Donald Trump did not impose new trade tariffs on the first day of his second term, as markets had feared, but the US president unveiled the official plan for an “America First Trade Policy”.
A presidential memo called on federal agencies to correct “unfair trade practices” and identify “currency manipulators.” Trade pacts with China, Canada, Mexico and all other partners came under scrutiny.
The message: the Trump administration was willing to use all means to re-engineer trade flows to its advantage. Here are five takeaways from Trump’s trade agenda rollout.
Firm’s promise of ‘fees sooner rather than later’
Trump mentioned the tariffs only three times in his inaugural address, reassuring investors and trading partners who had been warned to expect “day one” tariffs. But he outlined plans to set up an External Revenue Service to collect tariffs, indicating serious plans to boost trade revenue.
Josh Lipsky, a senior director at the Atlantic Council think-tank, said decisions on tariffs are likely to be delayed but not abandoned. “The president was worried about the market reaction on Tuesday and he didn’t want it to spoil his first day.”
The president’s “America First” memo provided a framework for the new agenda, announcing a series of reviews on unfair trade practices, the reasons for the U.S. trade deficit and whether competitors are manipulating currencies and unfairly taxing American business.
Trump also stepped up his rhetoric and repeated threats to impose 25 percent tariffs on Canadian and Mexican imports, despite the countries’ free trade pact. When asked about the possibility of imposing universal tariffs on anyone doing business with the US, the president said: “We can. But we’re not ready for that yet.”
“The experience of the first term is to expect tariffs sooner rather than later,” Lipsky warned, adding that the administration did not yet have a full economic team and wanted to create strong legal foundations for any moves.
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Focus on the neighbors first
Trump appeared to be prioritizing action on the US’s closest trading partners, saying he was preparing tariffs on Canada and Mexico to take effect on February 1.
Trump had no qualms about hitting US allies in his first term, invoking national security concerns to impose tariffs on steel and aluminum imports. But by going so public for Canada, analysts say he is signaling that no country is safe from the self-proclaimed “tariff man.”
Trump’s trade memo ordered a review of trade ties with Canada and Mexico by April 1 (a later date than Trump’s tariff warning, which the president did not explain). Preparations would then begin for a comprehensive review of the USMCA trade agreement in July 2026.
A priority highlighted in the trade memo is Trump’s determination to cut “illegal migration and fentanyl flows,” particularly from Mexico and Canada.
Many supply chains for US manufacturers, particularly carmakers, rely on operations in all three countries, and those businesses could pressure Trump to rescind his threats.
On Tuesday, Canadian Prime Minister Justin Trudeau said his country was taking Trump’s proposals “seriously” and would respond if tariffs were imposed, while Mexico’s President Claudia Sheinbaum said she would focus on “decrees and not discourse.”
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A systematic adjustment, including towards China
Other parts of the president’s policy cover the means to enable a sweeping change in Washington’s relationship with its trading partners.
“I don’t expect changes at the margins,” said Kelly Ann Shaw, a partner at the law firm Hogan Lovells and a former Trump trade adviser. “But rather a review of the entire panoply of commercial and economic tools that results in significant action.”
The wide range of initiatives launched by the memorandum includes an investigation into currency manipulation. Trump has previously accused China of undervaluing the renminbi to boost the value of its exports.
The president also directed his trade representative, Jamieson Greer, to review US trade deals, including the limited one struck during the first Trump administration aimed at boosting exports to China.
Parts of the memo direct various US economic officials to more broadly investigate US economic relations with China, including a review of existing tariffs on Chinese goods.
Greer has also been asked to identify potential new deals with important market access for “American workers, farmers, ranchers, service providers and other businesses,” indicating that a second Trump administration could be open to create new trade agreements.
“This is a pretty big deal. It makes me think that at some point there will be a trade bill in Congress,” said Everett Eissenstat, a partner at the Washington law firm Squire Patton Boggs. “Once the commercial bills start moving, they tend to be very significant and the statutes don’t change that often.”
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Arms trade to achieve different goals
Trump has linked the tariffs to other policy goals beyond reducing trade deficits.
He has promised duties on EU products if the bloc’s members do not buy more US oil and gas. Trump on Monday also suggested that tariffs on China could hinge on a deal over the ownership of TikTok. He said he would apply tariffs on Chinese imports of up to 100 percent if Beijing failed to agree a deal to sell at least 50 percent of the app to a US company.
Anahita Thoms, head of international trade for law firm Baker McKenzie in Germany, said Trump was using tariff threats to maximize his influence.
“I don’t think he’s bluffing, but he’s using it as a bargaining chip,” she said. Now “each country will know what concessions it will have to make to be on good terms.”
The threats risked collateral damage. “Tariffs would be inflationary,” Thoms said, adding that Trump “would not want to do something that has a negative impact on inflation.”
‘Global’ tariffs and global implications
US imports from countries such as Vietnam and Mexico increased in Trump’s first term. This reflected the trend of Chinese manufacturers seeking to circumvent US tariffs by exporting to America via third countries.
Trump’s trade team has realized this. His memo calls on Greer to consider additional tariff modifications to address “circumvention through third countries.”
The memo asks officials to look at whether a “global supplemental tariff” could be used to correct the US’s “large and persistent” annual trade deficit. This indicates that something similar to the universal tariff promised by Trump on the campaign trail may yet emerge.
His threats may also stimulate other countries to increase trade with each other. Just since December, the EU has reached agreements with the Mercosur group of South American countries and Mexico, while resuming talks with Malaysia after more than a decade.
Speaking to the Financial Times, Malaysian Prime Minister Anwar Ibrahim said the global trading system would survive the “initial shock” of Trump’s trade barriers.
