“America First Trade Policy” memorandum directs a comprehensive review of U.S. trade policy, suggests potential new tariffs and trade negotiations

On January 20, 2025, President Trump issued a broad executive memorandum (Memorandum) entitled “America First Trade Policy” that directs federal agencies and White House components to undertake a sweeping review of U.S. trade and economic policy by April 1, 2025. It is not yet clear whether any of the reports or accompanying recommendations will be delivered directly to the president or made publicly available.

This top-to-bottom review covers all aspects of trade and international economic policy, including the U.S. trade deficit, the potential application of new tariff measures, unfair trade practices, currency manipulation and misalignments, discriminatory tax policies, current and future U.S. trade agreements, trade remedy laws, export controls, and outbound investment restrictions, among other related policies. It also initiates a number of reviews specific to the U.S.-China trade relationship, including a review of China’s compliance with the “Phase One” trade deal and a review of current U.S. tariffs on China.

Notably, the Memorandum itself did not announce new tariffs. However, the possibility of future tariffs is mentioned throughout, including a request in Section 2(a) that the Secretaries of Commerce and the Treasury as well as the U.S. Trade Representative investigate the causes of the U.S. trade deficit and “recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits. In addition to tariffs, the Memorandum also cites to a number of specific trade authorities, signaling the types of measures the president may seek to use as the basis of future measures. If implemented, the use of some of these authorities in the context of U.S. trade policy would be novel. The breadth of the Memorandum also signals a more comprehensive and coordinated approach to trade, national security, and broader economic policy. 

Below, we’ve outlined a number of key directives in the Memorandum, including (i) recommendations related to possible new tariff measures; (ii) reviews related to the U.S.-China trade relationship; (iii) review of U.S. trade agreements and future negotiations; (iv) review of U.S. export controls, outbound investment measures, and ICTS rules; and (v) other economic tools, such as currency and tax policy, and government procurement, among others.

Reviews relating to potential tariffs

The Memorandum directs agencies including Office of the U.S. Trade Representative (USTR), the Secretary of Treasury (Treasury), the Secretary of Commerce (Commerce), and the Senior Counselor for Trade and Manufacturing to investigate and review the causes of several U.S. trade and economic challenges, as well as the efficacy of current trade tools and policies. It also requests recommendations with respect to appropriate actions and measures to address these challenges. In some cases, the Memorandum specifically highlights tariff measures as possible remedies. The tariffs being considered fall into three broad categories: (i) global supplemental tariffs; (ii) tariffs under specific legal authorities (e.g., Section 301); and (iii) tariffs specifically targeting China. China-specific tariffs are addressed in the next section.

Global supplemental tariffs

Section 2(a) of the Memorandum orders Commerce, Treasury, and USTR to investigate the causes of a “large and persistent” U.S. trade deficit in goods and recommend appropriate measures to remedy the deficit. One option specifically highlighted in section 2(a) is the possibility of a “global supplemental tariff.” The memorandum does not provide details as to what this tariff would look like if employed but does direct the Administration to consider it when making recommendations.

Tariffs under specific legal authorities

Section 2(c) of the Memorandum orders USTR, Treasury, Commerce, and the Senior Counselor for Trade and Manufacturing to undertake a review of and identify any “unfair trade practices” by trading partners of the United States. It further requests that the Administration recommend actions to remedy such practices including but not limited to a number of authorities, which could be used to impose tariffs, including Section 201 (safeguards), Section 301 (unfair trade practices), Section 337 (intellectual property), and the International Emergency Economic Powers Act (IEEPA) to address any such “unfair trade practices.” We note that it also highlights the Petroleum Overcharge Distribution and Restitution authority, which under which the Secretary of Energy might collect funds related to violations of the Emergency Petroleum Allocation Act of 1973 and Economic Stabilization Act of 1970.

In addition, section 4(a) of the Memorandum directs Commerce and Defense, and other relevant agencies to conduct an economic and security review of the U.S. industrial and manufacturing base to assess whether to initiate new investigations under Section 232. Although new Section 232 investigations could ultimately result in new tariffs on imports for critical goods, tariffs are not the only remedy under Section 232.

Moreover, section 4(b) directs the Director of the National Economic Council, Commerce, USTR and the Senior Counselor for Trade and Manufacturing to assess the effectiveness of current tariffs on steel and aluminum under Section 232, including exclusions and exceptions. 

