On Thursday 12 December, we hosted the webinar “Trump and Tariffs: A Global Perspective of What Lies Ahead”. The session focused on the potential tariff impacts of President-Elect Trump’s second term in office, giving a global perspective on what to look out for, and how best to prepare.
Highlights from our speakers are set out below. To listen to the full webinar, please click here.
US
- 10%-60% tariffs on Chinese imports (and potentially from Chinese-owned ports, especially those in LATAM)
- 10%-20% tariffs for all other countries
- 25% tariffs on imports from Mexico and Canada; the main policy driver tied to immigration and illicit imports but the actual tariffs could impact other merchandise
- 100% tariffs on imports from countries that abandon the US dollar
- Tariffs could apply even if FTA preference is available (e.g., the 25% tariffs on Mexico and Canada despite the USMCA)
- Trump will have a number of potential tools for imposing tariffs, with some requiring no advance legal notice or the involvement of the US Congress – a number of recent key appointments to the Executive Branch are also pro-tariff
- Expected increased forced labor enforcement (especially under the UFLPA), further designations to the UFLPA Entity List, as well as tension regarding labor provisions under the USMCA
Canada
- Implementation of countermeasures are expected, including tariffs on specified U.S.-origin goods
- Countermeasures will be proportionate to the value of U.S.-Canada trade impacted by the U.S. tariffs
- Knock-on effects may indirectly impact other sectors of the Canadian economy
Mexico
- Response and retaliatory measures expected
- Pressure around migration and fentanyl in particular
- Tensions under the USMCA review and potential renegotiation
Latin America
- Particular focus on tariffs for Brazil, Russia, India, China and South Africa (BRICS)
- Tariffs also expected to be applied to Chinese ports in Latin America
- Regional cooperation and diversification of trade partners expected to offset impacts
- Increased partnership with other countries expected, such as China
- Argentina seen as an outlier, due to a stronger relationship between Argentinian President Javier Milei and Trump
EU / UK
- Hesitant to introduce broad retaliatory tariffs, however more targeted response on specified U.S.-origin goods expected
- Focus on negotiation, exemptions, etc.
- Expect to see the EU/UK authorities taking an aggressive approach in rejecting avoidance of the retaliatory tariffs – for more on this, see our blog post on the recent ECJ case on anti-circumvention of tariffs
Africa
- Lack of predictability for African countries
- Trade relations between US and Africa improved in the first two years of Trump’s first administration
- The renewal of the US African Growth and Opportunity Act (AGOA) hangs in the balance
- BRICS countries threatened with 100% tariffs if they go ahead with a BRICS currency to replace the US Dollar
- Balance between US, Chinese, Russian and other international influences on Africa, questions over whether US will try to increase influence in Africa
Middle East
- Expected limited direct impact on tariffs imposed on Middle Eastern countries
- Stronger effect on countries that rely heavily on oil and gas revenues such as the GCC
- Diversification of economies by Middle Eastern countries away from oil dependency
- Diversion of Foreign Direct Investments to the Middle East expected
- Stronger potential effect on FTA partners such as Oman and Bahrain which might want to consider renegotiating their agreements
- Potential negotiation of tariff exemptions on some products
China
- Retaliatory tariffs likely to be “reactivated” in China
- Other tools such as anti-trade barrier/discrimination investigations and export controls also expected
- Country of origin and customs valuation/transfer pricing expected to be key considerations
WTO
- Lower prospects of agreement on WTO dispute settlement reform
- Increase in WTO litigation challenging tariffs and retaliatory measures
- Potential increase of WTO litigation on trade remedy measures imposed to mitigate the trade-distortive effects of tariffs
Mitigation measures
Key takeaways for businesses include implementing due diligence on global supply chains, with a particular emphasis on targeted jurisdictions such as China and the US’s USMCA counterparts. Whilst Trump’s second term will be unpredictable, key mitigation strategies can be implemented, such as relocation of production (subject to anti-circumvention rules – see our blog post on the recent ECJ case on anti-circumvention of tariffs), considering contractual clauses and exclusions, as well as possible lobbying.
