Trump sought to break from the gate of his second term at top speed, executing a raft of executive orders and other directives on his first day (see Lambert’s tally for details) and even holding an informal press conference during his signing. And he’s keen to keep the appearance of momentum up. For instance, he didn’t implement additional tariffs among his opening day actions, even though that is within Presidential authority, but on his second day saber-rattled about deploying them against China and Europe.
But as most readers here know, an executive order is valid only within the ambit of Presidential authority. Trump has elicited a raft of legal challenges with more likely to follow, on some of his executive orders that smack of overreaching. Others, as we’ll show, are more on the order of press releases, to call extra attention to things he could have done via less flashy means. We’ll also look at his memorandum on OECD-driven pending changes in taxes on multinational. It’s elicited a kerfluffle among the media, when the reaction appears to be a result of having missed the earlier plot. Finally, we’ll turn briefly to Ukraine. There, many Trump-friendly commentators are concerned that he’s being cognitively captured by neocons who may succeed in keeping the US supporting the war.
Keep in mind Trump is already running into execution problems, or what in the Johnson Administration was called a credibility gap. Trump has not gotten an end to the Ukraine conflict within 24 hours of taking office. Trump has not imposed his much-noised about big tariffs on China, Europe, Mexico or Canada.1 The sanctuary city immigration raids, promised to start on Tuesday in Chicago by ICE chief Tom Homans, have yet to begin.
One way to think about the Trump show of force is that it amounts to an effort to restore the Presidential ability to use jawboning to get his way. A notable historical example, recounted in Slate:
The federal government’s ongoing collaborative role in the [labor negotiation] process was demonstrated in April 1962 when President John F. Kennedy, having talked the United Steel Workers into accepting a moderate wage increase, publicly attacked U.S. Steel over a price hike he deemed excessive (“a wholly unjustifiable and irresponsible defiance of the public interest”), forcing the steel giant to back down. According to [MIT economists Frank] Levy and [Peter] Temin, this display of muscle “helps to explain why the reduced top tax rate” enacted two years later (it dropped to 70 percent) “produced no surge in either executive compensation or high incomes per se.” Fear of attracting comparable attention from President Lyndon Johnson kept corporations from showering the bosses with obscene pay hikes.
The Wall Street Journal, in its lead story today CEOs Launch War Rooms, Hotlines to Cope With Trump’s Order Blitz, confirms that Trump has gotten the attention of C-suites. Remember, for every group like the AI overlord looking to feed at Trump’s promised $500 billion trough (which would have to be approved by Congress), there are many who are looking at having rice bowls broken, for instance, by spending cuts or unfavorable regulatory changes (recall that quite a few sectors of the economy depend on existing complexity, starting with H&R Block and TuroTax, not that they are under threat). High points from the Journal’s account:
The blitz of executive orders and memos from President Trump left business leaders—some still in the tuxedos they wore to White House inaugural galas—scrambling to make sense of sweeping changes to tax, immigration, trade and energy policies….
Many of Trump’s first-day moves were expected, and there were few details on some of the biggest topics, including deportations….
The details of any new tariff policy would be critical for companies including 3M, the American manufacturing company behind everything from Scotch tape to materials used in electric-vehicle batteries….
Many companies remain concerned about changes to immigration policies. The law firm Fisher Phillips on Tuesday launched a rapid-response immigration team….
The firm sent clients a 24-hour hotline number that they could call in the event of an unexpected immigration raid. Employees in such industries as construction, hospitality and healthcare have conducted training sessions or posted placards at front desks so receptionists know what to do—and whom to call—should immigration officials show up unannounced.
Peter Belluomini, a citrus grower in Kern County, Calif., said he temporarily lost about 70% of his harvest crew earlier this month when a local Border Patrol raid prompted many workers to lie low.
“Basically the word gets out in the community and that part of the labor force gets nervous so they’ll stay home,” he said. Belluomini added that he expected “any disruption would be temporary and short-lived.”
However, despite the whinging and lobbying, the Journal report that big business remains optimistic that Trump will be a plus for them.
Neither piece appears to allow for the fact that many of Trump’s plans are subject to being delayed or overturned by court challenges. We described the fast-out-of-the-box filings against the improper construction of DOGE, including its lack of required transparency, like keeping records that can be FOIAed. If DOGE manages to get off the ground, it is certain to face additional litigation, such as over its expected refusal to spend fund already approved by Congress, or impoundment. Note that the Trump team appears to be avoiding engaging that type of battle yet; for instance, it put a 90 day pause on foreign aid for review as opposed to (yet) trying to cancel any. Well, with a noteworthy exception:
Trump signed an executive order suspending all foreign aid for 90 days. This was the headline published by all media outlets.
