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Trump’s national emergency declaration... President Donald Trump on Monday issued an executive order declaring a national energy emergency. One component of the order directs EPA to consider issuing emergency fuel waivers to allow year-round E15 sales to meet any projected temporary shortfalls in the supply of gasoline across the country.
Under Section 3 of the order on Unleashing American Energy: The heads of all agencies shall review all existing regulations, orders, guidance documents, policies, settlements, consent orders and any other agency actions (collectively, agency actions) to identify those agency actions that impose an undue burden on the identification, development or use of domestic energy resources — with particular attention to oil, natural gas, coal, hydropower, biofuels, critical mineral and nuclear energy resources — or that are otherwise inconsistent with the policy set forth in section 2 of this order, including restrictions on consumer choice of vehicles and appliances.
In the Unleashing American Energy order, Section 7 Terminating the Green New Deal. “(a) All agencies shall immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 or the Infrastructure Investment and Jobs Act, including but not limited to funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program, and shall review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law and the policy outlined in section 2 of this order. Within 90 days of the date of this order, all agency heads shall submit a report to the Director of the NEC and Director of OMB that details the findings of this review, including recommendations to enhance their alignment with the policy set forth in section 2. No funds identified in this subsection (a) shall be disbursed by a given agency until the Director of OMB and Assistant to the President for Economic Policy have determined that such disbursements are consistent with any review recommendations they have chosen to adopt.” Comment: The above references unobligated funds and does not include 45Z. It would take congressional action to impact 45Z.
Trump orders comprehensive trade policy overhaul amid anticipation... Trump ordered an expansive investigation into America’s trade policy, divided into three critical areas, with recommendations due by April 2025. The investigations aim to address trade imbalances and unfair practices, focusing on trade deficits, currency manipulation and counterfeiting. Key areas under review include:
- The U.S.-Mexico-Canda Agreement and other trade agreements.
- Anti-dumping duties and discriminatory taxes.
- The potential establishment of an External Revenue Service (ERS) to collect trade-related revenues.
Trade policy with China will face intense scrutiny, with reviews of the 2024 practices report, compliance with existing agreements and investigations into intellectual property rights and unreasonable practices.
Broader economic security measures will examine the U.S. manufacturing base, the effectiveness of steel and aluminum import measures, and the impact of foreign subsidies on federal procurement.
The results of the reviews and recommendations are to be delivered in three reports by April 1 and the report on foreign subsidies on U.S. federal procurement by April 30. The administration may invoke the International Emergency Economic Powers Act (IEEPA) to enact sweeping changes. The next few months could bring significant shifts in U.S. trade policy and economic strategy.
Impacts: Says ING Economics: “With more than 15% of all U.S. imports coming from Mexico and 13.7% from Canada in 2023, about a third of everything the U.S. imports would be affected by unilateral tariffs, potentially disrupting supply chains and impacting the economy significantly. Mexico’s share of U.S. imports exceeds 25% in seven categories, Canada’s share of U.S. imports exceeds 25% in 20 HS2 (Harmonized System Code) categories. These categories include agricultural products, food and beverages, automobiles, metals, wood and industrial products. As a result, everyday items, including a typical U.S. breakfast, could see a significant price hike this year, in addition to already soaring coffee prices.”
Trump’s second term: U.S./China relations reset to Phase 1... As Trump begins his second term, his administration is revisiting the “Phase 1” trade deal, a centerpiece of his first term’s approach to China. Despite China’s failure to meet the deal’s targets, the Trump administration has chosen negotiation over immediate tariff hikes, signaling a potential reset in the bilateral relationship.
Trump’s Treasury Secretary nominee, Scott Bessent, aims to enforce China’s purchase commitments under the agreement and explore catch-up provisions. Meanwhile, Beijing, facing domestic economic pressures, welcomes the return to talks but is ready with countermeasures as great-power competition intensifies.
The Wall Street Journal notes that while the Phase 1 deal provides an opening for renewed engagement, skepticism persists about its feasibility and past enforcement failures. Both sides face a delicate balancing act as they navigate an unpredictable dynamic under Trump’s leadership.
Phase 1 required China to increase purchases of American goods and services by $200 billion over a two-year period ending in December 2021. In the agreement, China committed to buying around $40 billion of ag goods annually in 2020 and 2021, and even as high as $50 billion. Overall, Beijing pledged to increase its purchases of U.S. products by $200 billion during that time period compared to 2017, the year before the trade war with the first Trump administration began. Back then, China imported around $186 billion from the U.S. In the end, according to estimates by the Peterson Institute for International Economics, China bought only 58% of the U.S. goods it had committed to purchase, not even enough to reach its import levels from before the trade war. Under Phase 1, the U.S. has the right to impose tariffs or other trade measures as a response to noncompliance by China.
Despite Beijing’s failure to hold up its end of the bargain, Bessent noted in his testimony that the Biden administration never enforced the deal.
Panama launches audit of China-linked port operator amid Trump’s canal takeover threats... Panamanian authorities have initiated an audit of Panama Ports Co., a subsidiary of Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings Ltd., which operates two ports adjacent to the Panama Canal, according to Bloomberg. The investigation, led by the comptroller’s office, aims to ensure the “efficient and transparent use of public resources.”
The move follows President Donald Trump’s renewed claims that China has influence over the canal and his pledge to take control of the strategic waterway. Trump’s allegations, which Panama’s government denies, have drawn attention to Hong Kong companies’ growing vulnerability to geopolitical risks as U.S. policies tighten against perceived Chinese influence.
The audit also seeks to review compliance with a 25-year concession agreement granted in 1998, renewed in 2021. Comptroller General Anel Bolo Flores cited concerns about insufficient revenue sharing despite increased cargo volumes.
CK Hutchison’s regional ports business, a key profit driver, could face heightened scrutiny amid escalating U.S./China tensions. Meanwhile, Panama’s President Jose Raul Mulino reiterated the canal’s sovereignty remains firmly under Panamanian control.
Euro zone economic sentiment improves in January... The ZEW Indicator of Economic Sentiment for the euro zone rose 1 point from the prior month to 18 in January, beating analysts’ expectations of a slight drop to 16.9 and the highest reading since October. Nevertheless, concerns and uncertainty remain, stemming from Germany’s sluggish GDP growth, rising inflationary pressures and political instability. These issues are compounded by unease about the economic policies of the Trump administration.
In January, about 60% of the surveyed analysts expected no changes in economic activity, 29% saw an improvement and 11% anticipated a deterioration. The indicator of the current economic situation increased by 1.2 points to -53.8 and inflation expectations surged by 9.1 points to -14.8.