Donald Trump did not impose new trade tariffs on the first day of his second term, as feared by the markets, but the US president has laid out an official plan for an “America First Trade Policy”.
A presidential memo called on federal agencies to crack down on “unfair trade practices” and identify “money laundering”. Trade agreements with China, Canada, Mexico and all other partners were put under scrutiny.
Message: The Trump administration was ready to use all means to get trade back on track. Here are five takeaways from the opening salvos of Trump's trade agenda.
Firm promises of 'prices sooner rather than later'
Trump mentioned tariffs just three times in his inaugural address, reassuring investors and trading partners who had been warned to expect “day one” tariffs. But he made plans to establish a Foreign Revenue Service to collect taxes, indicating serious plans to increase revenue from trade.
Josh Lipsky, senior director at the Atlantic Council think tank, said tax decisions could be delayed, but not abandoned. “The president was worried about sales on Tuesday and didn't want it to spoil his first day.”
The president's “America First” memo provided the framework for the new agenda, announcing a series of studies on unfair trade practices, the causes of US trade deficits and whether competitors are exploiting funds and unfairly taxing US business.
Trump too he sharpened his speech and repeated threats to apply 25 percent tariffs on Canadian and Mexican exports, despite the countries' free trade agreement. When asked about the prospect of imposing tariffs on anyone doing business with the US, the president said: “We can. But we are not ready for that yet.”
“The experience of the first quarter is to expect taxes sooner rather than later,” warned Lipsky, adding that the administration did not yet have a full economic team and wanted to establish a solid legal basis for any moves.
Targeting neighbors first
Trump appeared to be prioritizing measures against the US's closest trading partners, saying he was preparing tariffs for Canada and Mexico to be implemented as soon as February 1.
Trump had no problem attacking US allies in his first term, citing national security concerns to impose tariffs on steel and aluminum. But by going public in Canada, critics say he shows that no country is safe from the self-proclaimed “tax man”.
Trump's trade memo ordered a review of trade relations with Canada and Mexico on April 1 (the deadline from Trump's tax warning, the president did not specify). Arrangements will then begin a comprehensive review of the USMCA trade agreement in July 2026.
The main focus of the trade memo is Trump's determination to cut “illegal immigration and the flow of fentanyl”, especially from Mexico and Canada.
Most supply chains for American manufacturers, especially car manufacturersthey rely on operations in all three countries and those businesses could put pressure on Trump to back off his threats.
On Tuesday, Canadian Prime Minister Justin Trudeau said his country was considering Trump's proposals. can answer that the taxes are imposed, while the President of Mexico Claudia Sheinbaum said that she will focus on “regulations rather than speech”.
Scheduled adjustments, including going to China
Other parts of the president's policy include ways to make sweeping changes in Washington's relationships with its trading partners.
“I don't expect the boundaries to change,” said Kelly Ann Shaw, a partner at law firm Hogan Lovells and Trump's trade adviser. “But it's the review of all trade and economic instruments that leads to significant action.”
A wide range of measures initiated by the memo include a review of currency reform. Trump has accused China of devaluing the renminbi to boost export prices.
The president also ordered his trade representative, Jamieson Greer, to review US trade deals, including a ban that came during the first Trump administration that aimed to increase exports to China.
Several sections of the memo instruct various US economic officials to review the economic relationship between the US and China in general, including a review of existing tariffs on Chinese goods.
Greer has been asked to identify potential new deals with market access important to “American workers, farmers, ranchers, service providers and other businesses”, indicating that Trump's second administration may be open to making new trade deals.
“This is a very big problem. “It makes me think that at some point there will be a bill in Congress,” said Everett Eissenstat, a partner at the Washington law firm Squire Patton Boggs. Once commercial cases start flowing they tend to be very important and the laws don't change very often.
Trade in weapons to achieve different goals
Trump has linked the tariffs to other policy goals, beyond reducing trade deficits.
He promised jobs for EU products unless members of the bloc buy American oil and gas. Trump on Monday also suggested that China's tariffs may be dependent TikTok ownership agreement. He said he would apply tariffs on Chinese imports of up to 100 percent if Beijing failed to agree to a deal to sell at least 50 percent of its imports to American companies.
Anahita Thoms, head of international trade at law firm Baker McKenzie in Germany, said Trump is using tax threats to expand his power.
“I don't think he's a bully but he's using it as a bargaining chip,” he said. Now “each country will know what concessions it will have to make in order to have good agreements”.
Threats risk collateral damage. “Tariffs will be inflationary,” said Thoms, adding that Trump “doesn't want to do something that has a negative impact on inflation”.
'Global' values and global influences
US imports from countries such as Vietnam and Mexico rose in Trump's first quarter. This reflected the trend of Chinese manufacturers seeking to circumvent US tariffs by shipping to the US via third countries.
Trump's trade union saw this. His memo calls on Greer to consider further tax reforms to address “third-country avoidance”.
The memo asks officials to look into whether a “global tariff” could be used to fix the “large and persistent” annual US trade deficit. That suggests something like the global tariff promised by Trump on the campaign trail could emerge.
His threats may also encourage other countries to increase trade between them. From December, The EU has received agreements and the Mercosur group of South American countries and Mexico while resuming talks with Malaysia after more than a decade.
Speaking to the Financial Times, Malaysian Prime Minister Anwar Ibrahim said the global trading system will survive “first shock” of Trump's trade restrictions.