Buried in the fine print was that Israel and the US-Israeli Arab shield puppet regimes of Egypt and Jordan are exempted from the order. pic.twitter.com/CWS6UHFvj8
— ☀️👀 (@zei_squirrel) January 22, 2025
Similarly, the lead story at the Financial Times tonight is Donald Trump halts more than $300bn in US green infrastructure funding. The subhead correctly points out that this is a pause; Trump again is going to have to devise legal justifications for ending the spending permanently and can still expect court pigfights he may well lose.
This list is sure to grow, but in an e-mailed morning update, the Hill identified some new legal actions taken against some of the Trump first-day initiatives:
He also pledged to end birthright citizenship, which is guaranteed under the 14th Amendment. On Tuesday, attorneys general from 22 states, as well as Washington, D.C., and San Francisco, sued Trump in two federal district courts to block an executive order that refuses to recognize children of immigrants without legal status who were born in the U.S. as citizens.
“President Trump now seeks to abrogate this well-established and longstanding Constitutional principle by executive fiat,” one group of states wrote in their complaint. “The principle of birthright citizenship has been enshrined in the Constitution for more than 150 years. The Citizenship Clause of the Fourteenth Amendment unambiguously and expressly confers citizenship on ‘[a]ll persons born’ in and ‘subject to the jurisdiction’ of the United States.” ….
Meanwhile, the National Treasury Employees Union sued over an executive order creating a new class of federal employees — Schedule F — who can be hired outside the traditional merit-based system for bureaucrats. Federal workers see Schedule F as a way to insert politics into government actions, a move that could both reward Trump allies and politicize government decisionmaking.
However, it’s important to keep in mind some of the executive orders have more bark than bite. The order on “Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government” clearly takes aim at ideological and popular support of trans rights, so the official cover can be argued to be more important than the immediate impact. But the order does not attempt to bar funding of transitioning by minors. And even some of the areas it takes aim at are misfires. For instance:
There’s a direction that Homeland Security should change rules about passports, visas, and Global Entry cards to redefine sex under Trump’s terms. But those are programs under the Department of State.
— Ezra Ishmael Young (@ezraiyoung) January 21, 2025
Office of Personnel Management (federal gov’t HR) is asked to make sure that all federal employee records “accurately report” sex, as defined at conception. There are ~2.3M fed workers. That’s a lot of time machines and microscopes.
— Ezra Ishmael Young (@ezraiyoung) January 21, 2025
Trump demands that the Equal Employment Opportunity Commission, an independent agency, rescind a guidance document. Prez has no such power. As the label suggest, independent agencies are in fact independent.
— Ezra Ishmael Young (@ezraiyoung) January 21, 2025
A press release packaged as an order is “America First Policy Directive To The Secretary Of State”:
Seriously? A memo to Mario Rubio would have been more than sufficient.
But let’s turn to some odd coverage. Last night, the first day memorandum, “The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal)” generated lead story at the Financial Times: Donald Trump threatens tax war over US multinationals.2 It and the Wall Street Journal coverage oddly miss a key point, which is why Trump can proceed here with a mere memorandum: the OECD scheme to harmonize a corporate base rate had never been approved by Congress. The OECD seemed to be operating as if this was a “rules based order” item, that if the IRS implemented it merely on Biden Administration authority, of course it would all be good. But the reality is the IRS has a nasty propensity to lose pretty much all big corporate cases filed against it, so the odds are the US (and OECD) would have faced an unholy mess if this scheme went live.3 See the embedded document at the end of the post, posted by Tax Notes, in which House leaders tell the OECD that the Biden Adminstration did not have the authority to commit to OECD recommendations (not rules, they aren’t rules).
A short version of the bone of contention, from the Financial Times account:
Donald Trump has ordered officials to draw up retaliatory measures against countries applying “extraterritorial” levies on US multinationals, in a move that threatens to trigger a global confrontation over tax regimes.
The US president made the move in an executive order on Monday night, withdrawing US support for a global tax pact agreed at the Organisation for Economic Co-operation and Development (OECD) last year that allows other countries to levy top-up taxes on US multinationals….
