The BR International Trade Report: December 2024

Recent Developments

President-elect Trump threatens tariffs against Canada and Mexico.

Last month, President-elect Donald Trump threatened a 25% tariff on all imports from Mexico and Canada until they took action to prevent the flow of illegal drugs and migrants into the United States. Mexican President Claudia Sheinbaum initially threatened retaliatory tariffs, but disavowed such measures days later, following a call with President-elect Trump. Meanwhile, Canadian Prime Minister Justin Trudeau dined with President-elect Trump at his Mar-a-Lago residence, a meeting the President-elect described as “productive.” It is not clear whether these meetings resulted in any commitments for Canadian or Mexican action or agreement by President-elect Trump to hold off on his threat.

Assad dynasty falls as ousted Syrian leader Bashar al-Assad flees to Russia.

This month, the long-running Syrian civil war reached a critical juncture when opposition forces seized control of Damascus and ended the 54-year reign of the Assad family. Following the collapse of his government, ousted President Bashar al-Assad fled to Russia, where reports indicate he was granted asylum by Russian President Vladimir Putin. On December 9, Syrian Prime Minister Mohammed al-Bashir agreed to hand over power to the rebel-led Salvation Government. U.S. President Joe Biden called the fall of the regime a “fundamental act of justice” and a “moment of historic opportunity for the long-suffering people of Syria.” 

South Korean President Yoon Suk Yeol survives impeachment vote and is banned from international travel after failed martial law declaration.

The South Korean Justice Ministry banned President Yoon Suk Yeol and several leaders, including Defense Counterintelligence Commander Yeo In-hyung and Army Chief of Staff Park An-su, from leaving the country while investigations into President Yoon’s short-lived declaration of martial law are ongoing. While President Yoon managed to survive an impeachment motion brought December 7, protests continue as thousands of South Koreans demand Yoon’s replacement. 

Political crisis leaves France without a functioning government or 2025 budget.

Following a series of events which saw Marine Le Pen’s right-wing National Rally join forces with the left-wing coalition, French Prime Minister Michel Barnier was removed through a no-confidence vote, the first time that a no-confidence vote has toppled a French government since 1962. The 2024 budget saw the fiscal deficit increase from 5.5% to 6.1% of GDP—well above the European Commission’s limit of 3%—which Barnier sought to reverse in the 2025 budget by increasing revenues by €20 billion and decreasing spending by €60 billion. The planned budget was unpopular with the majority of parliament and voters, presenting the opportunity for Barnier’s removal. As a result of the political chaos, France will likely enter 2025 under its 2024 budget, averting a U.S.-style government shutdown but exacerbating its economic woes. 

European Union and MERCOSUR announce trade agreement.

After a quarter century of negotiations, the European Union and MERCOSUR (a trade bloc comprised of Argentina, Brazil, Paraguay, and Uruguay) reached a landmark free trade agreement which, if ratified, would create one of the largest free trade zones in the world. While European Commission President Ursula von der Leyen has hailed the agreement as a “truly historic milestone,” France has long signaled its opposition to the deal and, along with Poland, Austria, and Ireland, is expected to push to prevent ratification.

China responds to U.S. export controls with critical minerals ban.

On December 3, 2024, China announced an immediate ban of gallium, germanium, and antimony exports to the United States alongside tighter restrictions on graphite, citing national security concerns. The move came the day after the Bureau of Industry and Security announced new export controls on manufacturing equipment and software meant to limit China’s semiconductor production.

Hungary seeks to scale back EU foreign direct investment screening rules.

EU member countries are considering scaling back certain critical technologies, including semiconductors and artificial intelligence, that would be subject to foreign direct investment screening requirements should EU lawmakers adopt the European Commission’s legislative proposal. Although the text removing the critical technologies was negotiated between the 27 EU member states, it is notable that the measure was led by Hungary, chair of the intergovernmental arm of the EU, noted for its China ties. The text must pass through the EU Council before talks would begin in European Parliament for the text to become finalized legislation.

Chinese group actively hacking major telecom providers.

On December 3 and 4, 2024, the Cybersecurity and Infrastructure Security Agency, the Federal Bureau of Investigation, the National Security Agency, and partner agencies in other countries issued a joint alert concerning ongoing hacking efforts on telecommunications companies by Salt Typhoon, a China-linked hacking group. The group has targeted up to 80 telecommunications providers since last spring, with an apparent focus on national security and political targets—including both President-elect Donald Trump and Vice President-elect JD Vance—although others may have had their data compromised. President Joe Biden has been briefed “several times” about the hack, which Senate Intelligence Committee Chair Mark Warner (D-VA) called the “worst telecom hack in our nation’s history.”

U.S. Department of Commerce (“Commerce”) issues final “ICTS” technology supply chain regulations. 

On December 6, 2024, Commerce issued the finalized rule on Securing the Information and Communications Technology and Services Supply Chain, known as the “ICTS” regulations. This follows issuance of an interim rule in 2021 and recent proposals to regulate cloud computing and connected vehicles under the ICTS. The final rule makes important changes to the scope of the regulations and provides clarification and updates regarding Commerce’s procedures under the regulations.