefore be to use the dispute settlement procedures provided for in any regional or bilateral agreements that countries may have concluded with the United States. However, you would be particularly limited as to the extent of the obligations you could suspend. On the one hand, you could suspend the concessions you have granted to the United States under your agreement. On the other hand, as the reciprocal tariffs announced by the United States are particularly significant, you could be led to suspend certain concessions that you have granted to the United States under your bilateral agreement, but also the WTO agreements.

The third idea would be to adopt unilateral countermeasures in a bid to avoid lengthy procedures. In either case, the United States could challenge your measures before the WTO's DSB because they nullify or impair certain advantages acquired under Article I and II of the GATT or any other WTO agreement[i]. However, you will not be able to justify your measures because the United States has previously violated its obligations under the WTO agreements. This would be contrary to the DSB's exclusive jurisdiction under Article 23 of the DSU, which prohibits the use of unilateral measures or any measure that has not been expressly authorized by it.

Given the unprecedented scale and violence of the tariffs applied by the United States, is there any way of responding immediately without infringing international law? In general international law, retaliatory measures are certainly unfriendly measures, but they are not incompatible with any international obligation. Conversely, countermeasures are measures incompatible with certain international obligations but justified by the fact that they are a reprisal for a previous violation of international law[ii].

Under WTO law, compensation (mutually agreed) or suspension of obligations granted by the DSB are retaliatory measures and are specifically authorized by Article 22 of the DSU. At the same time, we found that the per se prohibition of countermeasures is the subject of consistent jurisprudence by the DSB. The panel also made the following statement about Section 301:

« Article 23.1 is not concerned only with specific instances of violation. It prescribes a general duty of a dual nature. First, it imposes on all Members to "have recourse to" the multilateral process set out in the DSU when they seek the redress of a WTO inconsistency. In these circumstances, Members have to have recourse to the DSU dispute settlement system to the exclusion of any other system, in particular a system of unilateral enforcement of WTO rights and obligations. This, what one could call "exclusive dispute resolution clause", is an important new element of Members' rights and obligations under the DSU. Second, Article 23.1 also prescribes that Members, when they have recourse to the dispute settlement system in the DSU, have to "abide by" the rules and procedures set out in the DSU. This second obligation under Article 23.1 is of a confirmatory nature: when having recourse to the DSU Members must abide by all DSU rules and procedures. »[iii]

We are therefore also of the opinion that only sanctions authorized by the DSB and expressly provided for in the Memorandum can be implemented. This implies the prohibition of any unilateral sanction or reprisal.

It therefore seems clear that the WTO's dispute settlement rules and procedures are no longer suited to the context of the generalised trade war launched by the US. So let us see what options can still be mobilized to address the needs of WTO Members.

I. Excluded Legal Grounds

A. Self-defence

In public international law, self-defence is grounded in Article 51 of the UN Charter.

Article 51

Nothing in the present Charter shall impair the inherent right of individual or collective self-defence if an armed attack occurs against a Member of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security. Measures taken by Members in the exercise of this right of self-defence shall be immediately reported to the Security Council and shall not in any way affect the authority and responsibility of the Security Council under the present Charter to take at any time such action as it deems necessary in order to maintain or restore international peace and security.

In order to lawfully exercise a right to self-defence under Article 51 of the UN Charter, three criteria must be fulfilled: (1) there must be an armed attack, (2) it must be necessary to use force in the exercise self-defence, and (3) the use of force in self-defence must be proportional.

To date, no court has upheld the invocation of self-defence in response to economic coercive measures. The term ‘armed’ excludes any economic dimension, and while legal scholars remain divided on its scope, no case addressed this matter yet. Historically, the International Court of Justice has consistently interpreted self-defense as having a military connotation, far removed from the economic and commercial reality of U.S. actions so far.

Even if a special group welcomes this argument, the second difficulty with self-defence is that recourse to it would at the same time justify recourse to Article XXI of the GATT by the United States, since this would mean recognizing the existence of serious international tensions.

