President Trump issued a presidential memorandum on January 20, 2025 entitled “America First Trade Policy.” This memorandum instructs 9 members of his cabinet to undertake things the federal government already routinely does.  

The AFTP memorandum:  

• Instructs cabinet members to carry out investigations of the root causes of persistent U.S. trade deficits and unfair trade practices undertaken by other countries, reviews of existing U.S. trade agreements, and reviews of currency exchange rates (which affect the relative competitiveness of U.S.-produced goods). These are all good things to do—and the federal government already routinely does them. For example, each year the U.S. Trade Representative office releases a National Trade Estimate Report on Foreign Trade Barriers and the U.S. Treasury reports to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. In fact, the AFTP memo often cites the specific statutes requiring executive branch departments to undertake such reviews and investigations, and to make executive and Congressional policy recommendations. Most of these reports are already due to the president by April 1, 2025.
• Calls for study of the feasibility of creating an “External Revenue Service” to collect tariff revenues. The United States already has the responsibility of collecting tariffs housed in the U.S. Customs and Border Protection agency. However, the memo may signal the administration’s desire to replace progressive income taxation with tariff revenues—regressive taxes on imported goods and services. This would not only result in a dramatically less fair and less efficient tax system, but also the extraordinary level of blanket tariff rates that would be needed to replace income tax revenues would most certainly translate into higher prices for U.S. consumers and businesses and lost export opportunities.
• Orders an investigation of imports under the de minimis rule—which allows duty-free importation of goods valued less than $800. A separate order by Trump to impose a 10% tariff on all Chinese goods starting February 4, 2025, also eliminated their de minimis exemption.  

• Calls for extending work begun in the Biden administration to tighten rules for U.S. overseas investment in technologies that raise national security concerns.  

The memo does not include:  

• Any references to promoting worker rights or clean air, water, or other environmental standards in trade. The failure to adequately protect worker and environmental concerns in existing U.S. trade policy creates unfair advantages for foreign producers and incentives for U.S. multinational corporations to site their manufacturing operations offshore.  

• Any directives on trade policy to Secretary of Agriculture, who oversees more than $174 billion in farm and food exports. The US Department of Agriculture also doled out tens of billions of dollars in emergency payments under the first Trump administration when foreign trading partners imposed retaliatory tariffs, shutting U.S. farmers and fishers out of key international markets. 

The memorandum also includes a brief and largely inaccurate summary of the first Trump administration’s approach to trade policy. During President Trump’s first term, the U.S. trade deficit widened to more than -$900 billion in 2020 from -$735 billion in 2016, a 23% increase. Trump also renegotiated the North American Free Trade Agreement (NAFTA) with the U.S.-Mexico-Canada Trade Agreement (USMCA). Under Trump’s new rules the trade deficit with Mexico and Canada has increased by $101 billion, or 79%, since he signed USMCA in January 2020. Though tariffs he imposed on steel and aluminum products did help revitalize jobs and investment in critical manufacturing industries, Trump’s Phase 1 trade deal with China failed to address structural imbalances in the bilateral relationship and merely diverted U.S. imports of Chinese goods to 3rd country intermediaries. Finally and crucially, when the COVID-19 pandemic disrupted global supply chains and revealed the unacceptably diminished capacity and fragility to disruption of the U.S. industrial base, the Trump administration was forced to scramble to procure personal protective equipment (PPE), respirators, and critical medicines in 2020.