Trump 2.0: Anticipated Impacts on International Trade, Sanctions and Economic Policy

Tariffs: Comprehensive Increases Possible Across Key Trading Partners
President-elect Trump has outlined ambitious tariff plans aimed at reshaping U.S. trade policy. The first Trump Administration introduced significant tariffs on Chinese imports under Section 301 of the Trade Act of 1974, as well as tariffs on steel and aluminum imports from all countries pursuant to Section 232 of the Trade Expansion Act of 1962. Throughout his latest campaign, he emphasized the desire to implement additional tariffs as part of his broader foreign policy and efforts to bolster investment in U.S. industrial capacity. With Republicans holding majorities in both the House and Senate, President-elect Trump is positioned to advance his tariff agenda.

Key proposals include:

• China: A proposed tariff of up to 60% on all imports, building on existing Section 301 tariffs, which already apply duties on $370 billion worth of Chinese goods. This aligns with Trump’s longstanding critique of China’s trade practices, including intellectual property theft and subsidies under its “Made in China 2025” strategy.
• Mexico: Threatening tariffs between 25% and 100% as leverage to pressure Mexico to provide further cooperation on enforcement of U.S. immigration policy.
• Universal Tariffs: A potential 10 – 20% tariff on all imports.

1. Authorities to Watch
   Although a number of the policies proposed are relatively novel, there are several authorities on which the second Trump Administration could rely, including the following:

• Section 201 of the Trade Act of 1974
  Previously used for global “safeguards” tariffs on solar cells, solar modules and large residential washers, Section 201 allows temporary tariffs to protect domestic industries from import surges.
• Section 232 of the Trade Expansion Act of 1962
  This provision allows the President to regulate imports determined to threaten U.S. national security and was used in President-elect Trump’s first term to impose 25% tariffs on steel and 10% tariffs on aluminum, citing national security concerns. Exemptions for allied countries and trade partners were later adopted and are expected to remain a key feature.
• Section 301 of the Trade Act of 1974
  This statute provides authority for the President to impose trade sanctions on foreign countries that violate trade agreements or otherwise harm U.S. commerce. The new Trump Administration could rely on the existing Section 301 action on China and pursue upward adjustments to existing tariffs and cover additional tariff categories.
• International Emergency Economic Powers Act (IEEPA)
  IEEPA authorizes the President to take broad actions to address national emergencies. It was cited by then-President Trump in 2019 as a potential basis to impose threatened tariffs on imports from Mexico, although that action ultimately was not taken. Efforts are underway within the current Congress to attempt to restrict the potential use of this authority, although it is unclear whether such efforts will be successful.

• In large part because the U.S. Government has stopped the functioning of the WTO Appellate Body by refusing to allow the appointment of replacements for members whose terms expired (a policy that started with the Trump Administration and continued by the Biden Administration), compliance with WTO obligations on tariffs does not appear to be a concern. Similarly, it appears unlikely that the Trump Administration will feel constrained by the terms of U.S. free trade agreements.

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2. Exclusion Processes and Challenges
   Past tariff regimes included exclusion processes administered by the Office of the United States Trade Representative (USTR) for the Section 301 duties and the Department of Commerce Bureau of Industry and Security for the Section 232 duties on steel and aluminum. Exclusions focused on products that are not readily available from U.S. suppliers or outside China. Over time, the availability of such exclusions has been narrowed. It remains unclear whether the Trump Administration will continue current exclusions, create procedures allowing for new exclusions, or eliminate them entirely. For example, certain exclusions which support domestic manufacturing or Buy America initiatives may present opportunities for engagement with the new Administration.

