Implications of the 2016 US Presidential Election for Trade Policy

The election of Donald J. Trump as the 45th President of the United States will have important implications for US trade policy. Assessing these implications in the immediate aftermath of the presidential election is, however, always a complicated task. While it is likely that the Trump administration will take a more interventionist approach to trade policy than recent US administrations, the extent and precise direction of this shift is difficult to predict.

The Trump campaign's trade policy platform included plans to (i) seek renegotiation of the North American Free Trade Agreement (NAFTA) and withdraw from the agreement if the NAFTA parties do not agree to such renegotiation; (ii) withdraw from the Trans-Pacific Partnership (TPP); (iii) direct the Secretary of Commerce to "identify every violation of trade agreements" by foreign countries and direct all appropriate agencies to take action to end such violations; (iv) "eliminate Mexico's one-side backdoor tariff through the VAT"; (v) instruct the Treasury Secretary to "label China a currency manipulator"; (vi) instruct USTR to bring trade cases against China both in the United States and at the World Trade Organization (WTO); and (vii) "use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities…including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962." Possible withdrawal of the United States from the WTO Agreements and other US Free Trade Agreements (FTAs) was also discussed but is not included in the Trump campaign's written statements on trade policy.

This report examines the legal and practical constraints that may be implicated by such policies. We highlight in particular the provisions of US law that the new administration might rely on to unilaterally raise tariffs, otherwise restrict imports, or unilaterally modify or withdraw from US trade agreements. (It is of course possible that new legislation could be sought to pursue broader reforms to US trade law.) We also discuss the likely implications for ongoing and future trade negotiations, foreign direct investment in the United States, and the United States' role in the WTO....

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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