Lobbyists Say Reciprocal Tariffs Could Come in June

John Strom, special counsel at the firm, said Feb. 26 that he doesn't know if there will be 25% tariffs on Canadian and Mexican goods on March 4 -- which is also the date of Trump's first speech to Congress.

"We are getting to very, very low [illegal crossing] numbers at the southern border," he said during the webinar, hosted by In-House Connect. And he said that Canada also has made serious efforts on its border security. "So there is a possibility that the March 4 tariffs get postponed again." He also wouldn't rule out the possibility that they are imposed in six days.

Strom said setting tariffs on a product-by-product basis for each trading partner "is going to be extremely, extremely complex to implement," and that taking value-added taxes into consideration further complicates that calculus. Would a bump to tariff levels past the trading partner's most favored nation rate only apply to countries that exempt exports from the VAT?

An hour after Strom spoke, President Donald Trump seemed to suggest that the U.S. wouldn't actually impose tariffs to match others' MFN tariffs, but that there would be a blanket number based on what he thinks is fair (see 2502260032). He said that there will be a 25% tariff on EU goods, for instance.

However the tariffs shake out, Strom predicted there would be a "much more tailored and narrow exemption process. Some of the president’s advisers take the view that the tariffs that were done last time, there were too many exceptions," which undermined policy goals and "made them extremely difficult and time-consuming to administer."

However, Strom told listeners, approaching a Republican member of Congress where your firm is headquartered, or where you have a major manufacturing plant, could help you secure an exclusion.

"Congress can still influence the administration through formal and informal means," he said in the presentation. "The more the president and key administrative officials hear from congressional allies, the better the chance of getting an exemption process."

When asked by International Trade Today if the end result of the reciprocal tariff push could be liberalized trade between the U.S. and some trading partners in certain products that the president values -- cars, motorcycles, U.S. agriculture exports -- Strom said, "that kind of breakthrough is probably a year or two away at the earliest."

But, he predicted, even if there are short-term disruptions in auto trade, he thinks the North American car production ecosystem will continue much as it has, with perhaps a requirement that more of the value of a car made in Mexico come from U.S. parts. To try to untangle the North American production platform "could be very, very tricky."

Exactly what the administration is prepared to do will be clearer after the America First Trade memo reports are released in April, he said.

"You should not discount the seriousness of this threat, and candidly the extent to which the administration is taking feedback from members of Congress, is taking feedback from companies. … it’s not that the policy is sort of set in stone," he said.

He said if tariff announcements or tariff implementation cause the stock market to fall, or car prices to increase, or broader inflation, he's not sure if the administration would keep higher tariffs in place.

"I think they would certainly be under a lot of pressure to reverse course," he said. "But there is a real deep desire to bring back as much manufacturing as possible to the U.S.," particularly in higher-value sectors, like cars.

Strom said anyone listening to Trump campaign expected more tariffs. However, he said, "seeing it in action and the speed at which the administration’s acting has been somewhat of a surprise."