Trade Report Provides Insight (and Spurs Some Questions) About Trump Trade Agenda

On the first day of his Administration, President Trump issued the America First Trade Agenda Memorandum, which ordered 20 reports (due April 1) from the U.S. Trade Representative, Secretary of Commerce, Secretary of the Treasury, and Director of the Office of Management and Budget.  These reports focused on a broad range of trade issues, from a comprehensive analysis of existing trade agreements to an analysis of trade deficits, and many issues in between.  Here are some important findings from an executive summary of those reports that was released by the White House and provides some important insight into what the Administration will likely prioritize going forward: 

White House Moving Forward with the External Revenue Service: The report reemphasizes that the creation of an External Revenue Service (ERS) remains a top priority for the President; maybe even more so given his focus on tariffs. 

“By closing regulatory gaps and modernizing revenue collection mechanisms, the United States can reaffirm its commitment to a strong, fair, and enforceable trade system that benefits American businesses and taxpayers alike.”  

There is Strong Interest in Negotiating the U.S. - Mexico - Canada Agreement:  A review of the USMCA is legally required to be completed by July 2026.  The Trump Administration has highlighted the need to renegotiate the agreement for some time. 

“Numerous changes are needed, such as stronger rules of origin to reduce the inflow of non-market economy content into the United States, expanded market access—especially for dairy exports to Canada and action to address Mexico’s discriminatory practices, such as in the energy sector.”

White House Doubles Down on Opposition to International Digital Services Taxes: President Trump has highlighted a focus on preventing actions by other countries to impose digital services taxes on American companies.  These taxes, now implemented in 19 countries, have increasingly attracted interest from foreign governments seeking to secure new revenue sources. 

“The United States must combat efforts by foreign governments to collect illegitimate revenue from U.S. firms by imposing various discriminatory taxes and regulatory regimes aimed to capture the success of America’s most successful companies—not the least of which are our leading technology firms.” 

Trade Focus on China will Continue and Likely Grow:  There is nothing surprising about the White House increasing focus on trade practices in China. The report notes that commitments made in the first Trump Administration have not been enforced. The report highlights the potential need for additional Section 301 investigations. Additionally, the report highlights that a review of legislation around Permanent Normal Trade Relations (PNTR) has been conducted and USTR has “advised the President accordingly,” spurring more questions than answers. 

“China has failed to live up to its commitments on agriculture, financial services, and protection of intellectual property (IP) rights. USTR assessed this lack of compliance and recommends potential responses.”

Additional Section 232 Investigations Likely: The report identifies some additional sectors for potential 232 investigations; highlighting the need to increase onshoring in specific industries. 

“Reshoring industrial production in key sectors is critical to national security, and DOC identified additional products and sectors that merit consideration for initiation of new Section 232 investigations, including pharmaceuticals, semiconductors, and certain critical minerals.”

Export Controls will Continue to be a Key Tool for the Trump Administration:  Export controls have been an important tool for protecting national security technologies, albeit with some level of concern from policymakers who believe export controls are not being fully enforced.  The report indicates export controls will continue to be used strategically.

“Export controls should be simpler, stricter, and more effective, while promoting U.S. dominance in AI and asserting global technological leadership.”