The current US administration continues to shake up US trade policy as president Trump pursues his ‘America First’ priorities of protecting domestic industries, pushing to increase US exports, and taking a ‘Buy American’ and ‘Hire American’ approach to federal procurement. At the near halfway point of his four-year presidential term, president Trump shows no signs of mellowing the tone or substance of his stance on global trade.

Central to the Trump trade agenda is the use of increased tariffs on imported goods, with the goal of decreasing imports and increasing exports, pulling economic levers to arrive at “free and fair trade”, and shifting trade flows away from disfavoured trading partners (particularly China). No surprise there. These tariffs, which have been imposed on a range of products imported into the US – from steel and aluminium to solar panels and washing machines – have garnered big headlines and fierce resistance from trading partners, not to mention key historic US trade allies, including those in the European Union (EU), Canada and Mexico.

Indeed, many trading partners have retaliated with increased tariffs of their own on US exports. To successfully steer an international company whose bottom line depends on forward-thinking, reliable and cost-effective supply chains, an executive decision maker has no choice but to keep an eye on this continually evolving US trade policy. This will be as true in 2019, as it was in 2018.

But how can the US president impose new and increased tariffs, when the US Constitution explicitly endows the Congress with “Power to lay and collect Taxes, [and] Duties”? During the first two years in power, the Trump administration has adopted an ‘old tools, new rules’ approach to trade, relying on decades-old and little-used federal laws to pursue a vision of America First unilaterally, albeit with the passive support of a Republican Party-controlled Congress.

Jan-Mar 2019 Issue

Venable LLP