Policy Risk Monitor – February 21, 2025

A weekly news scan of key policy areas to help firms identify and monitor policy risks.

Trump Executive Orders

Trump Seeks Direct Control of Independent Agencies with Executive Order

President Donald Trump is seeking more authority to shape the regulation of the financial system through additional review of “independent agencies.” In his executive order, “Ensuring Accountability for All Agencies,” Trump states that it is “the policy of the executive branch to ensure Presidential supervision and control of the entire executive branch.” The order states that “all executive departments and agencies, including so-called independent agencies, shall submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication in the Federal Register.” Independent agencies include the Federal Trade Commission (FTC), Federal Communications Commission (FCC), and Securities and Exchange Commission (SEC). The order exempts the Federal Reserve.

Trump Issues Executive Order Implementing DOGE “Deregulatory Initiative”

President Donald Trump issued on executive order titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.” The memo directs the heads of government agencies to “in coordination with their DOGE Team Leads and the Director of the Office of Management and Budget, initiate a process to review all regulations subject to their sole or joint jurisdiction for consistency with law and Administration policy.” The review is to be completed within 60 days. The order also directs agencies to “consult with their DOGE Team Leads and the Administrator of OIRA on potential new regulations as soon as practicable.”

Trump “America First Investment Policy” Restricts Investment from China

President Donald Trump is looking to “fast track” inbound investment from allies while restricting Chinese investment into the United States with a more active use of the Committee on Foreign Investment in the United States (CFIUS). In his February 21, 2025 memorandum on an “America First Investment Policy,” Trump states that the United States “will create an expedited ‘fast-track’ process, based on objective standards, to facilitate greater investment from specified allied and partner sources in United States businesses involved with United States advanced technology and other important areas. The memo also states that the United States “will use all necessary legal instruments, including the Committee on Foreign Investment in the United States (CFIUS), to restrict PRC-affiliated persons from investing in United States technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.” The administration will also seek to “strengthen CFIUS authority over ‘greenfield’ investments, to restrict foreign adversary access to United States talent and operations in sensitive technologies (especially artificial intelligence), and to expand the remit of ‘emerging and foundational’ technologies addressable by CFIUS.” The administration will also review potentially expanding restrictions on U.S. “outbound investment in the PRC in sectors such as semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy.”

Trump Considers Tariffs to Retaliate for Digital Servies Taxes

President Donald Trump is considering tariffs on countries that impose digital services taxes on U.S. technology firms. In the memo, “Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties,” Trump said it is his administration’s policy “that where a foreign government, through its tax or regulatory structure, imposes a fine, penalty, tax, or other burden that is discriminatory, disproportionate, or designed to transfer significant funds or intellectual property from American companies to the foreign government or the foreign government’s favored domestic entities, my Administration will act, imposing tariffs and taking such other responsive actions necessary to mitigate the harm to the United States and to repair any resulting imbalance.” The memo directs the U.S. Trade Representative (USTR) to determine “whether to renew investigations under section 301 of the Trade Act of 1974 (19 U.S.C. 2411) of the DSTs of France, Austria, Italy, Spain, Turkey, and the United Kingdom, which were initiated under my Administration on July 16, 2019, and June 5, 2020.” It also directs the USTR to determine “whether to pursue a panel under the United States-Mexico-Canada Agreement on the DST imposed by Canada and whether to investigate Canada’s DST under section 302(b).”

Tax

Senate Passes Budget Resolution

The Senate passed its budget resolution 52-48, largely along party lines. The Senate Budget Committee released the budget plan last week as the groundwork for an approximately $340 billion budget reconciliation bill that includes $175 billion on border security and immigration enforcement and $150 billion in defense spending. Senate Budget Committee Chair Lindsey Graham is pursuing a two-bill reconciliation strategy that would focus on extending the expiring provisions in the Tax Cuts and Jobs Act (TCJA) in a second bill later in the year. Notably, the Senate budget resolution introduces a “current policy” revenue baseline that assumes that the TCJA tax cuts will be extended with no impact to the deficit. The vote puts the Senate ahead of the House in competing strategies to pass Republican legislative priorities.