B. Vienna Convention on the law of treaties, Article 62

Article 62 of the Vienna Convention on the law of treaties is related to the « fundamental change of circumstances ».

Article 62

Fundamental change of circumstances

1. A fundamental change of circumstances which has occurred with regard to those existing at the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be invoked as a ground for terminating or withdrawing from the treaty unless:

(a) the existence of those circumstances constituted an essential basis of the consent of the parties to be bound by the treaty; and

(b) the effect of the change is radically to transform the extent of obligations still to be performed under the treaty.

2. A fundamental change of circumstances may not be invoked as a ground for terminating or withdrawing from a treaty:

(a) if the treaty establishes a boundary; or

(b) if the fundamental change is the result of a breach by the party invoking it either of an obligation under the treaty or of any other international obligation owed to any other party to the treaty.

3. If, under the foregoing paragraphs, a party may invoke a fundamental change of circumstances as a ground for terminating or withdrawing from a treaty it may also invoke the change as a ground for suspending the operation of the treaty.

Regarding the commentaries provided by the ILC on the draft articles on Responsibility of States, it can be considered equivalent to the excuse of necessity (see below)[iv]. Even if it can be argued that US tariffs would fundamentally change the initial circumstances that led to counter-measures, we do not believe it would be appropriate to base the justification for our response on this ground.

On the one hand, recourse to Article 62 of the VCLT marks the premise of the denunciation of the WTO Agreement vis-à-vis the United States, which is certainly not desirable.

On the other hand, even though paragraph 3 authorizes the suspension of an agreement, there are questions[v] as to whether this suspension must imperatively apply to all agreements or whether it can merely be partial.

II. The plea of « necessity » (État de nÉcessitÉ) or the « excuse of necessity »

A. What is the « plea of necessity »

In accordance with the ILC, « the term “necessity” (état de nécessité) is used to denote those exceptional cases where the only way a State can safeguard an essential interest threatened by a grave and imminent peril is, for the time being, not to perform some other international obligation of lesser weight or urgency ».

This is a customary principle of public international law widely established in case law[vi]. Since then, an initiative to codify the state of necessity is contained in article 25 of the ILC's draft articles on State responsibility :

Article 25

Necessity

1. Necessity may not be invoked by a State as a ground for precluding the wrongfulness of an act not in conformity with an international obligation of that State unless the act:

(a) is the only way for the State to safeguard an essential interest against a grave and imminent peril; and

(b) does not seriously impair an essential interest of the State or States towards which the obligation exists, or of the international community as a whole.

2. In any case, necessity may not be invoked by a State as a ground for precluding wrongfulness if:

(a) the international obligation in question excludes the possibility of invoking necessity; or

(b) the State has contributed to the situation of necessity.

Regarding on the level and scope of the tariffs that will be applied by the United States, we can conceive that without government action, the economy of WTO Members would find themselves in a situation of grave and imminent peril (in the meaning of article 25.1 (a)) and that it is ‘necessary’ in their nation's interests to act as quickly as possible without waiting for the DSB to authorize the adoption of sanctions.

B. What is not the « plea of necessity »

It seems to us that it is interesting to specify what a “plea of necessity” is not, insofar as such a justification requires, in our opinion, terminological clarification.

The “plea of necessity” is not a retaliation or countermeasure. Such measures are designed to sanction breaches of international law that have already occurred (in the WTO context, to sanction measures that are incompatible with the WTO agreements). The plea of necessity makes it possible to respond not to measures, but to exceptional circumstances, to a serious and imminent peril facing the economy of WTO Members. In this regard, we believe that it is possible for the government to legally justify its additional tariffs as, regardless of the blatant inconsistency of the US tariffs, it is no longer a matter of adopting a sanction, but of facing up to a grave and imminent peril.

