US President Donald Trump’s tariff-driven trade policy has started a trade war with China, antagonised traditional allies and roiled financial markets in the first 100 days of his second term.
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The 100th day of a US president's term is an informal milestone first used to gauge the early success of the Franklin D. Roosevelt administration in 1933. This article is part of a six-part series examining Trump's impact on different areas of the law since taking office on 20 January 2025.
The other articles in the series may be viewed here.
America First Trade Policy
Trump’s on-again, off-again tariffs, a cornerstone of his America First Trade Policy, may be the single-most disruptive feature of his administration to date.
The US Trade Representative (USTR) praised Trump’s approach to “reciprocal tariffs” on 2 April 2025, which he dubbed “Liberation Day.”
Today, President Trump is taking urgent action to protect the national security and economy of the United States. The current lack of trade reciprocity, demonstrated by our chronic trade deficit, has weakened our economic and national security. After only 72 days in office, President Trump has prioritized swift action to bring reciprocity to our trade relations and reduce the trade deficit by leveling the playing field for American workers and manufacturers, reshoring American jobs, expanding our domestic manufacturing base, and ensuring our defense-industrial base is not dependent on foreign adversaries—all leading to stronger economic and national security.
“Reciprocity” here refers to the “tariff rate necessary to balance bilateral trade deficits” between the US and its trading partners. Apparently, that means a minimum rate of 10% for most countries and higher – in some cases, significantly higher – rates for countries that have larger trade imbalances with the US. And in the case of China, it means a reciprocal tariff rate that Trump increased several times before it reached 125%.
The escalation with China was not isolated. Trump had previously imposed a 10% tariff on Chinese goods that he later upped to 20%. Taken together with the reciprocal tariff, Chinese goods face customs duties of 145%. The US president justified those measures based on China’s reactions to the announcement of each escalating step.
Other US trading partners have reacted differently, and all of them have had a better rate result than China. For instance, whilst Canada has also been willing to retaliate against US tariffs, it has been able to revert to the US-Mexico-Canada Agreement (USMCA), the trilateral free trade agreement that Trump concluded during his first term.
USMCA-compliant auto parts, as an example, are temporarily exempted from the 25% tariff applicable to auto parts beginning on 3 May 2025. The delay is to allow the US Commerce Department time to develop rules for limiting the tariff to the non-US content of auto parts. Those measures have reduced – but by no means resolved – the trade tensions in North America.
Trade tensions in the EU, Latin America and APAC have also been running high – especially related to manufacturing in China – in no small part due to Trump’s reliance on instinct to make high-stakes trade policy decisions.
Uncertainty
Governing on instinct translates into not only underdeveloped implementing rules but also economic instability.
Global markets reeled in response to the reciprocal tariffs announced on 2 April 2025, reflecting that instability. Indeed, according to the International Monetary Fund’s April 2025 World Economic Outlook, the “swift escalation of trade tensions and extremely high levels of policy uncertainty” are undermining economic growth.
Policy uncertainty has been typical of Trump’s approach to trade in his second term. He set the tone when he started “the dumbest trade war in history” and set his sights not only on China but also on Canada and Mexico – setting in motion, among other things, his administration’s flip-flopping approach to duty-free de minimis treatment of imported goods.
Soon after taking office, Trump announced tariffs on goods from Canada, China and Mexico, ostensibly to disrupt the illicit fentanyl supply chain and with no de minimis treatment available.
The next day, he agreed to a one-month delay with Canada and Mexico. Then, as the China tariff took effect and China announced retaliatory measures, the US Postal Service waffled on whether parcels from China and Hong Kong could enter the US, resulting in the temporary availability of de minimis treatment. Trump later made de minimis treatment available for Canadian and Mexican goods before introducing exemptions for USMCA-compliant goods.
What’s in and what’s out has been subject to change, but perhaps the most pronounced uncertainty came in connection with reciprocal tariffs, the details of which Trump announced on 2 April 2025. Those details included a 10% floor and varied, higher rates for other trading partners based on the size of their trade imbalance with the US.
The 10% floor has applied from 5 April 2025 to any goods from any country that did not have a country-specific rate assigned. The country-specific rates briefly took effect on 9 April 2025 before Trump suspended them for 90 days. During the suspension period, the baseline 10% rate applies (except on Chinese goods).
The shifting rates added complexity to a policy that signalled, but did not elaborate on, rules exempting imported goods’ US content from the reciprocal tariffs. And they came against the backdrop of a sharp escalation in the trade war with China and negative market reactions.
Invitation to negotiate
Trump boasted of the “many World Leaders and Business Executives” who have sought tariff relief following the “Liberation Day” announcement in a 20 April 2025 social media post. Bilateral talks are arguably at odds with Trump’s February edict that there would be no exemptions or waivers for the reciprocal tariffs. These seemingly contradictory statements underscore the uncertainty facing the international business community.
He may have been referring to business executives in the leadership teams at companies like Apple, Nvidia, TSMC and Hyundai. Each of those companies has announced large investments in the US.
On world leaders coming to the negotiating table, Treasury Secretary Scott Bessent said on 9 April 2025 after Trump announced the reciprocal tariffs’ 90-day pause, “We’re going to work on a solution with our trading partners.” He added that “we are willing to cooperate with our allies and with our trading partners who did not retaliate,” drawing a contrast with China’s retaliation. “Don’t retaliate – things will turn out well,” he said.
More recently, South Korea has been in talks with Bessent, Switzerland’s president said that the US is negotiating with a group of 15 countries, and China has refuted Trump’s recent claims that active negotiations between the world’s two largest economies are underway.
Legal challenges
A solution assumes that the reciprocal tariffs survive judicial scrutiny, however. Several post-“Liberation Day” lawsuits will put that to the test.
The plaintiffs in those suits are challenging Trump’s reliance on emergency powers. Specifically, they argue that the president lacks the authority to impose tariffs under the International Economic Emergency Powers Act 1977 (IEEPA). They also claim that only Congress can impose customs duties under the US Constitution.
The IEEPA enables the US president “to deal with an unusual and extraordinary threat” that is the subject of a declared national emergency. Trump declared a national emergency and invoked the IEEPA in the early-term tariffs on Canada, Mexico and China as well as the reciprocal tariffs. The plaintiffs have also taken issue with Trump’s emergency rationale.
In a lawsuit filed on 14 April 2025 several small businesses reliant on various imported goods are seeking a judgment from the US Court of International Trade declaring that the president lacks the authority to impose tariffs under IEEPA and granting injunctive relief to prevent their enforcement. The court denied the plaintiffs’ request for a temporary restraining order on 22 April 2025 and set a briefing schedule with a hearing set for 13 May 2025.
California joined the fray when it filed a similar suit in the US District Court for the Northern District of California on 16 April 2025. California Attorney General Rob Bonta said in a press release accompanying the complaint that “The President’s chaotic and haphazard implementation of tariffs is not only deeply troubling, it’s illegal. As the fifth largest economy in the world, California understands global trade policy is not just a game.”
The district court is expected to rule on a motion to transfer California’s case to the US Court of International Trade on 22 May 2025. The federal government has argued that the specialty court has exclusive jurisdiction on trade matters.
Other US states appear to share the federal government’s view of the trade court’s jurisdiction. A coalition of 12 US states, led by Oregon, filed a substantially similar suit in the US Court of International Trade on 23 April 2025. The states argued that Trump has “upended the constitutional order and brought chaos to the American economy” via his claimed “authority to impose immense and ever-changing tariffs on whatever goods entering the United States he chooses, for whatever reason he finds convenient to declare an emergency.”