Consistent with our expectations back in January, the Trump administration has made trade policy a major focus in this midterm election year. It’s an issue that not only resonates with President Trump’s political base and has animated the president for much of his public life, but can be effectuated (more or less) without Congress. President Trump has been a vocal critic of U.S. trade policy and its growing trade deficit since the 1990s, calling on policymakers to promote fairer, more “reciprocal” trade – a term he often used on the campaign trail and has repeated while in office. And the recent widening in the U.S. trade deficit, to $57 billion (seasonally adjusted annual rate), likely raises the sense of urgency for the administration.

While the Trump administration’s recent tariffs on aluminum and steel have garnered the most attention, we believe the trade actions with the most significant potential economic and market impact – particularly the investigation into China’s use of American intellectual property – have yet to unfold.

What has taken place so far?

In January, the administration announced multiyear tariffs on solar panels and washing machines under Section 201 of the Trade Act of 1974, an area of trade law that allows the president to impose tariffs on certain products in order to “safeguard” domestic industries after they have been deemed “seriously injured” by trade.

In late February, President Trump announced his intention to move forward with indefinite tariffs on aluminum and steel (of 10% and 25%, respectively, with certain notable exemptions, including Canada and Mexico) under Section 232 of the Trade Expansion Act of 1962, an infrequently used area of trade law that gives the president wide latitude to impose tariffs to protect “national security.”