C. The application of the plea of necessity in trade law

Our argument is that the tariffs applied by the US create circumstances that render necessary for other Members to safeguard their essential interests against a grave and imminent peril.

The question is whether or not general principles and customary rules of public international law apply in the specific field of international economic law[vii]. There is no doubt the plea of necessity finds its place in WTO Law.

One of the four conditions of validity of the plea is that necessity may not be invoked by a State as a ground for precluding wrongfulness of an act if the circumvented international obligation excludes the possibility of invoking necessity.

WTO Law does not exclude the possibility of invoking the plea of necessity. But the only dilemma is to determine whether certain provisions of the WTO Agreements (Article XXI, Safeguards Agreement...) constitute a form of lex specialis that would derogate from the general principle, as these provisions are somewhat in the same spirit: temporarily protecting essential interests against the effects of trade.

On that point, we consider the plea of necessity is different from the national security exception found notably in GATT Article XXI and GATS Article XIV bis. The security exception can be invoked by a trading State if its “essential security interests” are at stake. In WTO Law, it is generally left to every Member to define what it considers to be its essential security interests. But, as the panel in Russia-Traffic in Transit (2019) stated:

The discretion of a Member to designate particular concerns as ‘essential security interests’ is limited by its obligation to interpret and apply Article XXI(b)(iii) in good faith[viii].

Article XXI must not be an instrument to circumvent trade obligations. The Panel in the Russia- Transit case insisted that a Member should re-label trade interests in ‘essential security interests’. As Van den Bossche and Zdouc brilliantly summarize:

(…) the further an ‘emergency in international relations’ is removed from armed conflict or a breakdown of law and order, the greater the specificity required in the articulation of the ‘essential security interests’ at issue[ix].

To use the plea of necessity, a State must satisfy the conditions developed by customary international law and codified in Article 25 of the ILC's draft articles on State responsibility. These conditions are different from those set under Article XXI of the GATT and Article XIV bis of the GATS. So we do not consider that the national security exception constitutes a lex specialis vis-à-vis the excuse of necessity. However the situation remain unclear regarding the Safeguards Agreement.

Concluding Remarks and Communication Tools

The plea of necessity appears to us to be the best legal instrument.

It must be emphasized that pleading necessity should not be seen as a response to the measures taken by the United States, but rather to the situation in which the economy would find itself. It would therefore not be a question of taking reprisals or countermeasures against the United States. Here, the high level of the duties applied and their scope, which are, unprecedented in the history of the GATT/WTO, make it necessary for WTO Members to rescue their economies, which are facing a grave and imminent peril.

Moreover, building the political narrative around necessity is fairly straightforward for citizens and policy-makers to understand. This approach also offers a completely new legal argument that has never been argued in WTO law. This approach seems to offer a sufficiently solid political narrative and legal argument to preserve Member's devotion to a rules-based multilateral trading system.

NB : Joost Pauwelyn has also explored other ideas.

 

[i] This is what the United States did concerning the measures taken by Canada in response to the American tariffs on steel and aluminum in 2018. See Canada - Additional Duties on Certain Products from the United States - Request for the establishment of a panel by the United States WT/DS557/2.

[ii] ILC, p128

[iii] US – Section 301 Trade Act, WT/DS152/R para 7.43See also, US – Countervailing measures on certain EC products, WT/DS212/AB/R para 6.37 and EC – Commercial Vessels, WT/DS301/R para 7.198.

[iv] ILC, p 83

[v] Such questions were raised before a WTO Panel to which it didn’t respond, see US – Section 301 Trade Act, WT/DS152/R para 4.74.

[vi] See for instance, Gabcíkovo-Nagymaros Project (see footnote 27 above), pp. 40– 41, paras. 51–52 ; Fisheries Jurisdiction (Spain v. Canada), Jurisdiction of the Court, Judgment, I.C.J. Reports 1998, p. 432 ; Russian Indemnity case UNRIAA, vol. XI (Sales No. 61.V.4), p. 421, at p. 443 (1912)… For a more detailed list of relevant case law, see ICL page 80 et seq.