Section 2(i) of the Memorandum directs Treasury, Commerce, Homeland Security (DHS), the Senior Counselor for Trade and Manufacturing and USTR to assess the loss of revenue and risks of importation of counterfeit products and contraband drugs resulting from the current implementation of the $800 duty-free de minimis exception under section 1321 of title 19, United States Code. It also directs them to recommend modifications “as warranted.”

Section 4(g) of the Memorandum further also instructs Commerce and DHS to “recommend appropriate trade and national security measures to resolve {the} emergency {pertaining to unlawful migration and fentanyl flows}” from Canada, Mexico, China, and “any other relevant jurisdictions.”

Reviews specifically related to China

The Memorandum also directs a series of reviews regarding the U.S.-China trade relationship. Specifically, section 3(d) of the Memorandum directs Commerce and USTR to assess legislative proposals to revoke China’s Permanent Normal Trade Relationship (PNTR) status with the United States and make recommendations regarding any proposed changes. Under PNTR, imports from China are subject to the “Most Favored Nation” (MFN) ordinary customs duties assigned to most U.S. trading partners – although we note that many imports from China do not receive the MFN duty rate in light of the current Section 301 tariffs on Chinese imports. It’s not clear what a revocation of PNTR would mean in terms of new tariffs on China as it would be up to Congress to legislate what those new tariff rates should be.

In addition, section 3(b) of the Memorandum directs USTR to review the Biden Administration’s May 24, 2024, Four-Year Review of the Section 301 tariffs currently imposed on Chinese products and consider additional tariff modifications. This includes with respect to “industrial supply chains” and “circumvention through third countries.” Furthermore, section 3(c) of the Memorandum directs USTR to investigate additional Chinese acts, policies and practices that burden or restrict U.S. commerce and recommend appropriate responses including (but not limited to) actions under Section 301.

Section 3(a) of the Memorandum also directs USTR to review China’s compliance with the “Phase One” U.S.-China trade agreement and to recommend associated actions. This section includes an explicit reference to the possibility of “tariffs or other measures” as a response to non-compliance. This Agreement, signed by the first Trump Administration with China in January 2020, required China to agree to substantive concessions in IP protection, financial services, and agriculture. The Agreement also required China to purchase no less than $200 billion of U.S. goods and services (covering manufactured goods, agricultural goods, energy products, and IP licenses) beyond 2017 levels. 

Moreover, section 3(e) directs the Secretary of Commerce to assess U.S. intellectual property rights conferred on Chinese persons and make recommendations to ensure “reciprocal and balanced” treatment with China. This includes patents, copyright, and trademarks.

Reviews regarding trade agreements

Review of the USMCA

Section 2(d) of the Memorandum directs USTR to initiate a public consultation process regarding the U.S.-Canada-Mexico Agreement (USMCA) in advance of the July 2026 review. The USMCA includes a review provision (Article 34.7) requiring that the Parties conduct a joint review of the Agreement six years after entry into force. This review is set for July 2026, and USTR is required to initiate a public consultation on the review by October 2025. See 19 U.S.C. § 4611. The Memorandum directs USTR to accelerate the public consultation process and to further begin consulting with other federal agencies to assess the impact of the USMCA on U.S. economic stakeholders and make recommendations regarding U.S. participation in the agreement.

Review of current U.S. trade agreements and consider negotiating new agreements

Section 2(f) of the Memorandum directs USTR to review existing U.S. trade agreements and sectoral trade agreements and recommend revisions that are “necessary and appropriate” to “maintain the general level of reciprocal and mutually advantageous concessions.” Section 2(g) further directs USTR to identify countries with which the United States can negotiate new bilateral and sectoral agreements to expand market access for U.S. exporters. The First Trump Administration renegotiated the NAFTA with Canada and Mexico, made significant progress in free trade agreement negotiations with the United Kingdom and Kenya, negotiated revisions to the automotive and other provisions of the Korea-U.S. Free Trade Agreement, and concluded an “early harvest” trade agreement with Japan to reduce trade barriers on U.S. agricultural goods and digital trade. 

