Policy Risk Monitor – March 7, 2025

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

Key Policy Developments

Trade

Trump Provides One Month Tariff Reprieve as Trade War Intensifies

President Donald Trump provided a one-month reprieve from 25% tariffs for goods covered by the U.S.-Mexico-Canada Agreement (USMCA). The reprieve, issued March 6, two days after the tariffs took effect, was to “minimize disruption” to the U.S. automotive industry. Canada and Mexico now have until April 2, when reciprocal tariffs on all countries with tariffs on U.S. imports take effect. About half of imports from Mexico and more than a third of imports from Canada are covered under the USCMA. The tariffs were originally scheduled to take effect March 4, 2025. The 25% tariff takes effect on goods that do not satisfy USMCA rules of origin, with non-USMCA energy products from Canada are subject to a 10% tariff. Non-USMCA potash from Canada and Mexico are subject to a lower 10% tariff.

Prior to the reprieve, both Mexico and Canada prepared to retaliate for the tariffs. Canada announced that it would respond with 25% tariffs against $155 billion of U.S. goods, starting with immediate tariffs on $30 billion worth of goods and imposing tariffs on the remaining $125 billion of U.S. products in 21 days. Prime Minister Justin Trudeau said his administration would not remove Canada’s full package of retaliatory tariffs if any U.S. tariffs on Canadian goods are left in place. Trudeau said Trump wanted the “total collapse” of Canada’s economy to prepare for a U.S. annexation. Ontario Premier Doug Ford said he would cut off electricity exports to the United States of the tariffs are imposed.

Trump Increases Tariffs on Chinese Imports to 20%, China Retaliates

President Trump amended the executive order that imposed a 10% tariff on all imports from China to increase the tariff to 20%, effective March 4, 2025. This brings the total tariff on some Chinese products to 45%. Trump cited the failure of China to “blunt the sustained influx of synthetic opioids, including fentanyl.” China retaliated with tariffs of 10% to 15% on U.S. agricultural goods, including chicken, beef, wheat, and soybeans. China also added 10 U.S. defense companies to the “unreliable entity list” and added 15 companies to its export control list. China also revised its challenge against the United States at the World Trade Organization, stating that the additional 10% tariffs violates the rules of international trade.

Trump Orders Tariff Investigation into Lumber Imports

Trump ordered a trade investigation into lumber imports, which could provide the support for tariffs on imported lumber. Trump ordered the national security investigation under Section 232 of the Trade Expansion Act of 1962, which he used to impose tariffs on steel and aluminum imports. Trump also signed an executive order to increase U.S. lumber production.

Emerging Policy Issues

Trade

• Trump says a ‘little disturbance’ from tariffs is OK, as markets reel from trade war fears, CNBC

• Trump Puts Spotlight on Korea for ‘Higher-Than-China’ Tarif, Bloomberg

• The President’s 2025 Trade Policy Agenda, The White House

• Mexico Starts Dumping Investigation Into Chinese Laminated Steel, Bloomberg

Technology

• Trump Calls for End to $52 Billion Chips Act Subsidy Program, Bloomberg

• GOP signals CHIPS Act not going anywhere, The Hill

• US Chips Act Office Is Losing Two-Fifths of Staff to Trump Purge, Bloomberg

Energy and Climate

• Donald Trump’s directives deal fatal blow to America’s offshore wind energy industry, FT

• EU to extend relaxed subsidy regime for energy, FT

• US pulls out of flagship $45bn global climate finance coalition, FT

• OPEC+ will start long-delayed oil production hike, The Hill

• Italy Overturns 40-Year Nuclear Ban, Oilprice.com

• Trump Touts Plans to Spur Mammoth Alaska Gas Export Project, Bloomberg

U.S. Domestic Policy

• Treasury ends enforcement of business ownership database meant to stop shell company formation, AP

• Delaware bill would limit investor lawsuits as companies threaten to leave the state, Reuters

• Trump signs executive order establishing U.S. strategic bitcoin reserve, CNBC

U.S.-China

• Trump plans executive order to strengthen US shipbuilding, blunt China domination, Reuters

• Xi Leaves Door Open for Talks With Measured Response to Trump, Bloomberg

• Trump hails 'reclaiming' of Panama Canal after BlackRock-led group's deal to buy stake, Reuters

Geopolitics

• Trump Hails Letter From Zelenskiy But Holds Off on Minerals Deal, Bloomberg

• Trump pauses military aid to Ukraine after Oval Office argument with Zelensky, White House official says, CNN

• Fears Ukraine defences will last only months without US, BBC

• Zelensky calls Trump meeting ‘regrettable,’ stops short of apology, The Hill

• UK Sees Ukraine Mineral Deal as Insufficient US Security Promise, Bloomberg

• Europeans move towards seizing €200bn of Russian assets, FT

• Trump threatens sanctions and tariffs on Russia, X

• France to Open Talks to Extend Nuclear Shield for Europe, Bloomberg

• EU ponders 800 billion euro plan to beef up defenses to counter possible US disengagement, AP

• Trump Says He Sent Iran Leader Letter Urging Nuclear Talks, Bloomberg

• Trump pleads with people of Greenland to join the US, The Hill