Trump’s trade and economic security agenda: what we know so far
28 Jan 2025|

President Donald Trump’s trade and economic security team is united and ready to use tariffs, export controls and enhanced sanctions to strengthen the US economy and achieve geostrategic outcomes against US adversaries. Those objectives range from preserving the US technology edge over China to stemming the flow of fentanyl pre-cursors into the United States and forcing a Russia-Ukraine peace.

The team also stands ready to use these tools against US allies and partners for what the administration considers to be the greater good and for addressing trade imbalances, building up US industries, pushing up allies’ defence spending or managing immigration. Australia can take nothing for granted and must take every chance not only to demonstrate how the alliance benefits US security and prosperity but to show that hindering the Australian economy with trade measures would damage US security.

Of the slew of presidential actions and executive orders already issued, the America First Trade Policy memorandum has been one of the more detailed, with stated objectives of promoting investment, productivity, US industrial and technological advantages, defending economic and national security and benefiting US workers. It initiated more than 20 possible trade and economic security measures to address unfair and unbalanced trade.

The only surprise was that decisions on tariffs and other measures, including those relating to China, were delayed until after 1 April, to allow for detailed reviews by the Treasury, Commerce Department and the Office of the US Trade Representative. Detailed reviews are required for the use of some trade measures, those under section 232 of the 1962 Trade Expansion Act and Section 301 of the 1974 Trade Act. But others, such as those under the International Emergency Economic Powers Act of 1974 and section 122 of the 1974 Trade Act, can be imposed by presidential declaration, though sometimes only temporarily.

Trump’s trade and economic security team

For the main roles in the economic and trade team, Trump nominated Scott Bessent, a billionaire hedge fund manager, as treasury secretary; Howard Lutnick, a Wall Street trader and chief executive, as secretary of commerce; and Jamieson Greer as US Trade Representative (USTR). Greer was chief of staff to Robert Lighthizer, Trump’s first-term USTR. The Senate confirmed Bessent’s appointment on 27 January and is likely to approve the other two within days or weeks.

They appear to be in lockstep with Trump on use of tariffs, export controls and sanctions, though the degree and breadth of such measures is not settled. This contrasts with a diversity of views in Trump’s first term.

In his testimony to the Senate Finance Committee on 16 January, Bessent said the administration could raise tariffs for three reasons: to remedy unfair trade practices in a particular sector or exercised by a specific country; to raise revenue; or as a negotiating tool. Bessent strongly defended tariffs, particularly as tools for achieving deals, and emphasised that he expected the Treasury, Commerce Department and the Office of the USTR would deliver a coherent economic security agenda.

Lutnick, whose confirmation hearing before the Senate Commerce Committee is scheduled for 29 January, has actively promoted Trump’s use of tariffs as a tool to force other countries to reduce their tariffs on US goods or to generate revenue for widening domestic manufacturing.

In his testimony in May 2024 to the Congressional US-China Economic and Security Review Commission, Greer advocated expanding economic security policies implemented under the first Trump administration and the administration of president Joe Biden. That included calling for the extension of tariffs on China to include Chinese companies operating in other countries.

Also awaiting confirmation are key members of Trump’s first-term trade team. These including Kevin Hassett, former head of the White House Council of Economic Advisers, nominated as director of the National Economic Council; Russell Vought, former White House budget director and lead in the Heritage Foundation’s Project 2025, nominated to again be Trump’s director of the Office of Management and Budget; Stephen Miran, a former senior economic policy adviser at Treasury, nominated as chair of the Council of Economic Advisers; and Peter Navarro, a former trade adviser and avowed China hawk, nominated as Senior counselor for Trade and Manufacturing. This group will constitute the upper middle management of Treasury, Commerce and the Office of USTR, responsible for executing the agenda.

The America First Trade Policy in detail

According to the memorandum, the Treasury by 1 April must review US trade partners’ exchange rates and recommend ways to counter currency manipulation and other unfair trade practices. In the same time limit, it must assess risks associated with continuing exemption of imports worth less than US$ 800 from duties (currently allowed under de minimis exemption), and it must consider strengthening limits on US investment in national security technologies and products in China. Biden’s Executive Order 14105 of 9 August 2023 imposed those limits.

Also by 1 April, the Commerce Department must investigate the US deficit in merchandise (goods) trade and associated economic and national security implications, and it must recommend remedies, potentially including a global tariff and other section 232 tariffs. The department must also review and improve US anti-dumping and countervailing laws, consider revocation of US-China Permanent Normal Trade Relations and improve US-China reciprocity on intellectual property rights. To improve US economic security, the department will lead a full review of the US industrial and manufacturing base and export control system to assess whether additional barriers are needed to protect the US’s technological edge. The steel and aluminum sectors are listed.

The Office of the United States Trade Representative will have the biggest task. By 1 April, it must complete a wholesale review of countries’ trade practices, US trade agreements and sectoral agreements and propose ways to remedy unfair practices and improve market access and job outcomes for US workers and businesses.

Unsurprisingly, US trade with China is a particular focus. Foreshadowing application of tariffs and other measures, the USTR must review the US-China trade agreement to determine whether China is abiding by the agreement (it’s not, but the US isn’t fully complying, either), consider further section 301 tariffs based on an investigation started during the first Trump Administration and address any unreasonable Chinese actions that burden or restrict US commerce.

Also unsurprising is that there is no reference to consultation with US allies and partners in the America First Trade Policy memorandum. Friends get no free pass—but they never do in US trade policy. Even longtime and trusted US allies such as Australia, which has a trade imbalance that favours the US and is in the US’s primary strategic theatre, must advocate strongly to minimise the impact of foreshadowed measures.

Showing just how turbulent US trade and economic security policy could be until 2029, Trump on 26 January threatened a tariff of 25 percent and later 50 percent on Colombian imports to the US in retaliation for the US ally’s refusal to accept planeloads of its deported nationals. Colombia backed down within hours.

Since his inauguration, Trump has said that Mexico and Canada must do more before 1 February to stop fentanyl and unauthorised migrants entering the US to avoid a 25 percent tariff. China must do more to stop fentanyl to the US, via Mexico and Canada, to avoid a 10 percent import tariff, Trump has said.

In the latest development, on 27 January, Trump told House of Representatives Republicans in Miami he would add tariffs on foreign-produced ‘computer chips, semiconductors and pharmaceuticals to return production’ to the US. He also said he would be ‘placing tariffs on steel, aluminum and copper’.

This is where we are after only seven days. It will be a wild ride.