[vii] Andimariam. Chapter 10

[viii] Para. 7.132

[ix] Van Den Bossche and Zdouc (2022), p. 678

Collective Economic Security

Collective Economic Security

By Mona Paulsen (LSE Law) and Dan Ciuriak (C.D. Howe (Senior Fellow))

With a flurry of pomp and circumstance, the second Trump administration has reset United States trade with its trading partners. Based on U.S. laws that afford wide Executive discretion towards trade actions owing to concerns of unfairness, security interests, and a declared national emergency in the United States, the new Executive Order rewrites trade relationships owing to a “lack of reciprocity” and “disparate tariff rates and non-tariff barriers.”

For good measure, the new reciprocal tariff plan cautions that should any trading partner “retaliate” in response, they would face punishment in the form of an even higher or expanded scope of tariffs. Conversely, should any partner take “sufficiently” “significant steps to remedy” the alleged lack of reciprocity in their trade arrangements, they would see rewards in lower duties or a narrowed scope of existing duties.

Even though this is a dramatic shift in U.S. trade policy – it is only the beginning. Beyond the announcement of the new U.S. tariff policy remains an unspoken discretionary law that appears to be guiding the new tariff rates, namely a law that accords significant discretion to the President. The tariff rate calculations based on trade deficits with a country and then multiplied by 0.5 were necessary to keep the potential 100 per cent tariff implied by the formula (for trade deficits cannot exceed total imports) to 50 per cent. Without mention, this is the legal limit of Section 338 of Tariff Act of 1930, a never-before-used blunt tool which authorises the President to impose tariffs on duties of up to 50 per cent of the value of products, wholly or in part the growth or product of a foreign country, when the President finds that a foreign country imposes, directly or indirectly, “any unreasonable charge, exaction, regulation, or limitation” on, or discriminates, “directly or indirectly, by law or regulation or practice,” against U.S. commerce. It remains to be seen whether the President will invoke this law in the future. However, with this authority, the President could expand restrictions based on findings of discrimination and assessment of what is in the public interest of the United States.

We argue that it is time for governments to look beyond global economic governance strictly on U.S. terms. This new plan seeks to reset all multilateral trade arrangements on a bilateral, quasi-bartered basis. For most U.S. trading partners that had access to preferential schemes – for example, least developed countries in Africa under the AGOA scheme – such preferential access is now gone. The same is true for countries with bilateral free trade agreements with the United States such as Australia and Korea. For Canada and Mexico, preferential rates remain so long as the products are USMCA-compliant. Even with the carveout for USMCA-compliant products, the fact remains that Canadian and Mexican exports to the United States remain at risk of arbitrary tariffs as long as the state of emergence related to fentanyl drug smuggling remains in force. Moreover, there are consequences from trade diversion as third countries apply retaliatory tariffs on the United States. U.S. goods will seek the path of least resistance, and that will be to Canada and Mexico.  The trade war will come to everyone, one way or the other.

What can governments do? Unite.

Small open economies (SOEs) depend on the rules-based trading system for growth and economic security. They are disproportionately vulnerable to economic coercion, divide-and-conquer tactics, and blocking actions to prevent progress on multilateral issues that the large, quasi-closed economies (LQCEs) may be disinclined to support. Moreover, their size difference means their ability to sanction strategic acts of economic coercion/warfare is limited, leaving them to rely on safeguard measures in response.

In a forthcoming paper, we propose that a small open economy caucus (SOEC) be formed within the World Trade Organization (WTO). In that paper, we will explain how the SOEC would preserve WTO rules for their mutual interactions (including acceptance of the alternative appellate system) and would move forward on developing a rules-based approach to harmonise regulatory and administrative approaches to addressing economic security.

