WASHINGTON: US President Donald Trump announced that he would impose “reciprocal tariffs” on trading partners on Thursday, opening new fronts in his trade war.
“Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!” Trump said in a post in all capital letters on his Truth Social platform.
The move would match the United States’ tariff rates on imports to the levels that other countries impose on US goods.
Trump has announced a broad range of tariffs targeting some of the United States’ biggest trading partners since taking office, arguing that it would help balance trade – and in some cases using the threats as a way to influence policy.
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US consumer inflation was a key issue in the November election that saw Trump sweep to power and the Republican has promised to swiftly reduce prices.
Economists, however, warn that his broad-ranging tariffs on US imports would likely boost inflation, not reduce it.
Analysts have also warned that reciprocal duties could bring a broad tariff hike to emerging market economies such as India and Thailand, which tend to have higher effective tariff rates on US goods.
Countries such as South Korea that have trade deals with Washington are less at risk from this move, analysts believe.
During election campaigning, Trump promised: “An eye for an eye, a tariff for a tariff, same exact amount.”
For example, if India imposes a 25-percent tariff on US autos, Washington will have a 25-percent tariff as well on imports of autos from India, explained a Nomura report this week.
Indian Prime Minister Narendra Modi will hold talks with Trump at the White House on Thursday and New Delhi offered some quick tariff concessions ahead of his visit, including on high-end motorcycles.
“Trump’s objective of implementing reciprocal tariffs is to ensure fair treatment for US exports, which could indirectly also address US trade imbalances with partner countries,” analysts at Nomura said.
Among Asian economies, India has a 9.5-percent weighted average effective tariff on US exports, while there is a three-percent rate on India’s exports to the United States.
Thailand has a 6.2-percent rate and China a 7.1-percent rate on US products.
But higher tariffs are also often imposed by poorer countries, who use them as a tool for revenue and protection because they have fewer resources to impose non-tariff barriers such as regulatory protectionism, Cato Institute vice president of general economics Scott Lincicome earlier told AFP.
It remains unclear if Trump views reciprocal tariffs as an alternative to a universal tariff of between 10 and 20 percent, which he floated in the lead-up to last year’s US presidential election, or as a separate policy.
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