The United States is poised for significant trade policy changes as three comprehensive reports are set to be delivered by April 1, 2025. These reviews and recommendations could reshape the landscape of U.S. trade dynamics under President Trump's administration. A steadfast commitment to invoking the International Emergency Economic Powers Act (IEEPA) was evident when President Trump addressed reporters in the Oval Office on inauguration day. This move signals a potential shift in how the U.S. engages with its global trade partners.
Trade in goods is projected to experience a 2.5% year-over-year growth in 2025, fueled by substantial activity in the first quarter and increased intra-continental trade throughout the year. This growth pattern is underscored by Mexico and Canada's significant share of U.S. imports, with Mexico exceeding 25% in seven categories and Canada surpassing 25% in 20 HS2 categories. These figures highlight the intricate trade relationship between the U.S. and its North American neighbors.
In an effort to balance U.S.-China trade relations, the Secretary of Commerce will undertake a thorough evaluation of U.S. intellectual property rights in China. This evaluation aims to recommend measures that ensure balanced treatment, reflecting ongoing concerns about intellectual property protection in international markets. Intense investigations into trade policy with China are also on the horizon. These will include a comprehensive review of the existing trade agreement for compliance, an assessment of China's practices based on the 2024 report, investigations into any unreasonable practices, and a review of legislative proposals.
The United States-Mexico-Canada Agreement (USMCA), along with other existing trade agreements, will undergo careful review. These assessments will consider the impact on federal procurement and explore the feasibility of establishing an External Revenue Service (ERS) to manage trade-related revenues. President Trump has also announced potential tariffs of 25% on imports from Mexico and Canada, which could take effect starting February 1, pending Congressional approval under IEEPA.
Economic security measures remain a priority, with investigations into the U.S. industrial and manufacturing base to determine necessary import adjustments. Recent economic developments in Canada add another layer to these considerations. The Canadian Consumer Price Index advanced by 1.8% year-over-year in December, while the Bank of Canada lowered its interest rate by 175 basis points in 2024. Additionally, the Canadian Dollar has been navigating multi-year lows against its American counterpart.
In 2023, more than 15% of all U.S. imports came from Mexico, and 13.7% from Canada, highlighting the significance of these trade relationships. As President Trump moves forward with potential tariffs under IEEPA, Congressional approval remains a crucial step. If Congress approves, no further steps are necessary to implement these tariffs.
To declare a national emergency under the IEEPA, the President must issue a written proclamation or executive order specifying the nature of the threat and the legal basis for invoking the Act. This procedural requirement underscores the gravity of utilizing such powers in trade policy decisions.