Sanctions
The Biden Administration has relied heavily on sanctions as a foreign policy tool, particularly targeting Russia after its invasion of Ukraine and emphasizing commitment to issuing sanctions packages in alignment with the Group of Seven nations. The Trump Administration is expected to continue leveraging sanctions, though the methods and priorities may shift under his leadership, and we may see a move away from sanctions coordinated with allies. Early indications suggest key developments in several areas:

• Russia: The Trump Administration’s policies regarding Russia remain unclear. President Trump will inherit Russia sanctions that have expanded in the final days of the Biden Administration, and early discussions suggest the Trump administration may seek to enforce sanctions targeting Russian energy exports and otherwise increase pressure on sectors critical to the Russian economy. However, the President-elect and Vice President-elect JD Vance have expressed opposition to additional U.S. funding for Ukraine, which may complicate coordinated Western sanctions. Further, with expected efforts to guide Ukraine and Russia into a negotiated end to the war, the Trump Administration may remove certain tariffs (which may or may not come in concert with UK and EU policies).
• Iran: During his first term, President Trump adopted a “maximum pressure” campaign against Iran, including re-imposing stringent sanctions targeting the country’s energy, banking and shipping sectors after exiting the nuclear agreement framework with Iran. A renewed Trump Administration, particularly with Marco Rubio as Secretary of State, is likely to look for ways to expand these already-broad measures and enhance enforcement. This may involve targeting countries that consume Iranian oil, evasion networks and further restricting humanitarian carveouts to prevent misuse.
• Venezuela: The Biden Administration provided limited relief for energy-related transactions with Venezuela earlier this year but reversed course after the Maduro regime failed to meet agreed benchmarks on democratic reforms. The Trump Administration is expected to adopt a tough stance, potentially reimposing comprehensive sanctions targeting the Venezuelan oil sector, state-owned enterprises, and financial institutions.
• Cuba: The Trump Administration may revive policies from its first term that rolled back Obama-era engagement. Potential actions include reversing exemptions for private-sector entrepreneurs and tightening restrictions on travel, particularly under general licenses for educational and cultural exchanges. President Trump’s prior enforcement of Cuba sanctions may be revived in this Administration, particularly given the nomination of Senator Rubio as Secretary of State.
• Middle East: President-elect Trump’s strong support for Israel during his first term suggests continued alignment with anti-terror and anti-Iran policies. The Administration may introduce additional sanctions on regional terror groups such as Hamas, Hezbollah and the Houthis.

Businesses operating in or near sanctioned jurisdictions, or in affected sectors, will face a need in 2025 to closely monitor regulatory developments and update compliance frameworks to adapt to the new environment.

Potential Impact on China
The U.S.-China relationship has been a bipartisan area of focus for many years, and played a key role of President Trump’s reelection campaign. The new Trump Administration is expected to adopt a hardline stance on China, building on its first-term policies and seeking to counter Beijing’s influence in global trade and technology. The anticipated approach will focus on export controls, investment screening and import restrictions.

1. Export Controls
   Export controls on critical technologies are likely to expand under a Trump Administration, particularly targeting China’s access to emerging technology, including:

• Advanced computing and semiconductors.
• Artificial intelligence (AI).
• Quantum computing.
• Advanced energy technologies
• Dual-use technologies with military applications.

• President Trump’s first Administration focused on export controls seeking to combat China’s strategy of military-civil fusion and Chinese policy initiatives such as Made in China 2025. Measures included increased requirements for diligence on potential military end users, significant additions to the Entity List, and the creation of a foreign direct product rule aimed at restricting Huawei’s access to U.S. materials. Many of these measures continued and expanded throughout the Biden Administration, and are likely to continue narrowing China’s access to U.S. materials over the next four years.

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2. Investment Screening
   Under the first Trump Administration, the Committee on Foreign Investment in the United States (CFIUS) was granted broader authority pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). CFIUS reviews of inbound investment generally enjoy bipartisan support, and this trend is likely to persist under the incoming Administration. Enforcement by CFIUS is also a bipartisan issue. For example, CFIUS announced its largest penalty amount to date in August 2024 under the Biden Administration and has touted its achievements focused on increased enforcement, while then-President Trump was responsible for blocking four of the fewer than 10 transactions that CFIUS has referred to a President to block since its inception.

