Policy Risk Monitor – March 28, 2025
A weekly news scan of key policy areas to help firms identify and monitor policy risks.
Key Policy Developments
Trump Eases Reciprocal Tariffs: Will Offer Exceptions and Not Consider Non-Tariff Barriers
President Trump and White House officials suggested that the reciprocal tariffs, scheduled to be announced April 2, 2025, will be narrower than previously announced.
The White House said the administration will offer exceptions to its reciprocal tariffs and will not take into account all non-tariff barriers in determining the reciprocal tariff rates. Non-tariff barriers include value-added taxes (VAT), wage suppression, and currency manipulation.
President Trump said he “may give a lot of countries breaks” on the reciprocal tariffs. He said reciprocal tariffs would have exemptions and will probably be more “lenient than reciprocal.” He said there will be “some exceptions, and it’s an ongoing discussion, but not too many…”
The reciprocal tariffs will not necessarily be cumulative with existing tariffs, like those on steel and aluminum. The tariffs will likely be limited to the so-called “dirty 15” countries deemed most responsible for unfair commercial practices.
Trump Announces 25% Tariff on Autos and Auto Parts
On March 26, 2025, President Trump announced additional tariffs of 25% on imports of automobiles and automobile parts to address the threat to national security from the “imports of automobiles and certain automobile parts.” The 25% tariff is in addition to any other duties, fees, exactions, and charges on the imported goods. Tariffs on automobiles will be effective on April 3, 2025 and tariffs on auto parts will be effective no later than May 3, 2025. See Trump Announces 25% Tariff on Autos and Auto Parts.
Additional trade policy developments:
Auto tariffs: Trump announced new 25% tariffs on imports of automobiles, effective April 3, 2025, with tariffs on automobile parts following 90 days later.
Sector-specific tariffs: Trump said he will soon announce tariffs targeting automobiles, pharmaceuticals, semiconductors, and lumber in addition to “reciprocal tariffs.” He is expected to exclude sector-specific tariffs at the April 2, 2025 announcement.
Venezuela “secondary tariffs”: Trump also announced that the United States would impose a 25% “secondary tariff” on goods from countries that purchase oil or gas from Venezuela. Trump cited an influx of alleged members of the Venezuelan gang Tren de Aragua in announcing the tariffs. Trump said the 25% tariff would be in addition to existing duties. For China, for example, these could mean a 25% tariff in addition to the 20% tariff imposed earlier in the year.
“Far larger" tariffs on EU and Canada: Trump also threatened "far larger" than planned tariffs on the EU and Canada if they work together to retaliate in response to his tariffs. “If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!,” Trump posted on Truth Social.
Tariff revenue: Commerce Secretary Howard Lutnick said the administration would announce on April 2, 2025 plans for the “External Revenue Service” to oversee tariff collection.
China: Trump said he might reduce tariffs on China in exchange for a TikTok divestiture deal by the April 5, 2025 deadline.
Republicans Prepare Push to Enact Tax Agenda
Republican lawmakers continue to work on reconciling the House and Senate budget resolutions that were passed in February. Lawmakers have spent much of early March working on a deal to avoid a government shutdown. House Speaker Mike Johnson set Memorial Day, May 26, as a deadline for passing a reconciliation package. Meanwhile, Senate Majority Leader John Thune believes there will not be a deal until at least July, and some Republican senators think a deal might take until the fall.
The House’s resolution includes a minimum of $1.5 trillion in spending cuts and $4.5 trillion for tax cuts. The Senate’s budget resolution is focused on providing $325 billion in new military and border security spending. Republican senators are working on changes to the House’s budget resolution, notably with fewer cuts to Medicaid, with the goal to have the House vote on a compromise bill before the recess.
Punchbowl News reported that Republicans are developing a compromise resolution that will include two different budget-cut instructions: a minimum of $3 billion in spending cuts for Senate committees and $1.5 trillion in spending cuts from the House.
