WASHINGTON: U.S. President Donald Trump tasked his economics team on Thursday with devising a plan to impose reciprocal tariffs on every country that imposes duties on U.S. imports in a fresh salvo at American friends and foes ramping up prospects for a global trade war.
“On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less,” Trump told reporters in the Oval Office while discussing measures the White House says will strengthen economic and national security.
Trump signed a memo ordering his team to start calculating reciprocal tariffs to match those charged by other countries and counteract non-tariff barriers.
The president has been promising to introduce reciprocal tariffs, but Thursday’s directive stopped well short of that, instead kicking off what will be weeks or months of investigation into the levies imposed on U.S. goods by other trading partners and then devising a response.
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Wall Street - anxious that tariffs may add to inflation and keep the Federal Reserve from cutting interest rates further - breathed a sigh of relief, for the moment, with U.S. stocks adding to the day’s gains.
Howard Lutnick, Trump’s pick for Commerce secretary, said the administration would address each affected country one by one and said the administration’s studies on the issue would be completed by April 1.
That is also a deadline Trump set on his first day in office for Lutnick and other economic advisers to report to him with plans to reduce the chronic trade imbalances that Trump sees as a U.S. subsidy to other countries.
Trump, who campaigned on a pledge to bring down consumer prices, said prices could go up in the short term as a result of the moves. “Tariffs are great,” he said.
A White House official, who spoke to reporters before Trump’s event in the Oval Office, said the administration would study countries with the biggest trade surpluses and highest tariff rates first.
Trump’s tariffs would match the higher duties charged by other countries, he said, and 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 U.S. products to foreign markets.
“They effectively don’t let us do business. So we’re going to put a number on that that is a fair number. We’re able to accurately determine the cost of these non-monetary trade barriers,” Trump said.
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The broad announcement appeared designed at least in part to trigger talks with other countries. The White House official said Trump would gladly 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 recognize 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 European Union. The tariffs would avoid a “one size fits all” approach for more customized levies, he said, though he did not rule out a flat global tariff.
Indian Prime Minister Narendra Modi, who was scheduled to arrive at 4 p.m. (2100 GMT), oversees a government that imposes the highest tariffs on U.S. exports of any major U.S. trading partner. Trump acknowledged as much on Thursday.
The Republican president’s latest round of market-rattling tariffs has ratcheted up fears of a widening global trade war and threatened to accelerate U.S. inflation.
Trump’s trade advisers were finalizing plans on Wednesday for the reciprocal tariffs the U.S. president has vowed to impose on every country that charges duties on U.S. imports.
Trump, who took office on Jan. 20, has already announced tariffs on all steel and aluminum imports beginning on March 12, imposed 10% tariffs on goods from China, and imposed a 30-day hold on tariffs on goods from neighboring Canada and Mexico.
Trump said on Monday he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals. On Thursday he said car tariffs would be coming soon.
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 U.S. 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 Organization had different duty rates.
“At the international level, there’s something like 5,000 different descriptions at the 6-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 U.S. commerce, but has never been used.
Trump also could use the same International Emergency Economic Powers Act 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.
“Absent 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.
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