Trump unveils reciprocal tariff plan to reshape trade

By Elnur Mirzazada
February 14, 2025 11:25
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Reuters

U.S. President Donald Trump has directed his economic team to develop a plan for reciprocal tariffs on imports from countries that impose duties on U.S. goods, intensifying fears of 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 said Thursday in the Oval Office.

The directive tasks Trump’s team with calculating tariffs that match those imposed by other countries, as well as counteracting non-tariff barriers such as stringent vehicle safety regulations and value-added taxes that make U.S. exports more expensive. The order, however, does not immediately implement new tariffs, instead initiating an investigative process that could take months.

Global Trade Implications

Key targets of this initiative include China, Japan, South Korea, and the European Union. Trump’s protectionist stance has sparked concern among U.S. allies and heightened fears of retaliatory measures. Economists warn that escalating trade tensions could fuel inflation, potentially impacting Federal Reserve decisions on interest rates.

Market reactions were mixed. While initial fears of immediate tariffs caused fluctuations, Wall Street stabilized, with U.S. stocks rising and Treasury yields falling. Global markets also saw gains, with a key stock index hitting a record high.

Commerce Secretary’s Role and Timeline

Howard Lutnick, Trump’s nominee for Commerce Secretary, emphasized that the administration would evaluate each country individually. Studies on the tariff imbalances are expected to be completed by April 1, aligning with Trump’s broader economic agenda to reduce trade deficits.

Trump acknowledged that tariffs could increase consumer prices in the short term but defended them as a necessary tool for long-term trade fairness. “Tariffs are great,” he remarked.

A White House official stated that the administration would prioritize countries with significant trade surpluses and high tariff rates. The goal is to counteract measures such as government subsidies, restrictive regulations, and exchange rate policies that disadvantage U.S. exports.

“They effectively don’t let us do business,” Trump said. “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.”

As the administration advances its trade agenda, the impact of reciprocal tariffs on global trade relations and the U.S. economy remains uncertain. Observers anticipate responses from affected nations, which could further complicate international trade dynamics.

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