US President Donald Trump has signed off on a plan for sweeping reciprocal tariffs, targeting both allies and competitors in a significant escalation of global trade tensions.
Speaking at the Oval Office on Thursday, Trump justified the move by accusing US trading partners of imposing unfair trade barriers.
“Major exporting nations attack our markets with punishing tariffs and even more punishing non-tariff barriers,” his trade advisor Peter Navarro stated, singling out the European Union over value-added tax (VAT) policies.
Key Highlights of the Plan
Country-Specific Tariffs: The US will impose matching tariffs on imports based on what each country levies on American goods.
Targeted Economies: The US Trade Representative and Commerce Department will focus first on countries with large trade deficits with the US.
Potential Impact: Emerging economies like India and Thailand, which have higher tariff rates on US goods, may face significant hikes, while South Korea and others with trade deals could see minimal effects.
Economic Concerns and Inflation Risks
Trump acknowledged that US prices “could go up” due to the tariffs but expressed confidence that they would stabilize over time.
However, analysts warn that broad tariff increases could fuel inflation and slow economic growth.
“Higher tariffs are often used by poorer countries for revenue and protection,” said Scott Lincicome of the Cato Institute.
India’s Position and Modi’s Visit
The announcement came just before Trump’s meeting with Indian Prime Minister Narendra Modi in Washington.
India, which has an average tariff of 9.5% on US exports, made some concessions ahead of the visit, including lowering duties on high-end motorcycles.
“If India imposes a 25% tariff on US autos, Washington will now impose the same 25% tariff on Indian auto exports,” explained a Nomura report.
With trade tensions rising, analysts believe Trump’s tariff strategy aims to pressure trading partners into fairer trade terms while addressing the US trade deficit.
