Trump signs plan for 'reciprocal' tariffs on trading partners
“I have decided for purposes of fairness, that I will charge a reciprocal tariff - meaning whatever countries charge the United States of America, we will charge them no more, no less...
US President Donald Trump signed a memorandum yesterday, directing his administration to determine “the equivalent of a reciprocal tariff with respect to each foreign trading partner”, reported Xinhua.
“I have decided for purposes of fairness, that I will charge a reciprocal tariff - meaning whatever countries charge the United States of America, we will charge them no more, no less.
“In other words, they charge us a tax or tariff and we charge them the exact same tax or tariff. Very simple,” Trump said at the White House.
According to the memorandum, “It is the policy of the US to reduce our large and persistent annual trade deficit in goods and to address other unfair and unbalanced aspects of our trade with foreign trading partners.”
Under the so-called “fair and reciprocal plan”, the administration will work “strenuously” to counter non-reciprocal trading arrangements with trading partners by determining the equivalent of a reciprocal tariff for each foreign trading partner.
“This approach will be of comprehensive scope, examining non-reciprocal trade relationships with all US trading partners,” it said.
Under World Trade Organisation (WTO) negotiations, “reciprocity” meant overall balance, in terms of concessions given and concessions received, between each country on the one hand and all its trading partners on the other hand, said Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.
He said Trump has redefined the meaning of “reciprocity” to apply on a line item basis, country by country, rather than overall balance, he told Xinhua.
“With reciprocity, as defined by Trump, US tariffs would probably be on average 10 to 15 percentage points higher. In my opinion, tariffs actually hurt the US economy, so while they would raise revenue... they would reduce GDP growth,” Hufbauer said.
Observers believe this logic undermines the traditional principle of overall balance under the WTO framework, potentially leading to trade frictions and negotiation deadlocks, and prompting other countries to take countermeasures in response to US tariff increases.
- Bernama
