Trump, Tariffs and Turmoil: The Impacts of Donald Trump’s Trade Policies on Global Business
Since taking office, President Donald Trump has introduced a slew of tariffs on goods entering the US. His recent measures include imposing a 25% tariff on goods entering from Canada and Mexico, key US trading allies. This follows the introduction of a 25% tariff on all US steel and aluminium imports, drawing condemnation from affected trading partners. In response, Canada has announced 25% tariffs on nearly $20 billion worth of US products, whilst the EU plans to introduce levies on up to $28 billion worth of US goods.[1]
Trump has also fulfilled his promise to impose hefty tariffs on Chinese goods, with a further 10% tariff on all Chinese imports to the US after the initial 10% levy imposed upon his taking office.[2] His latest confrontation includes a threat of a 200% tariff on alcohol from the EU following the bloc's announcement of retaliatory tariff measures.[3]
Background
Tariffs are taxes charged on goods imported from other countries, with the companies bringing foreign goods into the country paying the tax to the government. Typically, these taxes represent a percentage of a product’s value. For example, a 20% tariff on Chinese goods means a product worth $10 has an additional $2 charge applied.[4]
These trade measures were a central component of Trump's presidential election campaign. The President maintains that tariffs will boost US manufacturing, protect domestic jobs, raise tax revenue, and stimulate economic growth. His administration aims to reduce the US’s large trade deficit, or the gap between US imports and exports.[5]
The legal concerns for companies
The trade war exacerbated by Trump’s protectionist policies and rhetoric will primarily impact areas including international trade and tax law, company law, commercial and contract law and projects and infrastructure law. These developments will likely encourage demand for law firms with specialities in these areas and a strong international presence due to these tariffs impacting global business activities.
Law firms wanting to capitalise on these developments may actively strengthen their service offerings. They may adopt measures including increased lateral hiring or establishing branches or partnerships in growing markets. They may also restructure by cutting services or closing offices in weak markets to fund growth in other jurisdictions.
Customs, Excise, International Trade and Tax
The fluctuating international trade landscape has created substantial uncertainty for businesses. Companies face the complex challenge of navigating an ever-changing regulatory environment as the US and impacted countries impose tariffs and counteract with retaliatory measures. Indeed, this shifting trade landscape has caused US stocks to drop as companies become more uncertain about future trading relations.[6] Impacted businesses will likely seek advice on their tax and other international trade obligations as tariffs are introduced, responded to, scaled back or removed altogether[7] to avoid the financial repercussions of non-compliance.
Corporate and Company Law
The tariff regime has significant implications for corporate structuring decisions. Companies with established manufacturing partnerships or operations in China, Canada, Mexico, and the EU now face increased costs when importing goods into the US market. These tariffs can significantly increase production costs, affecting the bottom-line for businesses and the prices paid by consumers.
Many companies are now exploring opportunities to establish subsidiaries or form partnerships in countries with lower tariffs to mitigate import costs into the US. For example, some companies have chosen to divest from China and invest in alternative jurisdictions in Southeast Asia and Eastern Europe to mitigate tariff costs.[8] Such companies would likely require legal advice surrounding making foreign direct investments, with these firms aiming to understand the regulatory landscape of the jurisdictions they are looking to invest in.
Contracts and Commercial Agreements
The imposition of tariffs has created complex contractual challenges for many businesses. As Skadden notes, "Parties confronted by the prospect of new tariffs will need to assess their impact on existing contractual obligations".[9] Companies with overseas manufacturing may consider redrafting contracts to reflect changes in trading conditions. Alternatively, companies may terminate contracts, arguing that the tit-for-tat tariffs qualify as “force majeure” events beyond the contractual parties’ control.[10] Companies will likely require legal services to comprehensively review all relevant contracts to determine how the tariffs impact their rights and obligations.
