While the announcement of 25% tariffs on steel and aluminum imports to the U.S. has garnered most of the headlines, the logistics world could also be affected by a lesser-publicized executive order that could open the door to bribery in foreign deals.
The order, which suspends the Foreign Corrupt Practices Act (FCPA), which could retroactively support indicted businesses, suggests that the bribery ban has harmed the U.S.
“America’s national security depends in large part on whether the United States and its companies gain strategic business advantages, whether in critical minerals, deep-sea ports, or other key infrastructure or assets,” the document says.
“But the excessive and indiscriminate use of the FCPA against American citizens and companies—by our own government—for routine business practices in other countries not only drains limited prosecutorial resources that could be devoted to preserving American freedoms, but also actively undermines American economic competitiveness and, therefore, national security.
“It is therefore the policy of my administration to preserve the presidential authority to conduct foreign affairs and to strengthen American economic and national security by removing unnecessary barriers to American commerce abroad.”
The order states that there will be a 180-day review period during which no new FCPA investigations will be conducted, all existing investigations will be reviewed, and policies will be updated, “as necessary,” to ensure “American competitiveness.”
This period may be extended for an additional 180 days. Existing and past enforcement actions will be reviewed.
“It’s so unfair that American companies are not allowed to pay bribes to do business abroad,” Mr. Trump said in 2020.
Jason Miller, a supply chain professor at Michigan State University, wrote on social media; “Maybe the idea is that bribes will offset all the retaliatory tariffs that the US is going to impose on its exports, thanks to the POTUS tariff lock?”
He added: “I was raised to think of the United States as ‘the shining city on the hill,’ to quote Ronald Reagan. Ending anti-bribery laws is a step backwards. The damage to US moral authority far outweighs any foreign business that could be gained by such an action.”
But most countries around the world are still reeling from the decision to impose a 25% tariff on steel and aluminum imports. Countries are now looking for ways to respond; As with previous tariff announcements, this is a matter for negotiation.
The executive order states: “If the United States and [any] country find a satisfactory alternative means to address the national security threat, such as the President determining that imports from that country no longer pose a threat to national security, I may remove or modify restrictions on imports of steel products from that country and, if necessary, adjust the tariff applied to other countries…”
The 2018 tariffs applied to raw materials but now include imported parts critical to other industries, including the automotive sector.
About 25% of the steel used in the United States is imported, with Canada, Brazil and Mexico being the largest exporters, followed by South Korea and Vietnam. Mexico and Canada accounted for about 40% of U.S. steel imports last year.
And nearly half of the aluminum used in the U.S. is imported, with Canada accounting for 79% of that, with Mexico once again the top supplier.
Alix Partners said the tariffs, which will go into effect next month, will add $400 to $500 to the price of a $48,000 car.
John Manners-Bell, CEO of consultancy and analyst Ti, told The Loadstar: “Because steel is such a major component (about a fifth) of the cost of manufacturing vehicles, the new tariffs will inevitably mean higher prices for U.S. automakers.
“Tariffs are a form of taxation, and taxation affects demand, so the impact will be felt in the form of lower vehicle sales or lower profitability, although President Trump has promised more tax cuts that could balance the equation.”
But tariffs could also lead to retaliation. EU President Ursula von der Leyen said: “I deeply regret the US decision to impose tariffs on European steel and aluminium exports. Tariffs are taxes – bad for business, worse for consumers. Unjustified tariffs on the EU will not go unanswered, they will trigger strong and proportionate countermeasures.
“The EU will act to protect its economic interests. We will protect our workers, businesses and consumers.”
The end result could be higher prices worldwide or a drop in global trade in automotive products, which will inevitably affect logistics.