In a bold statement on social media, US President Donald Trump announced that the United States would unveil reciprocal tariffs later on Thursday, marking a significant shift in economic policy.
“Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!” Trump posted in all capital letters on his Truth Social platform, signaling a major development in his administration’s trade strategy.
The announcement comes ahead of a high-stakes meeting with Prime Minister Narendra Modi, set to take place soon. The two leaders are expected to discuss a range of trade issues, and the announcement of these tariffs suggests a potential change in US-India trade relations.
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This strategy would essentially align US tariffs with the tariff rates imposed by other countries on US imports. Under the policy, if a country like India, for example, imposes a 25% tariff on US automobiles, the US would match that rate on imports from India.
The announcement has sparked concerns among economists, who warn that such a move could significantly raise tariffs on goods from emerging market economies. Countries such as India and Thailand, which have higher tariff rates on US products, would be most affected. In contrast, nations with existing trade agreements with the US, like South Korea, are seen as less vulnerable to these new tariffs.
Trump had previously promised during his campaign, “An eye for an eye, a tariff for a tariff, same exact amount,” reinforcing his stance on making trade relations “fair” for American exports. Analysts believe that his push for reciprocal tariffs aims to address US trade imbalances and ensure that American goods face equal treatment abroad.
Countries like India currently have a 9.5% average tariff on US exports, while the US imposes a much lower 3% tariff on Indian exports. Thailand’s tariff rate stands at 6.2%, while China’s is at 7.1%, further highlighting the disparity in tariff rates that Trump’s move seeks to address.
However, some economists caution that these higher tariffs are often used by poorer countries as a tool for revenue generation, given their limited ability to implement non-tariff barriers, such as regulatory protections.
It remains unclear whether Trump’s reciprocal tariffs are a replacement for the universal tariff proposal he floated during the 2020 election campaign, or if they are part of a broader strategy. What is certain, however, is that this new policy will likely have wide-reaching implications for global trade dynamics.
