This week, President Trump announced his decision to withdraw the United States from the Paris Agreement, describing it as “disadvantaging the United States” and indicating that the United States will “cease implementation” thereof, unless the United States can renegotiate its terms.

While the President announced a clear intent to withdraw from the Agreement, the legal process to accomplish that goal and how he will cease implementation remain unclear. Similarly, the ramifications that will follow his announcement to renegotiate a “new” agreement may take several courses under both international and domestic law. No country has ever left the Paris Agreement. By the Agreement’s own terms, no country may give notice to the United Nations to withdraw before three years from the date the Agreement came into force, which was November 4, 2016. The Agreement further provides that the withdrawal does not become effective until one year after providing notice. That assumes, of course, that the Trump administration views itself as bound by those terms (he referred to them as “nonbinding” today) and does not challenge the validity of the Agreement itself.

Regardless of the legal path chosen, there may be immediate impacts across a broad array of interests, including:

• The decision could impact international trade with signatory countries (only Syria and Nicaragua did not sign) and may give rise to customs barriers and punitive tariff or other trade retaliation.
• The decision will impact the choices of investment funds across a number of industries, and it particularly appears likely to embolden efforts to augment climate change disclosures in the oil and gas and other energy sectors.
• The decision creates uncertainties for the domestic, regulated community as environmental requirements shift to implement the change in policy. Of particular interest will be the role that states like New York and California decide to play in addressing climate change.