32 JUNE 2025 | THE FOREIGN SERVICE JOURNAL Supreme Court will presumably take up the case as expeditiously as possible. Yet all this creates general economic uncertainty: It would be highly illogical for investors to make major decisions in any country, including the U.S., without knowing whether today’s broad tariffs will hold. If they do, it might make sense for investors to shift more manufacturing to Central America or Mexico, both of which have free trade agreements with the U.S. But such investments take years to get off the ground. And the administration may then apply new tariffs to any country that is a waypoint for Chinese-owned manufacturing activity. There is another dimension to the uncertainty that U.S. diplomats must navigate. Quite simply, what is the purpose of the tariffs? Is it an attempt by the U.S. government to gain concessions from foreign countries? If so, is it clear to each foreign country what concessions will win them relief from the tariffs, or are they permanent? And if they are permanent, are they intended to reshore that manufacturing activity to the U.S., or shift the activity to another country that the U.S. would prefer to purchase from? U.S. diplomats will need to seek consistent answers to these questions from their agencies back in Washington, D.C., but remain flexible if the answers are overtaken by events and change without notice. If the Supreme Court does declare the administration’s use of IEEPA to apply sweeping tariffs unconstitutional, then U.S. diplomats should expect to see a swift pivot toward the use of more narrowly scoped and time-honored tariff processes such as in Sections 201, 232, and 301 of the Trade Act of 1974, which are spelled out by Congress and undertaken by the U.S. Trade Representative, the U.S. International Trade Commission, and the Department of Commerce. Those processes involve deliberative reviews of claims of damage or harm to national security and have survived legal challenge. They invite more precision, and a reversion to their use to determine tariffs may cause less overall bilateral disruption; but U.S. diplomats will still need to be able to articulate and defend them in front of constituencies adversely affected by their implementation in a foreign country. Investment in the U.S. Through the SelectUSA program, currently housed at the Department of Commerce, U.S. diplomats have been responsible for promoting foreign investment into the U.S. In many ways, the pitch has not changed. The U.S. is the world’s richest consumer market. Rule of law for businesses is strong and encourages innovation and risk-taking. Finance is world leading. Energy is reliable and cheap. Taxes, at both the state and federal level, A Note on Two Special Sectors Two areas affected by tariffs deserve a special note. The first is extraction, of both fossil fuels and of metals and critical minerals. U.S. diplomats stationed in countries that are either dependent on external sources of supply (e.g., Germany) or are reliant on export earnings from extraction (e.g., Nigeria) will want to pay special attention to the secondary consequences of any disruption created by applying tariffs. And U.S. diplomats will need to be cognizant not just of the impact of U.S. tariffs but also the European Union’s (EU) phase-in of the Carbon Border Adjustment Mechanism, which will eventually apply a tax on imports of “carbon-intensive” manufacturing. In the case of a country like Nigeria, its exports of fossil fuels may be subject to tariffs as well as its manufactured goods. Nigerians will immigrate to other countries if local economic conditions are dire. Similar issues for critical minerals and mining stand out in such jurisdictions as Bolivia and the Democratic Republic of the Congo. The U.S. has been transformed into an exporting powerhouse, largely by the fracking revolution and innovative fasttracked liquification facilities for LNG (liquified natural gas) exports by such companies as Venture Global. Countries tempted to implement retaliatory tariffs may hesitate if they are dependent on imports of oil and gas. Or they may not: China, for instance, has shrewdly and quietly targeted U.S. LNG imports. U.S. diplomats can and should report on the state of play of energy and what countries are doing to seek alternatives to the U.S., because energy infrastructure is a core component of sustainable economic development and therefore political stability. Computer chip fabrication is another standout sector. There is considerable uncertainty about the extent to which the current administration will continue offering financial incentives to build more fabrication facilities in the U.S. At the same time, the administration may seek to apply tariffs to chip imports to incentivize more inward investment. To certain countries, most notably Taiwan, there is a considerable tension here as the island’s global leadership in chip manufacturing is seen as a core competence and perhaps even a safeguard against China’s military movements. U.S. diplomats serving in countries with fabrication or chipmaking equipment capacity (e.g., the Netherlands) will want to gather intelligence on how particular companies are responding to tariffs. —D.C.
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