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06/16/2014 | Bill Krist | Woodrow Wilson Center for Scholars

Are President Trump’s Trade Actions Exempt from the Administrative Procedure Act?

On March 14, 2025, Secretary of State Marco Rubio issued a memorandum in the Federal Register that all agency actions involving trade, specifically “the transfer of goods, services, data, technology, and other items across the borders of the United States” are “foreign affairs functions,” and thus are exempt from the Administrative Procedure Act (APA).

Enacted in 1946, the APA governs how federal agencies can issue regulations. The APA establishes specific procedures, such as a public comment period, that federal agencies must follow when they engage in administrative action, such as issuing new rules and regulations, adjudication of licenses, or interpretation of existing regulations. In addition, the APA provides standards for judicial review of an agency action, enabling courts to strike down actions if they find that their substance or procedural history fails to meet APA standards. 

However, the APA excludes certain agency functions from its procedural requirements and judicial standards, including actions involving “military or foreign affairs functions” under Title 5, Sections 553(a)(1) and 554 (a)(4) of the U.S. Code. In short, the Rubio memorandum is an effort to protect most of President Trump’s actions on trade, illegal immigration, export controls, artificial intelligence, and espionage from procedural requirements and judicial review by pulling these under the umbrella of the “foreign affairs” exception. 

Doing so would insulate the administration from having trade-related agency actions struck down in the courts because of “process fouls”—procedural errors in conducting an agency action. For example, agency actions involving trade would no longer be exposed to potential “arbitrary and capricious” claims under Title 5, Section 706, of the U.S. Code, which allow courts to strike down agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. In other words, agency actions can be struck down when they are so far-fetched that they appear to lack any reasonable basis, do not consider relevant factors, or demonstrate a clear error of judgment. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). These agency actions would still remain subject to tests of constitutionality or compliance with applicable laws.

The first Trump administration frequently ran into process fouls, and so far, the new administration gives every sign of having the same problem. In its first two months, the administration has already run into a burst of unfavorable court rulings.

Given the administration’s focus on implementing new trade actions with respect to China, Mexico, Canada, and others, it is unsurprising that it would take steps to shield these actions from judicial challenges. Still, the Rubio memorandum raises the question of whether existing trade laws are, in fact, subject to the APA, and, if so, whether the secretary’s memo will make any difference. The short answer is that some trade laws are subject to the APA, and some are not. It is not clear whether the memo would force any significant changes.

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03/31/2025 | Warren Maruyama, Meghan Anand & William Alan Reinsch | CSIS

Global Trade Update (March 2025)

The March 2025 edition examines tariffs and their impact on global trade. As an important trade policy tool, tariffs serve as a mechanism to protect domestic industries and generate government revenue.

However, high import duties can increase costs for businesses and consumers, potentially stifling economic growth and competitiveness. Policymakers must strike a balance between leveraging tariffs for economic development and integrating into the global economy through trade liberalization.

The report also presents new trade data and projections across regions, industries and sectors, covering 2024 and early 2025. While global trade reached a record $33 trillion last year, the outlook for 2025 remains uncertain.

Key takeaways on tariffs

• Today, about two-thirds of international trade occurs without tariffs, either because countries have chosen to reduce duties under most-favoured-nation (MFN) treatment or through other trade agreements.
• However, tariff levels applied to the remainder of international trade are often very high, with significant differences across sectors. Agriculture remains highly protected, manufacturing still encounters trade barriers in key industries, while raw materials generally benefit from low tariffs.
• Developing countries face higher duties that limit market access. Agricultural exports from these nations face import duties averaging almost 20% under (MFN) treatment. Meanwhile, textiles and apparel remain subject to some of the highest tariff rates (import duties average close to 6%), limiting developing countries’ competitiveness in these industries.
• South-South trade (trade between developing countries) still faces high tariffs. For example, trade between Latin America and South Asia faces an average tariff of about 15%.
• Tariff escalation discourages developing economies from exporting value-added goods, hindering industrialization. This refers to the practice of applying higher tariffs on finished goods than on raw materials or intermediate inputs. Designed to protect domestic industries, this tariff structure also discourages manufacturing in countries that produce raw materials, creating a disincentive to move up the value chain.

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03/14/2025 | United Nations Trade and Development

Tariffs Will Destroy the Best Cure for the Trade Deficit

Trump’s upcoming tariff barrage is supposed to reduce trade deficits by cutting out imports. Forgotten amid all the administration’s threats and justifications is the other side of the trade equation. More exports not only reduce deficits but also bring broader economic benefits through higher-paying jobs and greater innovation. Yet in a world of global supply chains, boosting exports means upping imports as well. Widespread tariff hikes will also hold back US-based exporters.

The US is not a big trader. Just a fourth of its economy comes from international exchanges, far behind other OECD countries, in which trade averages closer to two-thirds of total economic output. And unlike in most other nations, trade’s importance in the US economy has been falling in recent years.