   The Biden Administration continued aggressive implementation of FIRRMA, with CFIUS issuing Enforcement and Penalty Guidelines in October 2022 that emphasized key national security risk factors, including data security, critical technologies, and supply chain vulnerabilities. A final rule issued in November 2024 expanded CFIUS’s authority to issue subpoenas and increased maximum monetary penalties for violations (from $250,000 to $5 million per violation), and another final rule that goes into effect in December 2024 will significantly expand CFIUS’s ability to review certain real estate transactions by foreign persons near more than 60 military bases and installations across 30 states.

   A Trump Administration is likely to continue utilizing CFIUS aggressively, particularly to scrutinize—and potentially mitigate or block—certain foreign investments in transactions that raise national security concerns. Focus will likely continue to stay on investments in certain sensitive/emerging technology industries such as semiconductors, supercomputers and artificial intelligence, transactions involving personal data or critical infrastructure, as well as transactions involving certain land ownership with proximity concerns, including renewable energy projects. Both the Biden and first Trump administrations have been tough on investment emanating from countries of concern—in particular China—into the United States, and this stance will likely continue. It is important to understand this focus is not entirely restricted to Chinese investment. For example, CFIUS continues to consider a Japanese company’s attempted acquisition of U.S. Steel, and is scrutinizing investment from jurisdictions around the world.

   Outbound investment also will be subject to further development by the Trump Administration. On October 28, 2024, the U.S. Department of Treasury issued a long-awaited Final Rule implementing its outbound investment review framework, which will go into effect on January 2, 2025. This framework targets U.S. investments in China’s critical technology sectors—artificial intelligence, semiconductors and microelectronics, and quantum computing—deemed essential to national security. The Trump Administration may broaden these restrictions, potentially including additional sectors or tightening enforcement mechanisms. Proposed outbound legislation pending in Congress contemplates including sectors such as hypersonics, satellite-based communications, and networked laser scanning systems with dual-use applications.

3. Supply Chain and Other Import Restrictions
   Supply chain resiliency and ethics have been a strong focus of the Biden Administration. We expect the shoring up of supply chains to remain a significant focus in the new Administration. This includes through the implementation of import restrictions for products entering the United States. Protecting supply chains for critical minerals and technologies also is expected to be a focus of some import restrictions. For example, Senator Rubio has also recently co-sponsored legislation to counter China’s dominance in the global critical minerals market.

   The Uyghur Forced Labor Prevention Act (UFLPA), which introduced a presumption that goods from Xinjiang Uyghur Autonomous Region (XUAR) of China are made with forced labor and banned their importation, is expected to see continued enforcement under the Trump Administration, particularly if Senator Rubio, a sponsor of the UFLPA legislation, is confirmed as Secretary of State.

   The antidumping and countervailing duty laws have been aggressively applied to China for some years, and that trend is expected to continue.

Trade Agreements: USMCA and Beyond
During the first Trump Administration, his team negotiated the United States-Mexico-Canada Agreement (USMCA) as a replacement for the North American Free Trade Agreement (NAFTA), emphasizing it as a modernized trade deal designed to better protect American workers and industries. More recently, however, he has stated that changes should be made. President-elect Trump intends to invoke the six-year review clause of the USMCA, likely seeking renegotiation of various provisions such as the automotive rules of origin. President-elect Trump is also expected to seek amendments or other commitments from the Mexican government to limit Chinese-owned companies from producing in Mexico to export to the United States. This could create disruptions for industries reliant on North American supply chains.

The second Trump Administration also may seek to revise other free trade agreements, as was done with the U.S.-South Korea Free Trade Agreement during the first Trump Administration.

Looking Ahead
As the Trump Administration develops its trade and sanctions agenda, and carries out what may be a more unpredictable and volatile policy approach, businesses will need to remain agile. Pillsbury’s International Trade and Sanctions team will continue monitoring developments to provide actionable guidance.

For more details, contact us directly or visit the Pillsbury Global Trade & Sanctions Law Blog.