U.S. President Donald Trump on Thursday took what could become his most consequential action involving international trade early in his second administration.
Trump, who signed a memorandum calling for reciprocal tariffs, told a group of reporters in the Oval Office that “if you build your product in the United States, there are no tariffs.”
The goal is to bring down America’s budget deficit, estimated to be approaching $2 trillion.
The president added that the action “is fair to all. No other country can complain.”
Trump ordered Howard Lutnick and Jamieson Greer, his picks for commerce secretary and U.S. trade representative, respectively, to lead teams to calculate new import taxes on America’s trading partners. To assess the amounts, they are to take into consideration other countries’ tariff rates, subsidies to industry, value-added taxes — which are common in the European Union — regulations and undervaluing of currencies.
The EU value-added tax is the “poster child” for unfair trade, Peter Navarro, the president’s senior counselor for trade, told reporters on Thursday.
Modi visit
Trump put his signature on the edict just hours before welcoming Indian Prime Minister Narendra Modi to the White House.
India is expected to be one of the countries most affected by the action. India has relatively high tariff and non-tariff barriers on numerous American exports. It has faced pressure from Washington to reduce its 100% tariff on walnuts, the 70% levy on apples and the 60% import tax on dairy products.
Other sectors include smartphones, pork and poultry, and medical devices. India reduced a 100% tariff on Harley-Davidson motorcycles — an iconic brand deeply embedded in the economy of the Midwestern state of Wisconsin — to 50% in 2018.
The two countries announced on Thursday an energy agreement to make the United States the primary supplier of oil and gas to India.
Trump, alongside Modi, at a Thursday evening news conference said he would pave the way for the United States to sell F-35 Stealth fighter jets to India and the two leaders would work to make tariff cuts in order to reduce America’s nearly $50 billion trade deficit with India.
“Prime Minister Modi and I agreed we would begin negotiations to address the long-standing disparities,” Trump said.
Modi said he and Trump have set a “target of more than doubling our bilateral trade to attain $500 billion by 2030. Our teams will work on concluding very soon a mutually beneficial trade agreement.”
In response to a reporter’s question about the reciprocal tariffs, Trump confirmed India would also be targeted.
“Whatever India charges, we’re charging them,” he said.
Some high-ranking government officials in New Delhi have suggested finding a way to appease the U.S. president amid concern that he could negotiate a sweeping trade deal with India’s neighbor and rival, China, according to Aparna Pande, director of the Hudson Institute’s Initiative on the Future of India and South Asia.
If Trump and China’s leader, Xi Jinping, were to forge a sweeping trade pact, “India could face a double challenge — on the trade/economic front and the strategic big picture front,” Pande told VOA on Thursday.
“India is a country that Trump has railed against in the past, although I don’t think it’s a particular obsession of his in the way that China is, because China is a major strategic competitor to the United States. Or the way Canada and Mexico are, because they are the bordering countries,” according to Milan Vaishnav, director of the South Asia program at the Carnegie Endowment for International Peace.
Since being sworn into office on Jan. 20 for his second nonconsecutive term as president, Trump has moved quickly on the trade front. He imposed, and then put on hold amid further negotiations, across-the-board 25% tariffs on nearly all products from America’s two continental neighbors, Canada and Mexico.
He placed a flat 10% tariff on all Chinese goods, which prompted Beijing to respond with countertariffs of 10% to 15% on crude oil, liquefied natural gas, farm machinery and some other U.S. products. Economists say the tariffs cover about $450 billion worth of Chinese goods, while the Chinese tariffs hit $15 billion to $20 billion in American products.
Trump characterized his actions as a way to pressure those three countries into doing more to stop the flow of the synthetic opioid fentanyl into the United States. He also has blamed Canada and Mexico for being lax in preventing migrants from crossing their borders into the U.S.
Trump earlier this week announced that effective in March, all steel and aluminum imports will be taxed at a minimum of 25%, an action analysts predict could significantly raise sticker prices at automotive dealerships in North America.
‘Stagflationary shock’
Analysts say Trump’s tariff actions will hurt the growth of the U.S. economy this year.
“Tariffs impart a modest stagflationary shock to an economy,” according to a report issued Thursday by financial services provider Wells Fargo. “The U.S. economy entered 2025 with a fair amount of momentum, but we look for real GDP growth to downshift a bit over the next few quarters as the price-boosting effects of tariffs erode growth in real income, thereby weighing on growth in real consumer spending.”
Peter Harrell, who was jointly appointed to the White House National Security Council and National Economic Council in the previous administration of President Joe Biden, said Trump “promised us he would be a ‘tariff man’ and he is certainly delivering.”
“I think this is only part of the tariffs we are likely to see or at least threatened” over the coming months, Harrell said Thursday morning on “The Capital Cable,” a livestream program of the Center for Strategic and International Studies’ (CSIS) Korea Chair.
These actions or the threat of them give the Trump administration leverage by having “a tariff bazooka ready to fire,” said Harrell, currently a Carnegie nonresident fellow.
On the same livestream, Philip Luck, director of the CSIS economic program, warned that Trump’s “Fortress America” will result in Americans paying “really high costs” due to retaliatory actions by Washington’s trading partners. If the president’s goal is to use such trade actions partly to increase the cash coffers, tariff revenue is approximately 1.5% of government revenue, “so it’s tiny,” Luck said.
The United States is in a dominant position as the largest economy and well-integrated into the global trading system, giving it leverage built up over an 80-year period, but Trump’s actions could squander that goodwill, Luck said.
“We’ve been a reliable partner for a long period of time,” he noted, with the United States traditionally setting tariffs through negotiations involving international groups such as the World Trade Organization.
“There’s a lot of anxiety, bordering on panic in [South] Korea,” because Trump, immediately in his second term, is using tariffs for noneconomic reasons, said Yeo Han-Koo, a senior fellow at the Peterson Institute for International Economics
“U.S. policymakers really need to see the strategic angle” amid the regional competition with China and how they can collaborate with Tokyo and Seoul, suggested Yeo, who as South Korea’s trade minister coinciding with Trump’s first term was at the negotiating table across from American officials.
Shipbuilding, civil nuclear power and biopharmaceuticals are three sectors where the United States, Japan and South Korea could cooperate to help counter Beijing’s rising trade and military influence, Yeo suggested.
Iram Abbasi of VOA’s Urdu Service contributed to this report. Some information came from The Associated Press.