The global deal agreed at the Paris-based OECD in 2021 and partly introduced by several countries last year was expected to raise the tax take from the world’s biggest multinationals by up to $192 billion (€185 billion) a year.
Under “pillar two” of the OECD deal if corporate profits were taxed below 15 per cent in the country where the multinational was headquartered, signatories could potentially charge top-up levies. But one part of the interlocking measures, known as the undertaxed profits rule (UTPR), has long drawn Republican anger, with the party labelling it “discriminatory”.
Oddly, my pdf of the original story, but not the Irish Times version, contains:
Alex Cobham, chief executive of the Tax Justice Network, an international campaign group, said Trump’s move in effect left the OECD pact “dead in the water”.
The Journal article did give a clearer idea that the Biden Administration had never properly firmed up the OECD commitment, but skipped over what the new scheme was about.
In 2021, about 140 countries reached an international tax agreement in two parts, attempting to put a floor under corporate tax rates and create clearer rules for which countries get to tax which income. Companies and Republicans have been objecting in particular to attempts to tax U.S.-based companies that pay below the 15% corporate tax floor in the U.S., which undercut the research tax credit.
Trump signed an executive memo on Monday that says Biden administration commitments under the deal have no force within the U.S. without congressional approval and asked administration officials to study potential U.S. actions.
Tonight, however the Financial Times described how the US has the means to aggressively retaliate if the other OECD members try to apply the new system to US companies abroad. From Donald Trump threatens to double tax rates for foreign nationals and companies based on a more careful reading of a related order:
His order, signed on Monday, specifically asks the Treasury secretary to “investigate whether any foreign country subjects US citizens or corporations to discriminatory or extraterritorial taxes” so it conforms with Section 891.
This section says that when a president formally declares there is such discrimination, the tax rates should “be doubled in the case of each citizen and corporation of such foreign country” — without needing Congressional approval.
“This [invoking Section 891] is the most extreme option and it’s interesting that they’re threatening to use it straight out of the gate,” said Alex Parker, tax legislative affairs director at Eide Bailly. “Based on the way the legislation is worded, it does seem to be double or nothing.”
Trump also issued a separate policy memo withdrawing US support for last year’s OECD global tax pact, which allows other countries to levy top-up taxes on US multinationals.
Finally, and only briefly, to Ukraine. Trump is a master of sensing weakness, witness him successfully putting Netanyahu on the back foot (although nothing is over till it’s over with Netanyahu). Sadly, that means Trump is particularly ill-prepared to contend with a situation where he has no leverage, as with Russia. He can’t cow or threaten Putin, nor can he deliver anything Putin might value, like a binding commitment of no Ukraine in NATO evah. He also can’t achieve a “new European security architecture” which is another keen Putin desire. Not only, as the Russians know bloody well, no US commitment can be assured to endure even as long as a single administration, but Starmer and key European have worked themselves up to a new high warble of anti-Russia war lust statements.
Of course, statements like the ones Trump just made are the predictable result of filling his foreign policy team full of neocons:
US President Donald Trump says Russian President Vladimir Putin should make deal to end war in Ukraine because conflict is destroying Russia pic.twitter.com/rkCuxulJhj
— TRT World Now (@TRTWorldNow) January 21, 2025
I can’t find a clip on Twitter that includes this section, quoted in Politico:
Trump said Putin couldn’t be happy with the slow progress of his war against Ukraine — nearly three years after he ordered an all-out assault, and 11 years after disguised Russian troops first entered Ukraine’s Crimean peninsula.
“He’s grinding it out. Most people thought it would last about one week and now you’re into three years. It is not making him look good,” Trump said.
“We have numbers that almost a million Russian soldiers have been killed. About 700,000 Ukrainian soldiers are killed. Russia’s bigger, they have more soldiers to lose but that’s no way to run a country,” he added.
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1 The Bloomberg story linked above and the Wall Street Journal piece quoted below differ on how quickly Trump might act on tariffs, if at all. Bloomberg points out that his executive orders call for reviews: “But the only actual action taken so far is the call for a review of trade practices that’s due by April 1, potentially giving China and others almost 10 weeks to avert new levies or address his demands.” The Journal, by contrast, cites Trump as saying he will Do Something with respect to Mexico and Canada by February 1.
2 Oddly, that version is no longer available on the pink paper’s site (I happened to have pdf’d a copy) but can be found syndicated at venues like the Irish Times
3 Yours truly is NOT arguing against the substantive merits of the OECD initiative but the Biden Administration fudge.
