Reciprocal Trade and Tariffs – Presidential Actions

February 13, 2025

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Action Summary

Background: Highlights the U.S. open economy and low tariff rates, noting that non-reciprocal trade practices by foreign partners contribute to a large annual trade deficit which undermines economic strength, industrial base, and national security.
Policy Initiative: Introduces the “Fair and Reciprocal Plan” to counter unfair trade practices by determining equivalent reciprocal tariffs for each trading partner and addressing unfair taxes, nontariff barriers, subsidies, wage suppression, and other mercantilist policies.
Implementation Actions: Directs the Secretary of Commerce, the U.S. Trade Representative, and other key officials to investigate non-reciprocal trade arrangements and report proposed remedies; mandates the Director of the Office of Management and Budget to assess fiscal impacts within 180 days.
Definitions: Clarifies critical terms such as “value-added tax” (a consumption tax on the incremental value added at each supply chain stage) and “nontariff barrier” (measures that restrict international trade).
General Provisions: Ensures that the memorandum does not impair existing agency authorities, confirms adherence to applicable laws and available appropriations, and authorizes publication in the Federal Register.

Risks & Considerations

The introduction of the “Fair and Reciprocal Plan” could lead to increased tariffs and trade barriers, potentially affecting the cost and availability of imported goods and services. This may impact Vanderbilt University’s procurement processes and the cost of materials, particularly those sourced internationally.
Changes in trade policies could affect international collaborations and partnerships, especially those involving research and development with foreign institutions. This may necessitate a reevaluation of existing agreements and strategies to mitigate potential disruptions.
The focus on reducing the trade deficit and addressing non-reciprocal trade arrangements may lead to retaliatory measures from trading partners, which could impact the global economic environment and, by extension, the university’s international programs and student exchanges.
Vanderbilt University may need to consider the implications of these trade policies on its international student body, as changes in economic conditions and trade relations could influence enrollment patterns and the diversity of the student population.

Impacted Programs

Vanderbilt’s International Programs may need to adapt to changes in trade policies, particularly in terms of student exchanges and collaborations with foreign universities.
The Office of Procurement might face challenges in sourcing materials and services from international suppliers, potentially leading to increased costs and the need for alternative sourcing strategies.
Research Centers focusing on international trade, economics, and policy may find new opportunities for research and analysis, contributing to the understanding of the impacts of these trade policies.
The Office of Global Safety and Security may need to assess the risks associated with international travel and partnerships in light of potential geopolitical tensions arising from these trade policies.

Financial Impact

Increased tariffs and trade barriers could lead to higher costs for imported goods and services, affecting the university’s budget and financial planning.
Potential changes in the global economic environment may influence the availability of international funding and grants, impacting research and development initiatives at Vanderbilt.
The university may need to allocate resources to address the challenges and opportunities presented by these trade policies, including potential investments in alternative sourcing and risk management strategies.
There could be implications for tuition revenue if changes in trade policies affect the enrollment of international students, necessitating adjustments in financial aid and scholarship offerings.

Relevance Score: 4 (The memorandum presents a need for potential major changes or transformations of programs and strategies at Vanderbilt University.)

Key Actions

Vanderbilt’s Office of Federal Relations should monitor developments in trade policies, particularly those related to reciprocal tariffs and non-reciprocal trade arrangements. Understanding these changes can help the university anticipate potential impacts on research funding and international collaborations.
The Owen Graduate School of Management could explore research opportunities related to the economic implications of the “Fair and Reciprocal Plan.” This could include studies on how changes in trade policies affect industries and markets, providing valuable insights for policymakers and businesses.
Vanderbilt’s International Programs Office should assess how changes in trade policies might impact international students and faculty, particularly those from countries affected by new tariffs or trade barriers. This assessment can guide the university in providing support and resources to affected individuals.
The Department of Economics should consider conducting research on the broader economic impacts of the United States’ trade deficit and the effectiveness of reciprocal tariffs. This research can contribute to academic discourse and inform public policy debates.

Opportunities

The emphasis on addressing non-reciprocal trade arrangements presents an opportunity for Vanderbilt’s Law School to engage in legal research and analysis of international trade laws and agreements. This could enhance the university’s reputation as a leader in international trade law education and research.
By leveraging its expertise in economics and international relations, Vanderbilt can position itself as a thought leader in discussions on trade policy reform. Hosting conferences and workshops on the implications of the “Fair and Reciprocal Plan” can attract scholars, policymakers, and industry leaders to the university.
The focus on reducing the trade deficit aligns with Vanderbilt’s commitment to economic research and innovation. The university can develop partnerships with industry and government to explore innovative solutions to trade imbalances and their impact on the U.S. economy.

Relevance Score: 3 (Some adjustments are needed to processes or procedures to align with potential changes in trade policies and their impact on the university’s operations and research initiatives.)

Average Relevance Score: 3.2

Timeline for Implementation

Within 180 days of the memorandum date, the Director of the Office of Management and Budget is required to assess fiscal impacts and deliver the assessment in writing to the President.

Relevance Score: 1

Impacted Government Organizations

Department of the Treasury: Tasked with collaborating in assessing and reporting on the impacts of non-reciprocal trade arrangements and tariffs, and in formulating the reciprocal tariff strategy.
Department of Commerce: Plays a pivotal role in coordinating with other agencies and initiating investigations into non-reciprocal trade practices as part of the “Fair and Reciprocal Plan.”
Department of Homeland Security: Involved in the consultation process regarding trade practices and the impact on national security, as specified in the memorandum.
Office of Management and Budget (OMB): The Director is tasked with assessing the fiscal impacts on the Federal Government and impacts related to information collection requests regarding this policy.
United States Trade Representative (USTR): Charged with working in conjunction with other agencies to investigate and report on the harms stemming from non-reciprocal trade practices and to publish the memorandum in the Federal Register.
Office of the Assistant to the President for Economic Policy: Involved in consultations concerning the evaluation of the economic impact of non-reciprocal trade practices.
Office of the Senior Counselor to the President for Trade and Manufacturing: Responsible for advising on trade-related policies and collaborating with the USTR and other agencies on the action plan.

Relevance Score: 3 (Six to ten executive agencies are explicitly impacted by the memorandum.)

Responsible Officials

Secretary of the Treasury – Consulted for financial and fiscal policy elements related to trade imbalances.
Secretary of Commerce – Charged with leading the investigation into non-reciprocal trade practices and coordinating with other agencies.
Secretary of Homeland Security – Provides input on potential national security impacts arising from trade practices.
Director of the Office of Management and Budget – Responsible for assessing fiscal impacts and reviewing information collection burdens within 180 days.
United States Trade Representative – Tasked with investigating and reporting on non-reciprocal trade arrangements, in consultation with the Secretary of Commerce and others.
Assistant to the President for Economic Policy – Engaged in the consultation process to ensure economic policy considerations are integrated.
Senior Counselor to the President for Trade and Manufacturing – Provides expertise on trade and manufacturing implications during the investigation.

Relevance Score: 5 (Directives affect multiple Cabinet-level and White House officials, ensuring high-level strategic oversight).