Donald Trump’s ‘Reciprocal’ Tariff Plan Sparks Fears of Global Trade War, Heightening Risks of Tensions and Inflation | US News
The President of the United States has pledged to address countries that impose taxes on U.S. imports by implementing reciprocal tariffs.
Donald Trump has instructed his team to begin calculating duties by early April, raising concerns about a potential global trade conflict that could also heighten inflation in the U.S.
“In the interest of fairness, I have resolved to impose a reciprocal tariff, meaning any country that charges the United States will receive the same treatment from us. No more, no less,” he stated on Truth Social.
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What is America’s trade position?
This measure is expected to initiate discussions with numerous countries aimed at reducing their tariffs and trade restrictions. The U.S. intends to decrease its goods trade deficit, which exceeded $1.2 trillion (£954 billion) last year.
A White House official noted that countries with substantial trade surpluses with the U.S. might be prioritized. The top five nations are China, Mexico, Vietnam, Ireland, and Germany, according to data from the U.S. Census Bureau.
Trump’s total trade war
At its core, Donald Trump’s insistence on reciprocal tariffs signals a state of total trade warfare.
This could lead to one of the most significant peacetime disruptions in global commerce.
By pledging to impose import taxes on any country that levies tariffs or VAT on American exports, he is delivering on a campaign promise.
The goal is to tackle a nearly trillion-dollar trade deficit – the gap between the value of U.S. exports and imports – which he perceives as a tax on American jobs.
To counter this, he plans to use tariffs to reduce the U.S. deficit while potentially making imports less appealing in favor of local production.
His primary targets seem to be major trading partners with whom the U.S. has the largest deficits.
This approach challenges the emerging belief in Whitehall that the UK might escape the turmoil relatively unscathed.
Read more from Paul here.
UK government minister Pat McFadden commented on Sky News’ Politics Hub with Sophy Ridge, stating that Britain will adopt a “wait and see” stance regarding the tariffs. He declined to specify if the government would retaliate.
Trump latest: New tariffs signal ‘total trade war’
The UK could face tariffs as high as 24% if Mr. Trump follows through on his threats to consider VAT a tariff, according to Paul Ashworth, chief North America economist at Capital Economics.
While some predictions are lower, he estimates that Britain would be the fourth most affected, following India (29%), Brazil (28%), and the EU (25%).
This calculation is based on VAT rates alongside existing tariffs, but the Trump administration also plans to consider regulations, government subsidies, digital services taxation policies, and exchange rate practices.
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“Most might view VAT as a non-discriminatory tax since it also applies to items produced domestically, offering a level playing field,” noted Mr. Ashworth.
However, the U.S. maintains that VAT constitutes a type of discriminatory tariff given that American states implement a significantly lower average sales tax.
Narendra Modi and Donald Trump at the White House. Pic: AP
On Thursday, Mr. Trump also met with Indian Prime Minister Narendra Modi, agreeing to collaborate on areas such as artificial intelligence, semiconductors, and strategic minerals.
During a subsequent news conference, Mr. Trump remarked that India has been “very strong on tariffs,” making it “very difficult to sell into India,” adding that “they’re going to be purchasing a significant amount of our oil and gas.”
According to the World Trade Organization, India’s tariff rates are the highest globally, averaging 17% for all products compared to 3.3% for the United States.
