United States President signs 'America First Trade Policy' Presidential Memo

Details of the Presidential Memo

The stated aim of the "America First Trade Policy" is to "promote investment and productivity, enhances [the USA's] industrial and technological advantages" while defending economic and national security concerns.

The Presidential Memo is broken down into three main sections:

1. Addressing Unfair and Unbalanced Trade
2. Economic and Trade Relations with the People's Republic of China
3. Additional Economic Security Matters

Under the first section, the President directs a combination of the US Trade Representative (USTR), Commerce Secretary, Treasury Secretary and Secretary of Homeland Security to undertake the following:

• The Secretary of Commerce, in consultation with the Treasury Secretary and the USTR, will look into causes of the US trade deficit, including the potential economic and national security implications — with a view to recommending the appropriate measures, which include the possibility of a global supplemental tariff.
• The Treasury Secretary, in consultation with the Secretary of Commerce and the Secretary of Homeland Security, will consider the creation of an External Revenue Service (ERS) to collect tariffs and other duties.
• The USTR, in consultation with the Treasury Secretary, Commerce Secretary and the Senior Counselor for Trade and Manufacturing, will review any unfair foreign trade practices.
• The USTR is to commence the public consultation process for the July 2026 review of the US-Mexico-Canada Agreement and undertake a study on the effect of the agreement on US workers and businesses.
• The US Treasury is to review potential currency manipulation by US trading partners and whether this provides an unfair competitive advantage.
• The USTR will undertake a wider review of existing US trade agreements and other trade arrangements, recommending any potential changes.
• The USTR is to identify countries with which the US could negotiate future trade agreements.
• The Commerce Secretary is to review the US's practice of using antidumping and countervailing duties and the potential for improving compliance by foreign companies and governments.
• The Secretaries of Treasury, Commerce and Homeland Security, and the Senior Counselor for Trade and Manufacturing, in consultation with the USTR, will review the economic and national security risk of maintaining the current de minimis exemption of US$800.²
• The US Treasury to investigate whether US citizens or companies are subject to any discriminatory foreign taxes.
• The USTR is to review all trade agreements, including the World Trade Organization Government Procurement Agreement on Federal Procurement with the objective of supporting previous initiatives on US's Buy American and Hire American requirements.

The second substantive section of the Presidential Memo covers the US's trading relationship with the People's Republic of China. Specifically, it directs the USTR to:

1. Review the US-China Economic and Trade Agreement³ and whether China has abided by the provisions contained in the agreement. The recommendations specifically direct the USTR to assess whether the imposition of tariffs or other measures are required.
2. Review the report produced by the Biden Administration entitled "Four-Year Review of Actions Taken in the Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation," and determine whether any additional tariff modifications are needed — citing, in particular, tackling circumvention through third countries.
3. Investigate any additional policies or practices by China that present an unreasonable or discriminatory barrier to trade for US businesses.
4. Undertake an assessment and provide recommendations on legislative proposals that the US Congress tabled in the previous months that would revoke the Permeant Normal Trade Relations between the US and China.

Further, the Secretary of Commerce has been directed to investigate intellectual property rights that have been conferred on Chinese persons with a view to assessing whether there is reciprocal and balanced treatment.

The third section of the Presidential Memo covers Additional Economic Security Matters and a range of issues relating to US supply chains, export controls and national security concerns. Specifically, it requires the following actions:

1. The Commerce Secretary, together with the heads of relevant agencies and the Defense Secretary, are to undertake a full economic and security review of the US's industrial base and whether it is necessary to initiate a Section 232 Safeguard Investigation against specific imports.
2. The Assistant to the President for Economic Policy, in consultation with the Commerce Secretary, USTR and Senior Counselor for Trade and Manufacturing, will undertake a review of existing exclusions and exemptions under the US's steel and aluminum safeguard duties from the first Trump Administration that are still in effect.
3. The Secretaries of State and Commerce, in cooperation with the heads of other agencies with export control authorities, are to review the existing US export control regime with a view to identifying and eliminating any loopholes with a focus on strategic goods, software, services and strategic technologies. This includes recommendations relating to compliance and enforcement of US export controls including the development of enforcement mechanisms to encourage compliance.
4. The Secretary of Commerce will review recent rules implanted by the Office of Information and Communication Technology and Services on connected vehicles and whether this should be extended to other connected products.
5. The Treasury Secretary will review the US's outbound investment regime that saw new measures under the Biden Administration's Executive Order "Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern," which entered into force on 2 January 2025 and consider whether the related Executive Orders should be modified or rescinded.
6. The Office of Management and Budget (OMB) will assess whether foreign subsidies are distorting US Federal procurement programs and make any relevant recommendations.
7. The Secretaries of Commerce and Homeland Security will assess any unlawful migration and fentanyl flows from Canada, Mexico and China and what measures are necessary to address this "emergency."

