In a bold step that might upend the norms of international trade and probably spark heated discussions, President Trump announced plans to impose fresh tariffs on other nations on Thursday.
The president gave his advisors instructions to develop new tariff levels that consider various trade restrictions and other economic strategies used by the United States’ trading partners. Not only do other nations impose tariffs on the United States, but they also impose taxes on foreign goods, provide subsidies to their sectors, manipulate exchange rates, and engage in other actions that the president believes are unjust.
According to the president, the action was required to balance out America’s “unfair” connections and prevent other nations from abusing the US in trade. However, he made it apparent that his ultimate objective was to compel businesses to return their production to the US.
“There are no tariffs if you manufacture your product in the United States,” he stated.
The president’s choice for commerce secretary, Howard Lutnick, stated that the measures may be available as early as April 2. Along with other advisors, he will supervise the strategy with Mr. Trump’s chosen trade representative, Jamieson Greer.
A significant revamp of the international trade system would result from the decision to modify the tariffs that the United States imposes on imported products.
Establishing new taxes, which are probably going to be greater than what the US already charges, would essentially do away with that system and replace it with one that is decided entirely by US authorities and according to their own standards.
A shift to a reciprocity-based tariff system would be “a fundamental change to U.S. trade policy, and among the biggest in more than 75 years — since the creation of the current multilateral trading system,” according to Timothy Brightbill, a lawyer at Wiley Rein, in 1947.
According to Chad Bown, a senior scholar at the Peterson Institute for International Economics, there are two scenarios in which Mr. Trump’s tariffs would be against WTO regulations. WTO members’ pledge to refrain from discriminating against one another would be broken if different tariff rates were applied to different nations.
“President Trump would deal the rules-based trading system his greatest blow to date if he decided to unilaterally raise U.S. import tariffs, country by country, product by product,” Mr. Bown stated.
Intense talks with nations whose economies rely on exports to the United States are probably going to be triggered by the measure. If other nations decide to raise their own tariffs in retaliation, it may potentially spark multifaceted trade battles.
In a call with reporters Thursday, a White House official who asked not to be named for credit stated that other nations will be given the chance to negotiate the tariffs they will be subject to.
Although the action would impact almost every nation, India, Japan, and the European Union may be most impacted. In addition to tariffs, Mr. Trump and his staff have frequently cited Europe’s value-added tax as an extra unfairness.
The president’s top trade counselor, Peter Navarro, referred to the European Union’s VAT as the “poster child” for unfair trade practices targeting American companies, claiming that it had enabled Germany to sell to the US many times as many automobiles as it purchased from the US.
Mr. Navarro stated, “President Trump will no longer put up with that.” “Such exploitation of American workers will be quickly stopped by the Trump fair and reciprocal plan.”
