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The New England Council would like to express our thanks to WilmerHale for bringing together a distinguished panel of experts to discuss the President’s trade and tariff agenda:
Jamie Gorelick - Chair, Regulatory & Government Affairs Department and Former Deputy Attorney General;
David Ross - Chair, International Trade, Investment and Market Access Practice Group and Former Senate Finance Committee Trade Counsel;
Neena Shenai - Partner and Former House Ways and Means Committee Trade Counsel; and
Eric Lesser - Senior Counsel and Former White House Economic Official.
Overview
On Monday, February 10, the New England Council heard from four experts on President Trump’s trade and tariff agenda. The discussion kicked-off with the display of a graph charting the Trade Policy Uncertainty Index which showed a record period of unpredictability. Mr. Ross discussed the shift in US trade policy, moving away from a multilateral rules-based approach to a more unilateral approach. He highlighted the increased use of Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962 for imposing tariffs on China and national security tariffs on aluminum and steel. Ms. Shenai added that this shift began during the first Trump Administration and continued into the Biden Administration, with a focus on sanctions, export controls, and outbound investment restrictions. She also mentioned the Uyghur Forced Labor Prevention Act and new rules on connected vehicles.
Mr. Ross discussed the recent trade actions issued by President Trump, particularly the imposition of 10 percent tariffs on China and 25 percent on Mexico and Canada, under the auspices of national security concerns. Asked about the implications of these actions, Ms. Shenai responded by highlighting the potential retaliatory measures from other countries, including China, Canada, the EU, and Mexico. She also mentioned the EU's new anti-coercion instrument, which could be used to target American tech companies, and mention was made that a multidimensional trade war could occur due to the aggressive posture of the Trump Administration.
Mr. Ross added that companies should be prepared for further uncertainty, with steel and aluminum tariffs on the horizon, and a lack of clarity on possible exceptions for certain products. He also mentioned the potential for legal challenges against the tariffs, as some are questioning whether the President can use the International Emergency Economic Powers Act (IEEPA) in this way.
Ms. Gorelick discussed three potential “guardrails” to these issues, with the first being the political aspect. She indicated that Congress has a lot of equity that they have not been exercising, and that public opinion and views of constituents in “red” districts hold a lot of weight. The second is the Court system, where judicial challenges to what the Administration has done can determine if the President’s actions have been overreaching. Third, she said, would be the markets, to which the President pays keen attention and which he uses as a means to keep score as to whether economic policies are working. She mentioned that for companies, targeted advocacy, activity, and outreach with Members of Congress and the Administration will be key.
In response to a question on the strength of IEEPA, both Ms. Shenai and Mr. Ross noted that in the authority to impose tariffs, the Courts have shown deference to the Executive Branch's foreign affairs and national security powers. They noted further that going against the use of IEEPA could be tricky due to its broad discretion and the need for a joint resolution to override a Presidential action. Mr. Ross also mentioned the possibility of using other statutes, such as Section 122 for balance of payments issues, and Section 338 for addressing discriminatory foreign treatment.
Finally, Ms. Shenai and Mr. Ross highlighted that while tariffs could potentially trigger positive actions from trading partners and lead to some revitalization of U.S. manufacturing, the overall impact would depend on the specific industry and company's footprint. They also noted that the proof of the tariffs' effectiveness would be in the results. The discussion also touched on the potential for tariffs to be used as a "pay for" for tax cut extensions in the reconciliation bill, though it was noted that the revenue generated would be relatively small. The conversation ended with a question about the impact of tariffs on oil and gasoline prices for American consumers, with both suggesting that the pass-through of tariffs to customers would be a key factor.
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