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Donald Trump unveiled a sweeping plan to impose “reciprocal” tariffs on America’s trading partners on Thursday, heralding greater disruption for the global economy.
In a broadside directed at both US allies and adversaries, Trump directed his top trade advisers to come up with new tariffs on a “country-by-country” basis in retaliation against levies, regulations and subsidies deemed unfair by Washington.
White House officials and Trump warned that trading partners Brazil, India, Japan, Canada and the EU were at risk of being hit by extra tariffs.
However, an official said the administration would examine the countries with which the US had the largest trade deficits, which would include Mexico and China, before imposing the new levies.
“I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said. “In almost all cases, they’re charging us vastly more than we charge them but those days are over.”
Reciprocal tariffs could be imposed as early as April 2, accelerating efforts in capitals across the globe to launch negotiations with Washington to forestall their implementation.
The dollar weakened slightly on Friday against a basket of currencies including the euro and yen, hitting an almost three-week low. It has fallen more than 1 per cent since the start of the week, while the US 10-year Treasury yield nudged up to 4.535 per cent.
Analysts at Barclays said in a note published on Friday: “While global financial markets may be inclined to take some relief from the delay . . . it is not clear to us whether the delay necessarily reflects a lower likelihood that they will eventually be imposed.”
Trump’s latest tariff plan was unveiled in a week in which he moved to transform the geopolitical landscape with a renewed push to end the war in Ukraine with calls to Russian President Vladimir Putin and Ukraine President Volodymyr Zelenskyy.
As he hosted Narendra Modi, India’s prime minister, Trump criticised traditional US allies while seeming to extend an olive branch to strategic foes such as China and Russia. Trump even invited Russia to rejoin the G7 group of wealthy nations after it was suspended in 2014 over its annexation of Crimea.
“It’s not a question of liking Russia or not liking Russia,” Trump told reporters at the Oval Office. “All you talk about is Russia, and they should be sitting at the table. I think Putin would love to be back.”
Trump said he would include Kyiv in any negotiations with Putin over ending the war. He added he would hold additional talks with China and Russia over defence spending in a bid to lower America’s $850bn defence budget.
He said he thought the US and China could have “a very good relationship”, adding: “I think that China is a very important player in the world, I think, [Beijing] can help us get this war over with Ukraine and Russia.”
The president had particularly sharp words for the EU, describing the long-term US ally as “very nasty”. He criticised the bloc over its value added tax regime, digital services tax and efforts to curtail American tech companies in the courts.
“The European Union’s been very tough on our companies,” Trump said. “They sued Apple, they sued Google, they sued Facebook, they sued many other companies, and they’re American companies . . . the court system over there is not very good to our companies.”
During their meeting at the White House, Trump hailed Modi as a “very special man” and spoke of the “special bond” between India and the US.
But he also criticised New Delhi for its high tariffs and announced measures to increase US oil and gas and defence sales to India with the aim of reducing the deficit, which surpassed $35bn last year.
Trump said he and Modi would begin “negotiations to address the long-running disparities that should have been taken care of over the last four years” with the goal of signing a trade agreement.
Trump’s reciprocal tariff plan would be at odds with many of the established rules of global trade. White House officials said they could use different legal powers to implement reciprocal levies, such as Section 301 of the Trade Act and the International Emergency Economic Powers Act, to circumvent Congress.
Trump said he intended to issue further tariffs against cars, chips and pharmaceuticals “over and above” the reciprocal tariffs. He has already applied levies of 10 per cent on all Chinese imports and tariffs of 25 per cent on all steel and aluminium imports are set to take effect next month.
Additional reporting from John Reed in New Delhi and Arjun Neil Alim in Hong Kong