Key issues to be resolved include:
Raising the debt ceiling: The Congressional Budget Office will announce by the end of March the date by which the debt ceiling must be raised. The House budget resolution includes an increase in the debt ceiling, and President Donald Trump wants a debt ceiling deal in the eventual tax package.
Spending and tax: Lawmakers must agree on the cuts to Medicaid and other social programs to help fund making the Tax Cuts and Jobs Act tax cuts permanent along with other tax cuts.
Baseline score: current policy versus current law baseline
Indicating growing concerns over the tight margins in the House could be at risk from two special elections in Florida, President Trump withdrew Rep. Elise Stefanik’s nomination to be U.S. ambassador to the United Nations.
Emerging Policy Issues
Trade
Auto
US trading partners warn of retaliation against Donald Trump’s 25% car tariffs, FT, March 27, 2025
Trump Warned U.S. Automakers Not to Raise Prices in Response to Tariffs, WSJ, March 27, 2025
China
China Explores Limiting Its Own Exports to Mollify Trump, WSJ, March 21, 2025
Billion-Dollar US Levies on Chinese Ships Risk ‘Trade Apocalypse’, Yahoo/Bloomberg, March 23, 2025
China says it is ready for ‘shocks’ as Donald Trump’s fresh tariffs loom, FT, March 23, 2025
U.S. blacklists over 50 Chinese companies in bid to curb Beijing’s AI, chip capabilities, CNBC, March 26, 2025
EU
Brussels expects tariffs of about 20% as US sticks to its guns in last-ditch talks, FT, March 26, 2025
EU Readies Robust Toolbox to Counter Imminent Trump Tariffs, Bloomberg, March 27, 2025
Canada
Canadian PM Carney calls snap election, says Trump wants to break Canada, CNBC, March 23, 2025
Mark Carney says old Canada-US relationship is ‘over’, FT, March 27, 2025
Venezuela
Trump’s Threat of ‘Secondary Tariffs’ Invents New Trade Tool, Bloomberg, March 24, 2025
Reciprocal tariffs
Donald Trump considers two-step tariff regime on April 2, FT, March 25, 2025
Exclusive: US pauses financial contributions to WTO, trade sources say, Reuters, March 28, 2025
Metals
Trump Weighs Imposing Copper Import Tariffs in Weeks, Not Months, Bloomberg, March 25, 2025
EU tightens steel import restrictions, Reuters, March 25, 2025
UK
UK in ‘Intensive’ Talks to Fend Off US Tariffs, Reeves Says, Bloomberg, March 27, 2025
EU to Limit Tariff-Free Steel Imports Amid Push to Protect Steelmakers, WSJ, March 25, 2025
Tax
GOP senators warn Trump agenda will be slowed by internal divisions, The Hill, March 24, 2025
GOP heads into key stretch for ambitious Trump tax cut plan, The Hill, March 23, 2025
Energy and Climate
Trade war risks curbing access to key green tech, Brazil climate chief warns, FT, March 24, 2025
Mining Company Seeks Trump Support to Shortcut Access to Seabed Metals, NYT, March 27, 2025
Exclusive: India weighs scrapping import tax on US LNG, boost purchases, sources say, Reuters, March 28, 2025
Regulation
Treasury’s play for regulatory control puts it on collision course with Fed, Semafor, March 24, 2025
SEC votes to stop defending climate disclosure rule, The Hill, March 28, 2025
Geopolitics
US is pushing more expansive minerals deal with Ukraine, sources say, Reuters, March 27, 2025
US Seeks to Control Ukraine Investment, Squeezing Out Europe, Bloomberg, March 27, 20256:40 PM CDT
Macron says a proposed European force for Ukraine could ‘respond’ if attacked by Russia, AP, March 27, 2025
Vance accuses Denmark of underinvesting in Greenland as Trump presses for US takeover of the island, AP, March 29, 2025