How to Read Trump’s Day-One Trade Actions

In U.S. President Donald Trump’s avalanche of day-one executive orders, he did not drop the gauntlet on the start of the next trade war, much to the temporary relief of markets and currency traders, as well as Canada and Mexico, which received almost an eight-hour reprieve before he threatened them, too.

But his sweeping executive order on trade did lay the groundwork for all and more that he promised on the campaign trail, prompting agency reviews and investigations that are the necessary precursor for the broad tariffs on China and the rest of the world. With an April 1 deadline for nearly all the reviews and investigations, the clock is already ticking for early administration action on Trump’s punitive trade agenda.

The executive order basically breaks down into China and the rest of the world. But there’s one interesting difference from many of the other actions Trump took that explicitly rolled back Biden-era rules, regulations, and mandates: Some of the planned trade measures maintain and build upon trade actions that the Biden administration took, including to combat China’s unfair trade practices and bolster U.S. export controls.

Parts of the executive order go after a particular obsession that Trump and his trade braintrust have: searching for a problem for which they already have the solution (more tariffs, of course).

First, Trump directed his administration to figure out why the U.S. trade deficit in goods just keeps getting bigger and to come up with some convincing reason why that is a national security risk, since economists and trade experts are blasé about what is essentially an accounting metric. That review opens the door to global tariffs—i.e., import duties on every other country—through the Carter-era International Emergency Economic Powers Act.

Second, Trump ordered a root-and-branch review of the U.S. industrial and manufacturing base to determine which imports might possibly affect national security and could thus be subject to their own punitive tariffs under Section 232 of the 1962 Trade Expansion Act. (Trump used that exact tool to hike tariffs on steel and aluminum on national security grounds in his first term, but he’s thinking bigger this time.)

The other not-entirely-about-China elements in the trade executive order are other usual suspects, including ordering further investigations into countries that may manipulate their currencies for trade advantage and a review of arcane de minimis customs rules that create a loophole for lots of small-value trade to sneak past his tariff dragnet. Trump also promised a review and perhaps expansion of Biden-era restrictions on technology exports and opened the door to further restrictions on Chinese “connected” technology, such as electric vehicles, which the Biden administration already flagged as a potential national security risk.

But much of the executive order goes specifically after China, the world’s second-biggest economy and the United States’ third-biggest trade partner. Cherishing hope over experience, Trump ordered an appraisal of his underwhelming Phase One trade deal with China to find out if Beijing complied with its terms (it did not), and he raised the specter of punitive tariffs.

Trump also builds on the Biden administration’s latest investigation into China’s unfair trade practices under the authorities of Section 301 of the 1974 Trade Act, promising to look at the entire industrial supply chain and especially third countries who offer Beijing a way to sidestep China-specific tariffs. (That’s bad news for countries such as Vietnam and Malaysia, not to mention Mexico, which rerouted a lot of China-U.S. bound trade and are now in the crosshairs.)

He also ordered the Office of the U.S. Trade Representative (USTR) to take its own look at China’s unfair trade practices—that means, in practice, a cheap yuan, industrial subsidies, dumping, intellectual property theft, market discrimination, and the like—and to use its own sweeping authority to impose—you guessed it—tariffs. Just for good measure, the executive order vowed to assess ongoing legislative efforts to strip China of its current preferential trade relations with the United States, a step that would automatically open the door to higher tariffs.

Trump campaigned on raising taxes on U.S. businesses and consumers through import levies as a way to rebalance what he and his trade advisors see as an unbalanced trade relationship with the world. What he did on his first day in office sets that process in motion, leaving just enough time for talks with targeted countries that could deliver the deals of a lifetime—or herald a new threat to global trade and growth.