With Donald Trump’s victory in the US presidential election held on November 5, 2024, the second Trump administration will begin on January 20, 2025. The Republican Party also won the Senate and House Majority, achieving the so-called “Trifecta.” As a result, Trump 2.0 is expected to be able to push forward strong policies for the following two years until the next midterm elections.

As Trump 2.0 is expected to implement tariff and trade policies with stronger momentum compared to the first term, it is crucial to prepare for these anticipated changes in light of President-elect Trump’s campaign promises and statements.

1. Tariffs

President-elect Trump has repeatedly emphasized the need to introduce a universal tariff since the early days of his presidential campaign. The Republican Party Platform1 also expressed support for raising the standard tariffs. In addition, the Trump administration is trying to make up for the budget deficit from domestic tax cuts (including corporate taxes) through tariffs. He also claims that solving the trade deficit through tariff increases will also solve the problem of inflation.

If the Trump administration introduces a universal tariff, the legal basis for doing so will most likely be the International Emergency Economic Powers Act (the “IEEPA”). The IEEPA was already invoked during Trump’s first term to impose tariffs on Mexican products to address undocumented immigrant issues with Mexico. According to the IEEPA, the president can take a wide range of measures on economic transactions in case of a threat to US national security. Moreover, these measures may be taken more quickly because they do not require the United States Department of Commerce to conduct an investigation or issue a report, as required under Section 232 of the Trade Expansion Act or Section 301 of the Trade Act of 1974, which were invoked during Trump’s first term.

In addition, it is possible that the Section 232 of the Trade Expansion Act will be invoked to impose tariffs on more products. Also, Trump 2.0 may negotiate to reduce quotas for items that are currently subject to quotas.

Moreover, there were several cases in which high anti-dumping duties (“AD”) and countervailing duties (“CVD”) were imposed on the grounds of adverse facts available (“AFA”) or particular market situations (“PMS”) due to the alleged non-cooperation of the parties subject to the investigations during the first Trump administration. During that time, AD/CVD rates were revised by the judgment of the US Court of International Trade in many cases. Given such experiences, Trump 2.0 is expected to refine the basis for applying AFA and PMS to AD/CVD investigations.

2. Supply Chain

In addition to the universal tariffs, Trump 2.0 is expected to take stronger measures against China and Mexico. During his election campaign, President-elect Trump said that he would revoke China’s Permanent Normal Trade Relations (“PNTR”) status and impose an additional 60% tariff on Chinese products on top of the above mentioned universal tariffs. Furthermore, the Trump administration may invoke Section 301 of the Trade Act of 1974 to impose stronger import bans on Chinese products. Moreover, the Uyghur Forced Labor Prevention Act (the “UFLPA”), which was enacted during the Biden administration, is also expected to be more actively enforced against China.

Meanwhile, there is an ongoing tension with Mexico over immigration issues and circumvention of AD/CVD measures. In particular, President-elect Trump has threatened to impose additional tariffs if the Mexican Government fails to properly control undocumented immigrants. He also mentioned imposing tariffs of up to 2000% on cars produced by Chinese companies in production facilities in Mexico and exported to the US. In addition, in the review process of the United States-Mexico-Canada Agreement (the “USMCA”) scheduled for 2026, there is a possibility that more restrictions on the proportion of Chinese raw materials/parts in Mexican products will be imposed and that the rules of origin will be strengthened. In addition, Trump 2.0 may attempt to control the import of Mexican products by referring labor-related issues at Mexican factories to dispute settlement systems, including the Rapid Response Mechanism (the “RRM”) under the USMCA.

3. Environment

Trump 2.0 is expected to promote energy production using fossil fuels and reduce incentives for environment-friendly businesses by easing environmental regulations. However, there is a bipartisan support to introduce a carbon tax, which could generate tax revenue and block the import of foreign products with heavy carbon emissions, as well as carbon tax regulations such as the Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency Act of 2024 (the “PROVE IT Act of 2024”) and the Foreign Pollution Fee Act.

In addition, President-elect Trump has consistently criticized the Inflation Reduction Act (the “IRA”), one of the key achievements of the Biden Administration, and has even said that he will immediately abolish it. However, a significant portion of the states where companies are benefiting from the IRA are Republican states, and 15 of the 18 Republican House of Representatives members, who signed the letter asking President-elect Trump not to abolish the IRA, were re-elected. As a result, Trump 2.0 may make adjustments through executive orders instead of the complete abolition of the IRA, which would face significant backlash.

President-elect Trump has vowed to fully impose universal tariffs, additional tariffs on China and tariffs on Mexico within 100 days of taking office on January 20. As discussed above, Trump 2.0 is expected to implement its campaign promises more quickly and assertively compared to the first term, with the Republican Party controlling both the executive and legislative branches. Therefore, companies will need to manage their supply chain risks related to exports to the US, assuming that (i) new tariffs will be imposed, (ii) the trade remedy measures will be more actively used, (iii) the US will pursue decoupling from China, and (iv) warnings of measures against circumvention of AD/CVD through Mexico will be materialized.

Companies are advised to pay attention to the selection of key personnel of Trump 2.0 and the actions of the presidential transition team, and prepare for the policy direction of Trump 2.0 as it takes shape over time.

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1 2024 Republican Party Platform: Republican Party’s campaign promises for the 2024 Presidential Election.