Trump Endorses House Budget Resolution and One-Bill Strategy

President Trump sided with the House of Representative’s budget approach. The House Budget Committee last week advanced a budget resolution for one bill that would include a tax cut of up to $4.5 trillion over the next 10 years and at least $1.2 trillion in spending cuts. It also sets a goal to reduce mandatory spending by $2 trillion over the next 10 years, with a reduction in the tax cuts if the spending goal is not met. The budget also includes a $4 trillion increase in the debt limit. The House is pursuing a single bill that includes tax cuts, spending cuts, and national security spending. Republicans prefer to pass “one big, beautiful bill” that would also include the extension of the expiring TCJA provisions.

Trump Supports DOGE Investigation of IRS

President Donald Trump expressed support for the Department of Government Efficiency’s (DOGE) investigation of the Internal Revenue Service. “[T]he Internal Revenue Service will be looked at like everybody else, Trump said. DOGE has also sought access to IRS systems that contain financial information on U.S. taxpayers. Additionally, the IRS laid off approximately 6,700 probationary workers in Washington and around the country.

Trade

Trump Considering 25% Tariffs on Cars, Chips, and Pharmaceuticals

President Donald Trump said he will impose tariffs “in the neighborhood of 25%” on automobiles, semiconductors, and pharmaceuticals. Trump said the tariffs on autos would be implemented by April 2, after the completion of the administration’s trade policy review on April 1. Trump also said the tariffs would “go very substantially higher over the course of the year” to give companies time to move production to the United States.

Japan Requests Exemption from U.S. Reciprocal Tariffs

Japan has requested to be excluded from the reciprocal tariffs. Foreign Minister Takeshi Iwaya requested the tariff exemption when he met with Secretary of State Marco Rubio during the Munich Security Conference. He also discussed automobile tariffs and the 25% tariff on steel and aluminum imports.

EU Ready to Discuss Cutting Auto Tariffs

The EU is ready to discuss cutting tariffs on autos and other goods to avoid a trade war with the United States. “Lowering the tariffs, even eliminating the tariffs let’s say for industrial products, this is something which we are ready to discuss,” EU trade commissioner Maros Sefcovic said. “Including ready to look at the tariffs for the cars.”

Senate Confirms Lutnick as Commerce Secretary

The Senate confirmed Howard Lutnick as commerce secretary by a vote of 51-45. Lutnick is viewed as a supporter of Trump’s trade and tariff policies.

WTO Holds “Constructive” Talks

The World Trade Organization (WTO) said it had "constructive" discussions on global trade tensions. Six countries participated in the talks that focused on trade tensions and called for restraint. The United States, Nicaragua, Namibia, Malaysia, Trinidad and Tobago and Russia participated in the discussions.

South Korea Could Implement Tariffs on Chinese Steel

South Korea is seeking to implement a provisional tariff of 38.02% on hot-rolled steel plates imported from China, Bloomberg reported. South Korea’s steel industry is concerned over an influx of cheaper products flooding the market.

U.S.-China

Trumps Says New Trade Deal with China is “Possible”

President Trump said it is “possible” to reach a new trade deal with China. “We did a great trade deal with China, great for the farmers, great for the manufacturers,” Trump said. “They had to buy $50 billion worth of our product and we were making them buy it. The problem is that Biden didn't push them to adhere to.” Trump did not provide any details on what a new deal could cover. He also stated that he has a “great” relationship with Chinese President Xi Jinping.

China Restricting Exports of Technology, Critical Minerals, and Engineers

China has proposed new export controls on battery technologies and restricted the export of technologies for processing critical minerals, the Financial Times reported. The government has also made it more difficult for some engineers and equipment to leave the country. The country plans to prohibit non-state companies from mining rare earths, Bloomberg reported.