Review of U.S. Export Controls, Outbound Investment Restrictions, and ICTS Rules 

Section 4(c) of the Memorandum directs the Secretary of State, Secretary of Commerce, and the heads of other relevant agencies to review existing export control measures and advise on modifications to maintain and enhance U.S. technological advantages “in light of developments involving strategic adversaries or geopolitical rivals.” This includes identifying and eliminating loopholes and incentivizing compliance by foreign countries with U.S. export controls, including through trade and national security measures, and enforcement policies, practices, and mechanisms. 

Section 4(e) of the Memorandum directs Treasury, Commerce, and the heads of other relevant agencies to review and make recommendations with respect to the Outbound Investment Security Program established by the Biden Administration on January 2, 2025, pursuant to Executive Order 14105 “Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern.” 

Section 4(d) of the Memorandum directs the Secretary of Commerce to review and make recommendations with respect to the recent connected vehicle rules by the Office of Information and Communication Technology and Services (ICTS). Specifically, Commerce is to consider whether controls should be “expanded” to account for additional products. The final connected vehicle rules covering classes of transactions involving certain software and hardware for connected vehicles were issued by Commerce on January 14, 2025

Other measures covered in the Memorandum  

The External Revenue Service

Section 2(b) of the Memorandum directs Treasury, Commerce, and DHS to investigate the feasibility of an “External Revenue Service” (ERS) to collect tariffs, duties, and “other foreign trade-related revenues” and make recommendations with respect to designing, building, and implementing an ERS. It is unclear how the External Revenue Service will interact with U.S. Customs and Border Protection, which currently collects tariffs and customs duties, and with the Department of the Treasury, which is responsible for the General Treasury.

Review of FX

Section 2(e) of the Memorandum directs Treasury to review and assess exchange rate policies and practices of trading partners and recommend appropriate measures to counter currency misalignments and “currency manipulation” (i.e., the artificial devaluation of a foreign currency against the U.S. dollar) by trading partners that prevents balance of payments adjustments or confers an unfair competitive advantage. Treasury is further directed to identify any countries that it believes should be designated as a “currency manipulator.”

Review of government procurement policies

Section 2(k) further directs USTR and the Senior Counselor for Trade and Manufacturing to review the of the impact of all U.S. trade agreements, including the WTO Government Procurement Agreement (GPA), on the volume of federal procurements covered by Executive Order 13788 of April 18, 2017 (Buy American and Hire American), and to make recommendations to ensure these agreements favor domestic manufacturers and workers.

Separately, section 4(f) of the memorandum directs the Office of Management and Budget (OMB) to assess the “distorting impact” of foreign government financial contributions or subsidies on U.S. federal procurement programs.

Review of discriminatory foreign taxation

Section 2(j) of the Memorandum directs Treasury, Commerce, and USTR to investigate whether any foreign country subjects U.S. citizens or corporations to discriminatory or extraterritorial taxes. The Memorandum specifically cites to section 891 of title 26 of the U.S. Code, which could imply the imposition of tariffs or other trade restrictions in response to findings of discriminatory taxes. 

Considerations for companies and next steps 

The “America First Trade Policy” Presidential Memorandum signed by President Trump on Monday, January 20, 2025, directs the Administration to undertake a sweeping top-to-bottom review of current U.S. trade, economic and national security policies – as well as those of many U.S. trading partners – all by April 1, 2025. It also requests that the Administration tee up a number of recommendations to address discriminatory practices, national security threats, the trade deficit, and unbalanced trade, for the president. These recommendations could include the imposition of new tariffs, among other measures, as well as the negotiation of new or existing trade deals. The broad nature of the Memorandum could signal significant action in the near term. We recommend that companies take steps to review their supply chains and investment strategies in light of the possibility of new trade actions.

Some of these reviews may have a public comment component, while others may not. In particular, companies with North American supply chains should be prepared to provide comments to USTR regarding the imminent USMCA review, which is starting ahead of schedule. It is not yet clear whether other agencies will any public comment process or rulemaking process—but Companies should consider how particular aspects of these broad policy proposals might impact their business in assessing next steps. Please reach out to Hogan Lovells attorneys to discuss how this Memorandum may affect you.

Authored by Kelly Ann Shaw, Jonathan Stoel, Craig Lewis, Jared Wessel, Warren Maruyama, Deen Kaplan, Ajay Kuntamukkala, Ben Kostrzewa, Greg Hawkins, Mark Ye, and Andrea Fraser-Reid.