Next steps

The Presidential Memo directs the relevant agency leads to compile their reviews, investigations and recommendations into three reports led respectively by the Commerce Secretary, Treasury Secretary and US Trade Representative to be sent to President Trump by 1 April 2025. The review undertaken by the OMB has a deadline of 30 April 2025.

To undertake these reviews, President Trump has appointed an acting Cabinet while the congressional confirmation hearings process is underway. Those undertaking relevant acting roles include:

• Secretary of Commerce — Jeremy Pelter
• Secretary of the Treasury — David Lebryk
• Secretary of Homeland Security — Benjamine Huffman
• US Trade Representative — Juan Millan

Action for businesses

Although the Presidential Memo does not impose any tariffs, in the press conference accompanying the signing of the Presidential Memo, President Trump stated that tariffs on Mexico and Canada, which he first put forward on 25 November in a social media post, could start from 1 February 2025.⁴

Strategic planning is imperative to help mitigate these additional tariffs. Immediate actions for companies that import into the US to consider include:

• Undertaking trade advocacy as reviews are being conducted by the relevant US government agencies
• Analyzing financial and physical flows, as well as the import duties spent, to assess the potential duty impact of anticipated new tariffs
• Evaluating current domestic or alternative sourcing options (e.g., outside of China, Canada and Mexico) and consider country-of-origin planning to mitigate duties
• Contemplating valuation planning, such as bifurcating product and non-product costs and first sale for export planning to help mitigate the increase in duty
• Aligning customs valuation with transfer pricing policies — US tax reform has resulted in companies' migrating intellectual property (IP) back to the US. With IP in the US, and in a direct import model, customs value is decreased. For customs value, certain design and development costs must be added to value, but US research and development (R&D) can be excluded. For R&D-intensive companies with significant R&D in the US, value reduction can be significant.
• Optimizing supply chains to utilize duty recovery through duty drawback, reclaiming duties paid on imports when the same or similar products are exported (e.g., substitution duty drawback)
• Conducting scenario-planning exercises to anticipate various outcomes of trade policy changes and develop contingency plans to ensure business continuity
• Keeping up with the latest news and developments in trade policies and staying adaptable to quickly respond to changes in trade regulations and tariff rates, including understanding potential announcements on how the tariffs affect Foreign Trade Zone operations

For additional information concerning this Alert, please contact:

Ernst & Young LLP (United States), Global Trade

• Sergio Fontenelle, New York
• Lynlee Brown, San Diego 
• Evan Giesemann, Washington
• Michael Leightman, Houston 
• Michael Heldebrand, San Jose
• Nathan Gollaher, Chicago 
• Bryan Schillinger, Houston
• Jay Bezek, Charlotte 
• Prentice Wells, San Jose
• Shane Williams, Houston
• Sharon Martin, Chicago 
• Renata Natalino, San Francisco
• Nesia Warner, Austin 
• Celine Petersen, Chicago
• Cody Davis, Charlotte 
• Tanna Johnson, Denver 
• Christopher Bourdganis, Detroit
• Ilona van den Eijnde, New York 
• Helen Xiao, Chicago 
• Parag Agarwal, New York
• James Lessard-Templin, Portland 
• Sundar Markandan, Irvine 

Ernst & Young LLP (United Kingdom)

• Marc Bunch
• George Riddell
• Ross Freeman 

Ernst & Young (Netherlands)

• Jeroen Scholten 

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.