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President Donald Trump will issue a broad trade memo today that stops short of imposing new tariffs on his first day in office but directs federal agencies to evaluate US trade relationships with China, Canada and Mexico, a Trump administration official said.
After weeks of intense global speculation over which duties Trump would impose immediately after being sworn in as US president, news that Trump would take more time on tariffs drove a relief rally in global stocks and a dive in the dollar against major currencies.
Trump mentioned no specific tariff plans in his inaugural address, but repeated his intention to create the External Revenue Service, a new agency to collect ‘massive amounts’ of tariffs, duties and other revenues from foreign sources.
“I will immediately begin the overhaul of our trade system to protect American workers and families,” Trump said. “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”
Trump added that his policies would make America ‘a manufacturing nation once again’.
During his election campaign, Trump vowed to impose steep tariffs of 10 per cent to 20pc on global imports into the US and 60pc on goods from China to help reduce a trade deficit that now tops $1 trillion annually.
He said after his November election that he would sign ‘all necessary documents’ upon taking office to impose an immediate 25pc import surcharge on imports from Canada and Mexico if they failed to clamp down on the flow of illicit drugs and migrants entering the US illegally.
Such duties would tear up longstanding trade agreements, upend supply chains and raise costs, according to trade experts.
The official, confirming a Wall Street Journal report that cited a summary of Trump’s memo, said the new president will instead direct agencies to investigate and remedy persistent trade deficits and address unfair trade and currency policies by other nations.
The memo will single out China, Canada and Mexico for scrutiny but will not announce new tariffs, the official said. It will direct agencies to assess Beijing’s compliance with its 2020 trade deal with the US, as well as the status of the US-Mexico-Canada Agreement, the official said.
The US dollar slumped broadly on the news against a basket of major trading partners’ currencies, with particularly large upswings in the euro, Canadian dollar, Mexican peso and Chinese yuan. MSCI’s measure of global stock markets rose. US financial markets were closed for the Martin Luther King Jr Day holiday.
Some industry groups and trade lawyers in Washington had speculated that Trump would invoke the International Emergency Economic Powers Act, a law with sweeping powers to control imports in times of national emergency, to impose immediate tariffs.
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