But, as a first order of business, once convened, the SOEC must immediately address the reset caused by the United States. The disproportionate, arbitrary actions taken by the United States violate the most fundamental WTO commitment to offer trading partners “most favoured nation” (MFN) treatment, a rule which limits harmful trade diversion. 

In simple terms, the United States wants governments to negotiate separately to strike deals in which it always has the upper hand.  But in fact, WTO membership binds all economies together. Should the United States wish to renegotiate its tariffs, it can do so under WTO rules that provide for a mutual reduction in the value of trade concessions. Under Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT), a Member seeking to withdraw tariff concessions must consult with any other Member with a “substantial interest” in such a concession. While it is true that failure to come to agreement in negotiation does not bar a Member from withdrawing concessions, our point is that collective response is inherently a core part of the multilateral trading system. All changes to tariff schedules require a certification procedure that encourages Members to come together to deliberate upon (and voice opposition to) modifications as impacting the overall balance of concessions. Under the WTO scheme, all Members with an interest in such renegotiation have the opportunity to participate because all Members have committed to share in the creation of ‘reciprocal and mutually advantageous arrangements’ – which means that a negotiation with one is a negotiation with all.  This understanding is built into the WTO arrangements to which the United States agreed. And this feature must be safeguarded to preserve the predictability and security of the multilateral trading system.

A corollary of this is that an attack on one is in reality an attack on all. Already, the highly differentiated tariffs imposed unilaterally by the United States imply a significant amount of trade diversion towards the source countries that face only 10% tariffs in the United States. At the same time, a differentiated response internationally to the U.S. tariffs means a significant amount of deflection of U.S. exports towards non-retaliating economies, which could force them in turn to put up safeguards to avoid having their domestic economies flooded by U.S. exports, which as noted will be searching for the path of least resistance.  No economy is isolated – firms have developed complex production networks that cross geographical and digital divides. Members must proceed to coordinate and consider collective economic development objectives in this light.

In short, we argue that, in the interest of preserving the multilateral trading system, a collective response to the U.S. reciprocal tariff is essential and, moreover, consistent with the spirit of the single undertaking that formed the WTO. The SOEC could immediately convene to cooperate on collective action – first as between themselves to address the United States’ actions and then a united front to consult with the United States thereafter. A coordinated response would represent a deviation from MFN, but such a deviation is necessary to limit the damage to global trade – the ambition of the caucus would be to open trade and to act collectively to contribute to a balanced, equitable, and expanding world economy. Should any Member seek to meet this commitment, they would be welcome to join. The SOEC would be breaking MFN to preserve it in the future.

A Few Answers To My Questions about Trump's Reciprocal Tariffs

Last week, I asked a lot of questions related to what we might expect from Trump's "reciprocal tariffs." Now we have a few answers in the Executive Order and a fact sheet from yesterday. Let's go through them.

Which statutes will they use as the basis for the tariffs? Clark Packard and Scott Lincicome of Cato describe the main possibilities here: IEEPA, Section 232, Section 301, Section 338, and Section 122.

They went with IEEPA for these tariffs, but I will note that I heard a lot of talk about Sections 338 and 122 as possibilities here. If the IEEPA tariffs are challenged successfully in court, the administration has these other statutes to fall back on.

When exactly will the tariffs be imposed? IEEPA tariffs can come pretty quickly, while tariffs under certain other statutes could require a longer process (although some tariffs might be imposed under already completed processes). To what extent will the April 2 announcement be used as the basis for a negotiation rather than the immediate imposition of tariffs?

In terms of the timing, this is from the White House fact sheet:

• Using his IEEPA authority, President Trump will impose a 10% tariff on all countries.
  • This will take effect April 5, 2025 at 12:01 a.m. EDT.
• President Trump will impose an individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits. All other countries will continue to be subject to the original 10% tariff baseline.
  • This will take effect April 9, 2025 at 12:01 a.m. EDT.

The tariffs will happen pretty quickly, and if there's going to be a negotiation, it had better start soon.

