Washington:
US President Donald Trump is planning to impose a new wave of tariffs on most imports during the “Liberation Day” tariff announcement on April 2, laying the groundwork for a potential escalation in global economic hostilities. The upcoming announcements would reportedly be focused on so-called
“reciprocal tariffs”, which the American leader sees as retribution for taxes and other barriers from nations, including longtime US allies.
“April 2nd is going to be liberation day for America. We’ve been ripped off by every country in the world, friend and foe,” Trump said in the Oval Office Friday. It would bring in “tens of billions,” he added.
The President also hinted there may be “flexibility” in his plan to impose blanket tariffs on most US trading partners.
“I don’t change. But the word flexibility is an important word,” Trump said. “Sometimes it’s flexibility. So there’ll be flexibility, but basically it’s reciprocal.”
Targeted Tariffs
In what is seen as a potential relief for markets gripped by anxiety about an all-out tariff war, the coming wave of tariffs is poised to be more targeted than the barrage Trump has occasionally threatened, Bloomberg reported citing his aides and allies.
The report said the US President would announce widespread reciprocal tariffs on blocs or nations, excluding only some countries. The administration will not, however, plan separate, sectoral-specific tariffs to be unveiled at the same event, as Trump had once teased, officials said.
During his first two months in office, Trump raised tariffs on nearly $800 billion in imports from China, Mexico and Canada, sending the stock market careening and raising the risks of a US recession while inviting retaliation against domestic industries by trade partners. Despite the blowback, the President’s senior advisers are now publicly pledging to create a new tariff regime to impose new duties.
The Reciprocal Plan
Per the Bloomberg report, Donald Trump is looking for immediate impact with his tariffs, planning announced rates that would take effect right away– a measure that could further strain ties with allied nations and provoke at least some retaliation.
“Only countries that don’t have tariffs on the US, and with whom the US has a trade surplus, will not be tariffed under the reciprocal plan,” an official said.
As with many policy processes under Trump, the situation remains fluid and no decision is final until the president announces it, the report said.
Trump officials have publicly acknowledged in recent days the list of target countries may not be universal, and that other existing tariffs, like on steel, may not necessarily be cumulative, which would substantially lower the tariff hit to those sectors. It’s already a retreat from the American leader’s original plans for a global across-the-board tariff at a flat rate, which later morphed into his “reciprocal” proposal that would incorporate tariffs and non-tariff barriers.
It’s also not clear which countries Donald Trump will include under his more targeted approach. He has cited the European Union, Mexico, Japan, South Korea, Canada, India and China as trade abusers when discussing the matter, an official said.
While narrower in scope, Trump’s plan is still a much broader push than in his first term and will test the appetite of markets for uncertainty and a raft of import taxes. “There will be big tariffs that will be going into effect, and the president will be announcing those himself,” White House Press Secretary Karoline Leavitt said Thursday.
‘Dirty 15’
US Treasury Secretary Scott Bessent said last week that steel and aluminium tariffs may not necessarily add to the country-by-country rates. “I will have a better sense as we get closer to April 2. So, they could be stacked,” he told Fox Business last week.
In the same interview, he signalled that roughly 15 per cent of countries, that are the worst offenders, will be targeted by the President.
“It’s 15 per cent of the countries, but it’s a huge amount of our trading volume,” he said, referring to it as the “dirty 15” and signalling they are the target.
“And they have substantial tariffs, and as important as the tariff or some of these non-tariff barriers, where they have domestic content production, where they do testing on our – whether it’s our food, our products, that bear no resemblance to safety or anything that we do to their products,” he said.
Trump’s Tariff Ride
Trump sees tariffs as a key tool both to steer new investment to the US and to tap new sources of revenue, which he hopes to offset tax cuts Republicans are considering.
“Tariffs will make America more competitive. They will incentivize investment into America,” Stephen Miran, Trump’s Council of Economic Advisers chairman, said in an interview, declining to detail the steps.
The White House has also argued that trillions of dollars in pledged announcements by foreign countries and companies provide evidence Trump’s plans are working. Miran told Fox Business last week that talks are ongoing ahead of the April 2 deadline.
“I do think that it’s perfectly reasonable to expect that we could raise trillions of dollars from tariffs over a 10-year budget window and like I said before, using those revenues to finance lower rates on American workers, on American businesses,” he said.
Still, economists have questioned whether the tariffs would meaningfully impact the deficit, particularly considering the risk of inflation or an economic slowdown.