Trump unveils plan for reciprocal tariffs on US allies and competitors

Washington — US President Donald Trump unveiled a programme on Thursday for charging reciprocal tariffs on every country that charges duties on US imports, his latest trade salvo directed at friends and foes that the White House says will strengthen economic and national security.

“Today is the big one: reciprocal tariffs,” Trump wrote on his social media platform ahead of his announcement.

The tariffs were not going into effect on Thursday but could begin to be imposed within weeks as Trump’s trade and economic team study bilateral tariff and trade relationships, a White House official said on a conference call.

The administration would examine what it called the most “egregious” issues first, beginning with nations with which the US has the highest trade deficits.

According to the Bureau of Economic Analysis, in December 2024 the largest trade gaps were recorded with China ($295.4bn), the EU ($235.6bn, Mexico ($171.8bn) and Vietnam ($123.5bn). The trade gap with Canada was $63.34bn. 

Trump’s reciprocal tariffs would match the higher rates charged by other countries, the White House official said. They also would aim to counteract non-tariff trade barriers such as burdensome regulations, value-added taxes, government subsidies and exchange rate policies that can erect barriers to the flow of US products to foreign markets.

The effort also aims to launch negotiations with some countries to reduce these barriers.

The announcement appeared designed at least in part to prompt talks with other countries. The official said Trump would be more than happy to lower tariffs if other nations lowered theirs.

“So the president is more than happy to lower tariffs if countries want to lower tariffs. But let’s also recognise that tariffs, higher tariffs, are not the biggest part of the problem in many, if not most cases,” the official said.

Targets include China, Japan, South Korea and the EU. The tariffs would avoid a “one size fits all” approach for more customised levies, he said, though he did not rule out a flat global tariff.

The official said a lack of US reciprocal tariffs had contributed to the country’s large and persistent trade deficit.

Indian Prime Minister Narendra Modi, who was scheduled to arrive at 11pm SA time, oversees a government that imposes the highest tariffs on US exports.

The Republican president’s latest round of market-rattling tariffs has ratcheted up fears of a widening global trade war and threatened to accelerate US inflation.

Trump’s trade advisers were finalising plans on Wednesday for the reciprocal tariffs the president has vowed to impose on every country that charges duties on US imports.

Trump, who assumed office on January 20, has already announced tariffs on all steel and aluminium imports beginning on March 12, imposed 10% tariffs on goods from China, and imposed a 30-day hold on tariffs on goods from neighbouring Canada and Mexico.

Trump said on Monday he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals.

Structural headache

Trade experts say structuring the reciprocal tariffs that Trump wants poses big challenges for his team, which may explain why the latest duties were not announced earlier in the week.

Damon Pike, a trade specialist and principal with the US division of accounting firm BDO International, said the reciprocal tariffs that Trump envisioned would result in a monumental undertaking, given that each of the 186 members of the World Customs Organisation had different duty rates.

“At the international level, there’s something like 5,000 different descriptions at the six-digit (product subheading) level, so 5,000 times 186 nations. It’s almost an artificial intelligence project,” he said.

Experts say Trump could turn to several statutes, including section 122 of the Trade Act of 1974, which would only allow a flat rate maximum of 15% for six months, or section 338 of the Tariff Act of 1930, which provides authority to act against trade discrimination that disadvantages US commerce, but has never been used.

Trump also could use the same International Emergency Economic Powers Act (IEEPA (used to justify the tariffs imposed on China and pending for Canada and Mexico.

The White House official said that measure and others could be used.

“In the absence of IEEPA, there would need to be some kind of agency action first before any trade remedy tariffs can be imposed ... but everything seems to be on the fast track,” Pike said, adding that normally tariffs would be done by Congress.

Reuters