Update on Trade Actions Under Trump 2.0
Today marks three weeks of President Trump’s second term. On inauguration day, President Trump introduced his America First Trade Policy, a continuation of his trade policy efforts under his first term and a major departure from the U.S. trade approach under the Biden Administration. President Trump has instructed Commerce, Treasury and the US Trade Representative to undertake a comprehensive assessment of ongoing trade issues, practices by trading partners against the United States, and current U.S. trade-related measures and policies in place, as well as provide recommendations on how to revamp U.S. trade policy by 1 April. From day 1, President Trump’s trade-related announcements and modifications have created uncertainty, with an emphasis on unilateral action, bilateral deals to advance non-trade related priorities, and implementation of protectionist measures.
Below is a summary of key trade actions taken since 20 January and known possible impacts to PMMI members’ cross-border trade operations.
Colombia Threatened with Tariffs to Ensure Deportation Flights Allowed: On 26 January, President Trump announced on Truth Social that 25% emergency tariffs would be implemented on all products imported into the United States from Colombia, with import tariffs increasing to 50% in a week. However, late Sunday the dispute between the U.S. and Colombia was temporarily resolved, with the two countries agreeing on how to proceed with deportation flights and the U.S. placing the tariffs “in reserve”. No immediate impact to PMMI given tariffs averted.
Canada and Mexico Threatened with Tariffs to Stem Flow of Immigrants and Fentanyl: On 1 February, President Trump signed Executive Orders imposing new 25% tariffs on nearly all imports into the United States from Canada and Mexico beginning Tuesday, 4 February.
In response, Canada released its list of products from the United States subject to 25% retaliatory tariffs. PMMI relevant HS codes for machinery and equipment were not included on Canada’s retaliation list.
On 3 February, tariff action against Mexico and Canada were delayed for 30 days given promises by Canada and Mexico to help implement measures at their respective U.S. borders to stop immigrants and drugs from entering the United States. Imposition of tariffs could have resulted in new tariff-costs for companies sourcing machinery from Canada or Mexico into the United States. Eligible products currently remain duty-free under USMCA.
Goods from China Hit with New Tariffs: Also on 1 February, Trump announced additional 10% tariffs on imports from China beginning 4 February which were implemented as announced.
In response to the U.S. tariffs, China’s Ministry of Finance has imposed additional tariffs of 10% on certain U.S. goods including agricultural machinery products. In addition, China filed a dispute against the United States with the World Trade Organization (WTO), alleging the new U.S. tariffs violate trading rules and are discriminatory.
One PMMI-related code is included on China’s retaliation list -- 8438.60: machinery equipment for processing fruits, nuts, or vegetables. Any U.S.-made machinery of 8438.60 shipped to China is expected to be hit with the additional 10% tariff on top of any tariffs already in place.
Drawback of Tariffs on Goods from China Not permitted and De Minimis Shipments Targeted with New Duties: The Executive Orders for Canada, Mexico and China included two additional tariff-related measures:
U.S. to Pursue Reciprocal Trade Action: On Friday, 7 February, President Trump indicated the administration will take “reciprocal trade action” on unspecified countries this week. An official announcement has not been released so additional details yet on scope of trade actions, countries or products to be targeted are not yet available.
President Trump has noted that he intends to use trade policy, including tariffs, to reduce the trade deficit. Countries with which the United States has large trade deficits and may be targets for tariff action include EU, China, Canada, Mexico, Vietnam, Japan, and many others.
Additional U.S. Tariffs Expected on Imports of Steel and Aluminum: Yesterday, President Trump indicated he would impose 25% tariffs on all steel and aluminum imports from most trading partners under Section 232 of the Trade Expansion Act. We anticipate new tariffs could impact PMMI members’ sourcing of steel and aluminum to support manufacturing of machinery and equipment, but an official announcement has not been released so no additional insight on scope of countries or which steel and aluminum products will be targeted.
The European Commission announced it would react to protect EU interests but would not respond until it had clarification of the measures.
