Trump says he’ll rework global trading relations with ‘reciprocal’ tariffs


WASHINGTON — President Donald Trump on Thursday set in motion a plan for new tariffs on other countries globally, an ambitious move that could shatter the rules of global trading and is likely to set off furious negotiations.
The president directed his advisers to come up with new tariff levels that take into account a range of trade barriers and other economic approaches adopted by America’s trading partners. That includes not only the tariffs that other countries charge the United States but also the taxes they charge on foreign products, the subsidies they give their industries, their exchange rates and other behaviors the president deems unfair.
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The president has said the step was necessary to even out America’s “unfair” relationships and stop other countries from taking advantage of the United States on trade. But he made clear that his ultimate goal was to force companies to bring their manufacturing back to the United States.
“If you build your product in the United States, there are no tariffs,” he said during remarks in the Oval Office.
Howard Lutnick, the president’s nominee for commerce secretary, said the measures could be ready as soon as April 2. He will oversee the plan along with Jamieson Greer, Trump’s pick for trade representative, and other advisers.
The decision to rework the tariffs that America charges on imported goods would represent a dramatic overhaul of the global trading system. For decades, the United States has set its tariff levels through negotiations at international trade bodies like the World Trade Organization. Setting new levies — likely to be higher than what the United States charges today — would effectively scrap that system in favor of one determined solely by U.S. officials and based on their own criteria.
Timothy Brightbill, a lawyer at Wiley Rein, said a move toward 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” in 1947.
Chad Bown, a senior fellow at the Peterson Institute for International Economics, said Trump’s tariffs would violate WTO rules in two ways. Applying different tariff rates to different countries would violate a commitment by WTO members not to discriminate against one another. And if the United States raises its tariff rates beyond the maximum rate it has negotiated with other members, that would break trading rules, too.
“A decision to unilaterally increase U.S. import tariffs, product by product, country by country, would be President Trump’s biggest blow yet to the rules-based trading system,” Bown said.
The action seems likely to kick off intense negotiations with governments whose economies depend on exports to the United States. It could also elicit trade wars on multiple fronts if other countries choose to increase their own tariffs in retaliation.
A White House official, who did not have permission to speak for attribution, said in a call with reporters Thursday that other countries would be given the opportunity to negotiate on the levies they will face.
Nearly every country would be affected, but the move could have particularly significant consequences for India, Japan and the European Union. Trump and his staff members have repeatedly pointed to Europe’s value-added tax, or VAT, as an additional injustice on top of tariffs.
Peter Navarro, the president’s senior counselor for trade, called the European Union’s VAT the “poster child” for unfair trade toward American business, saying that such treatment had allowed Germany to export to the United States many times the number of cars that it bought from it.
“President Trump is no longer willing to tolerate that,” Navarro said. “The Trump fair and reciprocal plan will put a swift end to such exploitation of American workers.”
The EU requires a standard value-added tax rate on most goods and services, and while the rates vary by country, they average about 22% across European nations. The tax is applied at each stage in a supply chain, and the cost is usually borne by the end consumer.
The United States is an outlier among advanced economies in not levying a value-added tax on products like cars.
Trump’s proposal represents a significant reversal in a decades-long push in trade policy toward lowering international barriers. While past presidents have often negotiated with foreign countries over tariffs, those agreements have typically led to lower levies, not higher ones. No president has taken Trump’s approach of raising U.S. tariffs to match other countries’ rates.
The reciprocal tariff plan is the latest move by Trump to punish allies and adversaries alike with an extraordinary array of trade actions. On Monday, the president signed a proclamation imposing 25% tariffs on all foreign steel and aluminum. Trump said his advisers would also meet over the next four weeks to discuss measures on cars, pharmaceuticals, chips and other goods.
Trump did acknowledge that his reciprocal tariff plan could result in prices going up. That’s because consumers tend to pay higher prices when goods are taxed at a higher rate. But the president said any increase would be short-lived and that his plan would result in more jobs. “Prices could go up somewhat short term, but prices will also go down.”
In the long term, he said, it’s going to “make our country a fortune.”
In the past weeks, Trump’s almost-daily tariff threats have rocked diplomatic and economic relationships. The United States imposed an additional 10% tariff on all products from China last week and came within hours of putting sweeping tariffs on Canada and Mexico that would have brought U.S. tariff rates to a level not seen since the 1940s.
The president had criticized Canada and Mexico over drug and migrant crossings into the United States, but agreed to put off the tariffs for 30 days after the countries offered him some concessions.
Reciprocal tariffs will likely broaden Trump’s trade fight to even more countries. It remains to be seen whether the president uses the strategy to drastically raise U.S. barriers to imports or as a lever to extract concessions from countries that end up opening foreign markets.
When asked which legal authority would be used to impose tariffs, the White House official said the president could draw on several, depending on the action and country, including Section 232, which relates to national security; Section 301, which relates to unfair trading; and the International Emergency Economic Powers Act.
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