Companies looking to establish trading relations with parties in alternative jurisdictions with lower tariffs may also look to safeguard themselves against future tariffs through their contracts. Businesses may choose to include a “change in laws or taxes” clause in their contracts, which allow for price adjustments when the cost of goods or services changes due to new laws or taxes after contract formation.[11]
Projects and Infrastructure
The tariff landscape has implications for companies' strategic infrastructure investments. Some businesses may consider relocating manufacturing and production facilities to the US to avoid hefty tariffs on operations abroad. For example, following Donald Trump’s re-election, Apple has announced plans to invest more than $500 billion in the US over the next four years,[12] with semiconductor giant TSMC also making a similar $100-billion investment pledge.[13] This shift creates opportunities for projects and infrastructure lawyers who can facilitate the construction of new infrastructure for these companies. These lawyers will be crucial for tasks such as gaining local planning permissions for construction, drafting contracts for sub-contractors, and ensuring that construction complies with health and safety and environmental and energy regulations.[14]
Conclusion
Trump's tariff policies have created a complex web of commercial law challenges for global businesses. Companies must navigate regulatory changes, reassess supply chains, review contractual obligations, and reconsider strategic investments. As this trade landscape continues to evolve, businesses will increasingly rely on legal expertise to mitigate risks and identify opportunities. The full economic impact of these tariffs remains to be seen, but their legal implications are already reshaping corporate strategies worldwide.
[1] Jennifer Clarke, ‘What are tariffs and why is Trump using them?’ (BBC News, 3 February 2025) <What are tariffs, why is Trump using them, and will prices rise? - BBC News> accessed 17 March 2025.
[2] Natalie Sherman, ‘Trump says US will impose additional 10% tariff on China’ (BBC News, 27 February 2025) <Trump says US will impose additional 10% tariff on China - BBC News> accessed 16 March 2025.
[3] Natalie Sherman & Farea Masud, ‘Trump threatens 200% tariff on alcohol from EU’ (BBC News, 13 March 2025) <Trump threatens 200% tariff on alcohol from EU - BBC News> accessed 18 March 2025.
[4] Clarke (n1).
[5] Ibid.
[6] Max Zahn, ‘Stocks tumble as Trump tariffs create ‘uncertainty’ in markets’ (ABC News, 4 March 2025) <Stocks tumble as Trump tariffs create 'uncertainty' in markets - ABC News> accessed 18 March 2025.
[7] Shannon Pettypiece, ‘Trump walks back tariffs on a range of goods from Mexico and Canada for one month’ (NBC News, 6 March 2025) <Trump walks back tariffs on a range of goods from Mexico and Canada for one month> accessed 18 March 2025.
[8] ‘Looking Ahead: Risk-Based M&A - Selling Out of Political Risk’ (Baker McKenzie, 3 February 2025) <Looking Ahead: Risk-Based M&A – Selling Out of Political Risk | Insight | Baker McKenzie> accessed 18 March 2025
[9] Julie Bedard, Jennifer Permesly, ‘Impact of Tariffs on Commercial Contracts’ (Skadden, 11 February 2025) <Impact of Tariffs on Commercial Contracts | Insights | Skadden, Arps, Slate, Meagher & Flom LLP> accessed 17 March 2025.
[10] ‘Does Your Force Majeure Clause Provide Refuge From Trump’s Threatened Tariffs?’ (Dentons, 28 January 2025) <https://www.dentons.com/en/insights/alerts/2025/januar> accessed 17 March 2025.
[11] Jonathan Ellis, Nick Boyle, Tim Nicholls, ‘Accounting for tariffs in commercial contracting: Practical considerations’ (Bird & Bird, 18 February 2025) <https://www.twobirds.com/en/insights/2025/australia/accounting-for-tariffs-in-commercial-contracting> accessed 17 March 2025.
[12] Natalie Sherman, ‘Apple commits to $500bn US investment’ (BBC News, 24 February 2025) <Apple commits to 'largest ever' $500bn US investment - BBC News> accessed 15 March 2025.
[13] David Shepardson and Steve Holland, ‘Trump and TSMC announce $100 billion plan to build five new US factories’ (Reuters, 4 March 2025) <Trump and TSMC announce $100 billion plan to build five new US factories | Reuters> accessed 15 March 2025.
[14] ‘What to expect from the second Trump presidency: 2025 and beyond (Davis Polk, 19 December 2024) <What to expect from the second Trump presidency: 2025 and beyond | Davis Polk> accessed 19 March 2025.
