US President Donald Trump has signalled a significant shift in trade policy, announcing plans to introduce reciprocal tariffs on multiple countries. The official announcement is expected next week. According to a Reuters report, the move aims to align tariff rates on American imports with those imposed on US exports abroad.
A major move in US trade policy
Trump highlighted that the decision has been taken not with the intent to gain an advantage but to make sure that fairness is maintained in global trade.
The US President made this declaration during a meeting with Japan’s Prime Minister Shigeru Ishiba, Trump restated concerns related to trade imbalances, especially in the automotive sector. He underlined the differences as the European Union’s 10% tariff on auto imports in comparison to the US’s 2.5% rate. Moreover, he has also observed that countries like Brazil, India, and Vietnam enforce higher average tariffs on American goods, which he thinks has placed the US at an economic downside.
The announcements are anticipated to have a wider impact, potentially affecting the trade relationship with major partners. Although Trump has not clarified which countries will be affected. The Trump administration has earlier also raised concerns related to tariff structures in several countries. As reported by Reuters, Trump’s trade representative has said that India will be imposed a 12% tariff rate, Vietnam 5.1% and Brazil will face 6.7% .
Reciprocal tariffs’ impact on the US economy
The Financial market has not welcomed the announcement, as Wall Street has suffered extended losses over concern related to potential economic consequences. Moreover, consumer opinion in the US is also impacted as many fear that retaliatory decisions from other countries could fuel inflation.
Trump’s decision to impose higher tariffs has been declared as his administration is all set to reveal a new tax and spending package. The plan faces hurdles in Congress, where Republicans have less majority and may depend on special budgetary measures to pass the proposal.
Meanwhile, Trump along with supporters argues that increased tariffs could help counterbalance the rising national debt. However, experts warn that imposing tariffs has not resulted in generating more federal revenue.