What methodology will they use for the calculation of a reciprocal tariff rate to be applied to each trading partner? Coming up with a credible methodology is going to be a big challenge.

See USTR's explanation here for how they got to their tariff numbers. As I said in the question, "[c]oming up with a credible methodology is going to be a big challenge." If what they were trying to do was make U.S. tariffs/non-tariff barriers "reciprocal" with those of foreign countries, I don't think they've achieved that. They describe their approach as a "proxy" methodology, and they never actually carry out a comparison of U.S. tariffs/non-tariff barriers with individual foreign country tariffs/non-tariff barriers to see if there is reciprocity. Maybe if this goes to court they can put together an additional analysis to present, but what they have now seems insufficient.

Will the reciprocal tariffs include a sectoral component? It seems clear that tariffs are coming on autos and various other sectors, but is that part of the reciprocal tariff package, or will it be separate?

I think this is a clear no, with carveouts for specific sectors from these "reciprocal" tariffs, although I've seen some people raise interpretive questions about this part of the EO.

Which countries will be hit the hardest? Treasury Secretary Scott Bessent recently referred to the "Dirty 15," meaning the countries that have the highest tariffs/barriers and large trade imbalances with the U.S.

You can see the EO Annex I list of countries hit with tariffs above 10% here. At the top are Lesotho at 50%, Cambodia at 49%, Laos at 48%, Madagascar at 47%, Vietnam at 46%, and Myanmar at 45%. Not exactly what I was expecting.

Which governments will retaliate and in what amounts? The reaction by other governments will depend on their domestic politics as well as their strategizing about how to get to the best outcome. Will any of the retaliation go beyond tariffs, and do creative things such as weakening intellectual property protections? And will products/services from Elon Musk and other Trump allies be targeted?

The retaliation questions are still open. It's worth noting here that the Trump administration is warning against retaliation:

Sec. 4.  Modification Authority.  ...

(b)  Should any trading partner retaliate against the United States in response to this action through import duties on U.S. exports or other measures, I may further modify the HTSUS to increase or expand in scope the duties imposed under this order to ensure the efficacy of this action. 

But no doubt there's going to be some retaliation. Further U.S. escalation in response to any retaliation could make the economic impact of all this much worse.

Will any countries make concessions in the hopes of being subject to lower U.S. tariffs? If so, how meaningful will these concessions be in terms of actual value to U.S. companies? Will they be designed to look meaningful without actually doing much, or will there be real opportunities for U.S. exporters? 

Some countries may try to offer something up, and the Trump administration seems open to it:

Sec. 4.  Modification Authority.  ...

(c)  Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.

Will these concessions be carried out through formal trade deals? If so, what will these deals look like? Will there be an enforcement mechanism? 

Seems possible, but who knows.

Will the reciprocal tariffs get tied in with non-trade issues such as security? For example, will foreign defense spending be brought into the mix? Of course, part of the foreign defense spending issue is trade related, as a lot of foreign defense spending involves buying from U.S. companies. Thus, foreign defense spending could either be brought in as a concession (through buying more U.S. products) or retaliation (through buying less). Also on defense spending, will the U.S. authorize the sale of military technology that it had not previously allowed, as part of broader deals with specific countries? And will certain countries shift away from reliance on U.S. military equipment, due to concerns about the direction of U.S. foreign and trade policy? 

The administration does mention alignment on "national security" in the EO, so security definitely seems tied in here.

Will there be lawsuits in U.S. courts against the reciprocal tariffs? If the calculation methodology looks arbitrary, that could be an important part of any legal challenge.

Lawsuits seems inevitable. As set out in the EO, the Trump administration's claim of a "national emergency" was based on the following:

Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; inhibited our ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries.  Large and persistent annual U.S. goods trade deficits are caused in substantial part by a lack of reciprocity in our bilateral trade relationships.  This situation is evidenced by disparate tariff rates and non-tariff barriers that make it harder for U.S. manufacturers to sell their products in foreign markets.  It is also evidenced by the economic policies of key U.S. trading partners insofar as they suppress domestic wages and consumption, and thereby demand for U.S. exports, while artificially increasing the competitiveness of their goods in global markets.  These conditions have given rise to the national emergency that this order is intended to abate and resolve.