Still, the US sells some $3 trillion a year worth of goods and services to the world, supporting roughly 10 million US jobs. It is a major commodity exporter, selling nearly $700 billion in oil, gas and coal as well as grains, soybeans, meat and more every year. It also sells more than a trillion dollars annually in high-end services abroad, including software, advertising, movies and airline flights that ferry tens of millions of global travelers.

International sales present big growth opportunities for US-based companies and workers. While US economic growth has recently outpaced other high-income countries and even many emerging economies, the US customer base is just 4% of the globe’s population. And the next billion newly minted middle class will live elsewhere — mostly in Asia. Whether growing food, building planes or creating online games, companies that cater only to the domestic market have a limited runway for future growth.

Moreover, export-oriented jobs, particularly those in manufacturing, tend to pay more. According to the US International Trade Commission, workers in export industries earn 16% more than their domestically-oriented counterparts. And export-oriented operations tend to create more job opportunities than domestically focused industries.

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03/31/2025 | Shannon K. O’Neil | Council on Foreign Relations

Trump’s Tariffs and Latin America

This piece at Americas Quarterly includes reactions to President Trump’s tariffs announcements on April 2.

Sergio Luna

Luna is an economist from UNAM with an M.Sc and Ph.D. in economics from the University of London. He’s Grupo Financiero Mifel’s chief economist.

There’s a big sigh of relief south of the border. With “reciprocal tariffs” meaning a hefty 34% for China, 20% for the EU, and a 10% baseline tariff, keeping Mexico and Canada at “just” 25% tariffs on import content not covered by the USMCA has everyone in Mexico talking about the benefits of trade diversion (although no one uses that word). The foreign exchange market seems to concur, as it ended “Liberation Day” with the Mexican peso as the third-best performer vs. the U.S. dollar.

My back of the envelope calculation is that the weighted tariff for motor vehicles crossing from Mexico to the U.S. will rise from 0.6% to 6%. Agro-industrial exports (already more prominent than oil & mining exports at 9.4% of the total) should be little affected since, apparently, we go back to the definition of regional – rather than U.S. – content rules for USMCA qualification. In the case of electronic goods, calculations are more complicated but since only about 37% of their export value is local content, the tariff increase should be higher. Still, it should compare favorably with that applied to ASEAN countries, for instance.

Antonio Ortiz-Mena

CEO of AOM Advisors, Adjunct Professor of International Economic Relations at Georgetown University’s Walsh School of Foreign Service and Chair of the Mexican Foreign Trade Council (COMCE)‘s USMCA Committee.

The U.S. has implemented tariffs on a wide range of imports from its trade partners, with some exceptions for goods that comply with the USMCA agreement. These tariffs aim to strengthen the U.S.’s position in the global economy, protect American workers, and promote domestic production of certain goods. Additionally, the tariffs are intended to reduce the U.S. trade deficit and generate revenue that could help offset the expected loss in tax revenue due to anticipated domestic tax cuts. Given the complexity and scale of these measures, it will take months—or even years—before their full impact becomes clear. However, several potential outcomes can be anticipated.

One possibility is that the U.S.’s trade partners will respond by reducing some tariffs and non-tariff barriers that currently restrict U.S. exports. In turn, the U.S. may then reduce its own tariffs, leading to more open and reciprocal trade. While this scenario remains plausible, another potential outcome is that some countries might challenge the legitimacy of unilateral tariff increases, either at the World Trade Organization (WTO) or through regional trade agreements. In response, these countries might impose higher tariffs on U.S. exports, especially impacting the U.S. agricultural and services sectors. Such retaliatory measures could undermine the U.S.’s goal of reducing its trade deficit.

Luíza Pinese

Pinese is an economist focused on balance of payments analysis for the macroeconomics team at XP Investimentos in São Paulo.

President Trump’s tariff decision was based on the overall trade deficits the United States runs with each trading partner, rather than the effective tariff imposed on specific products. Given that Brazil maintains a roughly balanced trade position with the U.S., it was assigned just the baseline 10% additional tariff. That was a better-than-expected outcome. The market reaction in Brazil has been quite positive, reflecting a sense of relief and that Brazil could be a relative “winner” in the global trade war (more below). That said, Brazilian exports to the United States are expected to decline in absolute terms, as some products may be replaced by U.S.-made alternatives.

From a macroeconomic perspective, the direct effect is likely to be limited. Exports account for some 18% of Brazil’s GDP, and sales to the U.S. represent about 12% of total exports—thus, 2.2% of GDP. However, on the microeconomic level, the consequences may be more significant, especially in sectors where the U.S. is a dominant buyer, such as iron and steel, aircraft, and ethanol.

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04/03/2025 | Sergio Luna, Antonio Ortiz-Mena & Luíza Pinese | Americas Quarterly