Energy

Trump Establishes “National Energy Dominance Council”

President Donald Trump issued an executive order to establish the National Energy Dominance Council with the Secretary of the Interior as Chair and Secretary of Energy as Vice Chair. The council is to advise the president on a variety of issues, including on “how best to exercise his authority to produce more energy to make America energy dominant.” The council is also to advise the President on “improving the processes for permitting, production, generation, distribution, regulation, transportation, and export of all forms of American energy, including critical minerals.” Another key activity is providing a “recommended National Energy Dominance Strategy to produce more energy that includes long-range goals for achieving energy dominance by cutting red tape, enhancing private sector investments across all sectors of the energy-producing economy, focusing on innovation, and seeking to eliminate longstanding, but unnecessary, regulation.”

U.S. and European Energy Companies Could Face Uranium Supply Shortages

U.S. and European energy companies could be at growing risk from a uranium supply shortage stemming from increased demand for nuclear power, the Financial Times reported. Kazakhstan, which is the world’s largest uranium supplier, sells more to Russia and China and is selling less to the United States and Europe.

Trump and Modi Agree to Make India a Leading Buyer of U.S. Energy

President Donald Trump and Indian leader Narendra Modi agreed to increase U.S. oil and gas exports to India as part of efforts to rebalance the two countries’ trade relationship, the Financial Times reported. Russia is currently India’s main supplier of crude oil and Qatar is its largest supplier of liquefied natural gas (LNG). The United States is the world’s largest LNG exporter and supplied a fifth of India’s LNG in 2024.

U.S. Seeks to Reduce Iran’s Oil Exports to 10%

Treasury Secretary Scott Bessent said the United States will reduce Iran’s oil exports to less than 10 percent of current levels under a campaign of “maximum pressure” on its nuclear program. “We are committed to bringing the Iranians to going back to the 100,000 barrels-a-day of oil exports” during Trump’s first term, according to RigZone.

Climate

Congress to Review California’s Recent Emissions Waivers

The U.S. Environmental Protection Agency (EPA) Administrator Lee Zeldin announced that the EPA would send three California vehicle emissions waiver rules to Congress for review under the Congressional Review Act (CRA). The rules—Advanced Clean Cars II, Advanced Clean Trucks, and Omnibus NOx rules—could be repealed.

Geopolitics

U.S. and Russia agree to “Begin Working on a Path” to End Ukraine War

U.S. and Russian senior officials met in Saudi Arabia to begin talks aimed at negotiating an end to the war in Ukraine. The two sides agreed to “lay the groundwork for future co-operation” on ending the Ukraine war. Secretary of State Marco Rubio said the United States will keep sanctions on Russia until they reach a deal to end the war. Treasury Secretary Scott Bessent said that the United States would adjust sanctions based on Russia’s willingness to negotiate. Trump, meanwhile, called Ukraine’s President Volodymyr Zelensky “a dictator,” and Zelensky said Trump “lives in this disinformation space.”

Ukraine Rejects U.S. Bid for Ownership of Rare Earth Minerals

Ukrainian President Volodymyr Zelenskyy rejected a U.S. bid for ownership of 50% of the rights to rare earth minerals in Ukraine, the Financial Times reported. Treasury Secretary Scott Bessent offered Zelenskyy the deal during a visit to Kyiv. President Trump had earlier said the United States should receive “rare earth” elements from Ukraine in exchange for military assistance. Zelenskiy wants to tie U.S. and European security guarantees to any deal on the mineral reserves. Ukraine has up to $11.5 trillion in deposits of critical minerals, including lithium, graphite, cobalt, titanium and rare earths such as scandium, according to the Financial Times.

United States Declares Mexican Cartels Terrorist Organizations

The U.S. State Department declared several Mexican drug cartels as terrorist organizations. The designation is part of the Trump administration’s move against immigration and fentanyl coming from Mexico into the United States.

EU Considering Redirecting Funds to Defense Sector

The EU is considering redirecting €93 billion in pandemic recovery funds into its defense sector, the Financial Times reported. The EU is looking to increase defense spending after the Trump administration warned that the U.S. could withdraw military support from Europe.