I'm no IEEPA law expert, but I see plenty of arguments people can try here. For one thing, the view that a goods trade deficit constitutes a "national emergency" is a pretty big stretch. And even if it were an emergency, tariffs as the response don't make much sense. To address the overall deficit, you would want to focus on macroeconomic issues such as savings rates or currency levels, and while those are mentioned in the EO, they aren't addressed in a way that could deal with the trade deficit. And if you are worried about trade in manufactured goods in particular, as the administration seems to be, there are plenty of better ways to shift your economy away from services or agriculture or energy and towards manufacturing. It's also worth noting that the fact sheet says "annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base," but there's pretty clearly no cause and effect here. And finally, taking an approach that tries to address trade deficits on a bilateral basis is extremely misguided.

Will the targeted countries file WTO/FTA complaints? Of course, the U.S. can appeal any adverse WTO panel report into the void, but governments may see value in bringing a WTO case for various reasons. And some of the affected countries have FTAs with the U.S., so they have that as an alternative as well.

You would think the answer will be yes, with lots and lots of complaints coming. But we'll see how governments decide to approach this.

Will affected countries step up their efforts to negotiate deeper trade deals with each other?

Possibly, although they may be a bit distracted by having to deal with the U.S. tariffs in the short term.

How will the stock market react? And what will be the broader impact on the U.S. economy? And how will Trump react to the stock market reaction and to the impact on the economy? It feels like the Trump administration has been testing the waters with its tariffs, seeing how the market and the economy react to its initial moves. My best guess is there are limits to what the administration can tolerate in terms of a negative economic reaction, and if things get too bad they may pull back a bit, but we'll see.

The stock market impact could be pretty bad. On the plus side, if you've been waiting for a market dip to get in, this may be your chance! With regard to Trump's reaction, is there some point at which he rethinks these tariffs? I suggested it could happen, but I'm not all that certain about it.

----------------------------------------------------------

There's one other thing I want to address. The EO says:

The post-war international economic system was based upon three incorrect assumptions:  first, that if the United States led the world in liberalizing tariff and non-tariff barriers the rest of the world would follow; second, that such liberalization would ultimately result in more economic convergence and increased domestic consumption among U.S. trading partners converging towards the share in the United States; and third, that as a result, the United States would not accrue large and persistent goods trade deficits. 

I have three points here:

• The Trump administration has not presented evidence that the U.S. leads the world in liberalizing tariff and non-tariff barriers. The U.S. has lots of these barriers, and I'm not sure where it would come out in a serious comparison with other developed countries.
• I'm not sure anyone expected "increased domestic consumption among U.S. trading partners converging towards the share in the United States," and in fact I think many people see U.S. consumption as higher than it probably should be.
• As to any assumptions about the U.S. and goods trade deficits, I think this result was driven in significant part by U.S. policies, which could be adjusted by the U.S. but have not been.

On the point about consumption, the EO also says:

... non-tariff barriers include the domestic economic policies and practices of our trading partners, including currency practices and value-added taxes, and their associated market distortions, that suppress domestic consumption and boost exports to the United States.  This lack of reciprocity is apparent in the fact that the share of consumption to Gross Domestic Product (GDP) in the United States is about 68 percent, but it is much lower in others like Ireland (27 percent), Singapore (31 percent), China (39 percent), South Korea (49 percent), and Germany (50 percent).

I hear complaints from various people about differentials in savings rates across countries, but it's hard to understand their point. The U.S. is always on the high end, yet somehow the people arguing this issue seem to take the view that the U.S. is the normal one and others are "cheating" somehow. It is not clear to me how they come to this conclusion.