Donald Trump did not introduce new trade tariffs on the first day of his second term, as markets had feared, but the US president did present an official blueprint for an “America First Trade Policy”.
AND presidential letter urged federal agencies to fix “unfair trade practices” and identify “currency manipulators.” Trade pacts with China, Canada, Mexico and all other partners are under review.
The message: The Trump administration was ready to use any means to reorganize trade flows to its advantage. Here are five takeaways from the opening salvos of Trump’s trade agenda.
Firm promises for ‘tariffs sooner rather than later’
Trump mentioned the tariffs only three times in his inauguration speech, reassuring investors and trading partners who had been warned to expect “day one” tariffs. But he outlined plans to establish a Tax Administration to collect customs duties, indicating serious plans to increase trade revenues.
Josh Lipsky, senior director at the Atlantic Council think tank, said decisions on tariffs would likely be delayed but not abandoned. “The president was concerned about the market’s reaction on Tuesday and didn’t want it to spoil his first day.”
The president’s “America First” memo provided the framework for the new agenda, announcing a series of reviews of unfair trade practices, the reasons for US trade deficits and whether competitors are manipulating currencies and unfairly taxing US businesses.
Trump too sharpened his rhetoric and repeated threats to impose 25 percent tariffs on Canadian and Mexican imports, despite those countries’ free trade pact. When asked about the prospect of imposing universal tariffs on everyone doing business with the US, the president said: “We can. But we are not ready for that yet.”
“The experience from the first term is that we can expect tariffs sooner rather than later,” Lipsky warned, adding that the administration has not yet established a full economic team and wants to establish a solid legal basis for any moves.
Focus on the neighbors first
Trump appears to be prioritizing actions against the US’s closest trading partners, saying he is preparing tariffs on Canada and Mexico to take effect on February 1.
Trump has not hesitated to hit out at America’s allies in his first term, citing national security concerns to impose tariffs on steel and aluminum imports. But by coming out so publicly for Canada, analysts say he is signaling that no country is safe from the self-proclaimed “customsman.”
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.
One of the priorities highlighted in the trade memorandum is Trump’s determination to end “illegal migration and the flow of fentanyl,” particularly from Mexico and Canada.
Many supply chains for US manufacturers, especially car manufacturersthey rely on operations in all three countries, and those companies could pressure Trump to withdraw his threats.
On Tuesday, Canadian Prime Minister Justin Trudeau said his country was taking Trump’s proposals “seriously” and would answer if tariffs are imposed, while Mexican President Claudia Sheinbaum said she would focus on “decrees, not discourse.”
Systematic audit, including towards China
Other parts of the president’s policy cover the means to facilitate comprehensive change in Washington’s relationship with its trading partners.
“I don’t expect changes at the margins,” said Kelly Ann Shaw, a partner at law firm Hogan Lovells and a former Trump trade adviser. “Rather, it’s about reviewing the entire range of trading and economic tools that results in meaningful action.”
The wide range of initiatives launched by the memorandum includes an examination of currency manipulation. Trump has previously accused China of undervaluing the renminbi to boost the value of its exports.
The president also ordered his trade representative, Jamieson Greer, to review trade deals with the US, including a limited one struck during the first Trump administration aimed at boosting exports to China.
Several sections of the memo direct various US economic officials to take a broader look at US economic relations with China, including a review of existing tariffs on Chinese goods.
Greer was also asked to identify possible new deals with significant market access for “American workers, farmers, ranchers, service providers and other businesses,” indicating that another Trump administration may be open to new trade deals.
“This is a pretty big deal. It makes me think that there will be a trade bill in Congress at some point,” said Everett Eissenstat, a partner at the Washington law firm Squire Patton Boggs. “Once merchant accounts start moving, they tend to be very substantial and the statutes don’t change that often.”
Arming the store to achieve different goals
Trump has linked the tariffs to other policy goals besides reducing the trade deficit.
He promised tariffs on EU products unless members of the bloc buy more American oil and gas. Trump also suggested on Monday that tariffs on China could depend on agreement on the ownership of TikTok. He said he would apply tariffs on Chinese imports of up to 100 percent if Beijing failed to agree to sell at least 50 percent of the app to a U.S. company.
Anahita Thoms, head of international trade for law firm Baker McKenzie in Germany, said Trump had used threats of tariffs to increase his power.
“I don’t think he’s bluffing, he’s using it as a negotiating tool,” she said. Now “each country will know what concession it will have to make in order to have good relations”.
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 have increased in Trump’s first term. This reflected the trend of Chinese manufacturers wanting to circumvent US tariffs by exporting to America via third countries.
Trump’s trade team got it. His memo urged Greer to consider additional tariff changes to address “circumvention through third countries.”
The memo asked officials to consider whether “global additional tariffs” could be used to correct the “large and persistent” annual US trade deficit. This indicates that something similar to the universal tariffs that Trump promised on the campaign trail could still emerge.
His threats could encourage other countries to increase trade with each other. Only since December, The EU has concluded agreements with the Mercosur group of South American countries and Mexico while restarting negotiations with Malaysia after more than a decade.
Speaking to the Financial Times, Malaysian Prime Minister Anwar Ibrahim said the global trading system would survive “initial shock” Trump’s trade barriers.
