President Trump on Thursday signed a memorandum directing his administration to weigh reciprocal tariffs, threatening to impose levies on U.S. imports from nations that put higher duties on American products.
“I’ve decided for purposes of fairness that I will charge a reciprocal tariff,” Mr. Trump said in the Oval Office at a proclamation signing. “It’s fair to all. No other country can complain.”
The Trump administration has argued that its tariff policies would level the competitive playing field for U.S. and foreign manufacturers, although the new taxes would probably be shouldered by U.S. shoppers and businesses either directly or indirectly.
Tariffs, which act as a tax on foreign goods, could lead to higher prices, which are rarely if every welcomed by Americans, and having more import duties on the horizon comes against a backdrop of inflation flaring up once again. Consumer prices in January accelerated to 3% on an annual basis, signaling the Federal Federal’s push to drive inflation down to a 2% annual rate has petered out, at least for now.
Deutsche Bank analysts said in a research note earlier this week that proceeding with reciprocal U.S. tariffs poses “additional upside risks to the inflation outlook.”
Trade negotiations
The tariff hikes would vary for affected countries, with a goal of starting new trade negotiations, the Associated Press reported. A senior White House official who spoke to the wire service on condition of anonymity said the reviews required to move forward with the tariffs could be finished within a number of weeks, although the process could take longer.
The plan “will seek to correct long-standing imbalances in international trade and ensure fairness across the board,” the White House said in a statement about the tariffs. “Gone are the days of America being taken advantage of: this plan will put the American worker first, improve our competitiveness in every area of industry, reduce our trade deficit, and bolster our economic and national security,” it proclaimed.
The announcement came before a meeting between Mr. Trump and Narendra Modi, prime minister of India, a country that could be targeted by U.S. tariffs. Modi has recently sought to assuage the Trump administration’s concerns regarding trade issues, moving to cut import India’s tariffs on some motorbikes and bourbon whiskey, while also agreeing to receive planes carrying undocumented migrants.
President Trump has placed an additional tariff on Chinese imports for what he says is that nation’s role in producing opioid fentanyl. He has also readied tariffs on Canada and Mexico that could take effect next month, after being paused 30 days. Mr. Trump also this week announced 25% tariffs on steel and aluminum that are scheduled to take effect in March.
Applying a matching tariff against select U.S. trading partners is likely an alternative to imposing a more sweeping levy, according to economists. Argentina, Brazil, India and Turkey have the biggest gaps in tariffs with the U.S., trade data shows.
“While most developed markets would come out relatively unscathed, emerging markets would suffer a greater loss of competitiveness, with India, Brazil and Turkey looking among the most exposed,” Shilan Shah, deputy chief emerging markets economist with Capital Economics, told investors in a report. “It is probable that their governments (among others) would provide concessions to President Trump in an attempt to prevent reciprocal tariffs from being imposed.”
Trump administration officials say tariffs can protect domestic manufacturers and also spur both American and foreign companies to create more jobs in the U.S.
“America has helped many Countries throughout the years, at great financial cost. It is now time that these Countries remember this, and treat us fairly – A LEVEL PLAYING FIELD FOR AMERICAN WORKERS,” Mr. Trump wrote Thursday on Truth Social.
contributed to this report.
