US President Donald Trump has ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, raising the prospect of a wider campaign against a global system he complains is tilted against the US.
The president on Thursday signed a measure directing the US trade representative and commerce secretary to propose new levies on a country-by-country basis in an effort to rebalance trade relations — a sweeping process that could take weeks or months to complete.
Howard Lutnick, Trump’s nominee to lead the commerce department, told reporters all studies should be completed by April 1 and that Trump could act immediately afterward.
Photo: Reuters
Fresh import taxes would be customized for each country, meant to offset not just their own levies on US goods, but also non-tariff barriers the nations impose in the form of unfair subsidies, regulations, value-added taxes, exchange rates, lax intellectual property protections and other factors that act to limit US trade, a copy of the memo distributed by the White House said.
“I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said in the Oval Office. “In almost all cases, they’re charging us vastly more than we charge them, but those days are over.”
Trump told reporters that he would enact import taxes on cars, semiconductors and pharmaceuticals “over and above” the reciprocal tariffs at a later date.
Trump cited barriers in the EU, including VAT, as an example of what the US is looking to respond to. Trump has also singled out Japan and South Korea as nations that he believes are taking advantage of the US, and thus could be targeted in his latest push, a White House official who briefed reporters before the announcement said.
Reciprocal tariffs would amount to Trump’s broadest action to address US trade deficits and what he characterizes as unfair treatment of US exports around the globe. Trump has already imposed 10 percent tariffs on Chinese goods and plans to slap 25 percent duties on all US steel and aluminum imports next month.
Yet the president’s decision not to implement tariffs right away could be seen as an opening bid for negotiation — following the same strategy he has already used to extract concessions from Mexico, Canada and Colombia — rather than a sign he is committed to following through.
Traders saw the moves as a boost for risk assets, with the dollar retreating and stocks rising around the world. Speculation that negotiations would soften the tariffs, for now, eased fears of a full-blown trade war that would hurt growth and spur inflation.
“The goal is to have fair and reciprocal trade, and if we have that we will have jobs, high wages and high productivity,” Trump trade adviser Peter Navarro said on Thursday on Bloomberg Television.
The president is hoping to have a discussion with other nations about how existing policies have created an imbalanced trade environment, an official said, and he is more than happy to lower tariffs if countries want to pare their levies or remove other trade barriers.
“It’s a two-way street,” Lutnick told reporters after Trump signed the directive.
However, Trump said he did not expect to issue exemptions or waivers. He said that despite giving Apple Inc a pass on tariffs he imposed on China during his first term in order to compete with Samsung Electronics Co, this tariff package “applies to everybody across the board.”
Whatever happens, Trump’s brinkmanship has injected uncertainty into the global economy, with businesses and consumers waiting to see how Trump proceeds on a decision that could disrupt the US’ trade relationships with the rest of the world. The tariffs, if enacted, also risk driving up prices for US consumers on imported goods and exacerbating worries over inflation.
Navarro downplayed those worries on Thursday, saying the revenue raised from tariffs would be a “beautiful thing” and arguing that China-specific levies on certain key goods imposed during the first Trump administration had not meaningfully driven up prices.
“I would suggest to you that the tariffs we imposed on China were historic and large, and we had no problem at all with that,” Navarro said.
A study from the US International Trade Commission found that the costs of those tariffs were split between less-favorable margins for sellers and higher prices for downstream buyers.
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