United States President Donald Trump has announced a new trade policy imposing reciprocal tariffs on all U.S. trade partners, ensuring that foreign nations charge the same tariffs that America applies to them.
This initiative aims to restore fairness and prosperity in global trade, which Trump described as previously “complex and unfair.”
Policy Objectives and Rationale
In a statement on Monday, Trump emphasized that countries seeking to maintain lower tariffs should reduce or eliminate their own tariffs against the U.S. if they believe American tariffs are too high.
“For purposes of fairness, I will charge a RECIPROCAL Tariff, meaning whatever countries charge the United States of America, we will charge them – no more, no less!” Trump stated.
The policy also accounts for countries that use value-added tax (VAT) systems, which Trump described as being more punitive than tariffs.
“Sending merchandise, products, or anything else through another country to unfairly harm America will not be accepted,” he added.
Additionally, the administration will consider subsidies and non-monetary trade barriers imposed by foreign governments that disadvantage U.S. businesses.
“We are able to accurately determine the cost of these non-monetary trade barriers,” Trump noted. “If a country feels that the United States would be getting too high a tariff, they can reduce or terminate their tariff against us.”
Exemptions and Domestic Impacts
Trump clarified that the reciprocal tariff policy would not apply to products manufactured or built in the United States.
“For many years, the U.S. has been treated unfairly by other countries, both friend and foe. This system will immediately bring fairness and prosperity back into the previously complex and unfair system of trade,” he asserted.
He further highlighted the significant financial support the U.S. has provided to various nations over the years and called for fair treatment in return.
“I have instructed my Secretary of State, Secretary of Commerce, Secretary of the Treasury, and United States Trade Representative (USTR) to do all work necessary to deliver RECIPROCITY to our system of trade,” Trump concluded.
During the signing of the proclamation in the Oval Office, he reiterated his commitment to fairness.
“It’s fair to all. No other country can complain,” he said.
Potential Economic Implications
The administration believes the new tariffs will create a level playing field for U.S. and foreign manufacturers. However, under current law, the costs of these tariffs may be passed on to American consumers and businesses through higher prices.
In the coming weeks, the administration will study the rates to be imposed, allowing room to address potential challenges or extend negotiations.
Trade expert Scott Lincicome from the Cato Institute expressed concerns, noting that while the U.S. maintains relatively low average tariffs, Trump’s policy appears to be more about increasing import taxes than ensuring fairness. He also highlighted that the U.S. has its own regulatory restrictions limiting foreign products.
Trump’s proclamation identifies VAT, a sales-tax-like system common in the European Union, as a trade barrier to be included in reciprocal tariff calculations. Other factors in tariff assessments will include foreign tariff rates, industry subsidies, regulatory policies, and potential currency undervaluation.
