Is Trump Pivoting From a Trade War to an International Tax Fight?
The Trump 2.0 era may have officially begun this week, but the much-hyped tariff-fueled trade war has not. At least, not yet.

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The Trump 2.0 era may have officially begun this week, but the much-hyped tariff-fueled trade war has not. At least, not yet.
In a wide-ranging session with reporters late Monday, the newly inaugurated Donald Trump threatened to levy 25% tariffs on Canadian and Mexican goods starting as soon as February 1, while saying that tariffs on China — potentially as high as 100% — could be tied to the potential sale of TikTok to a US entity. By Tuesday, world leaders and currency markets had plenty of time to respond to the trade war’s new tentative start date. Tentative being the operative word.
A New Taxation World Order
Trump wasted little time initiating parts of his policy plan via a flurry of executive orders hours after he was sworn into office. But he’s taking a slower tack to institute his trade policy. Instead of Day One import duties, Trump issued a memorandum to multiple federal agencies to evaluate US trade policy and report back by April 1 — which may or may not be in conflict with the February 1 start date he cited later in the evening.
And that’s not all. Trump on Monday also outlined a series of new or increased taxes that could be levied on foreign companies and nationals operating in the US — in part as retaliation for allegedly unfair taxes levied on Americans in some jurisdictions abroad; he also issued another memo that withdraws the US from an OECD global tax pact agreed to last year that allowed foreign countries to levy “top-up” taxes on US multinational businesses. It’s a signal that tax law may be just as instrumental as tariffs, if not more so, in Trump’s international economic policy plan.
It’s been a lot for markets to process:
- Trump’s penchant for policymaking from the hip has sent the US dollar into a frenzy; the USD fell against a basket of foreign currencies about 1% during the day Monday after Day One tariffs looked off the table, then rebounded in the evening, only to fall over 1% on Tuesday. “We basically got back to where we were, which means that there was no new information,” Geoff Yu, a market strategist at Bank of New York Mellon, told The Wall Street Journal.
- Canadian Prime Minister Justin Trudeau, meanwhile, threatened retaliatory tariffs on Tuesday — though he insisted “the facts bear out [current trade policy] is a win-win relationship.”
Shifting Gears: A senior European Union official told the Financial Times the focus on multinational taxes likely reflects the priorities of major American tech firms: “The conversation on tariffs will be transactional,” he said, “but the real fight will move to where fortunes are at stake and big tech has an interest.” Meanwhile, KPMG head of global tax strategy Grant Wardell-Johnson shared with the FT his view of the new tax fight: “Ultimately, we are seeing international taxation moving from a multilateral domain to a bilateral one based on strong unilateral assertions. It is a new taxation world.”