What are Trump's reciprocal tariffs and which countries will be affected?

US President Donald Trump has signed a new initiative aimed at implementing reciprocal tariffs, a move that could significantly reshape the United States' trade dynamics with the global market.

 

What are reciprocal tariffs?

Reciprocal tariffs are measures designed to ensure equitable trade by adjusting tariffs to match those imposed by trading partners. Trump claims that many countries have higher tariffs on US imports than the United States does on theirs, creating an uneven playing field that disadvantages US manufacturing.

 

Regarding reciprocal tariffs, Trump made a campaign promise stating: “An eye for an eye, a tariff for a tariff, same exact amount.”

 

 

“Every country will be reciprocal,” Trump remarked on Sunday.

 

This idea is not new; during his first term, Trump's Commerce Secretary, Wilbur Ross, suggested increasing tariffs to align with the import taxes of other nations, with plans to reduce them only once those countries did the same.

Trump’s nominee to lead the Commerce Department, Howard Lutnick, stated that the proposals could be finalised by early April.

However, this approach carries potential risks. Heavier tariffs on imports could lead to increased inflation in the US, the world’s largest economy, while also slowing down economic growth in other nations.

 

How will the tariffs be structured?

Trump’s reciprocal tariffs will be tailored to each trading partner, as reported by Bloomberg, referencing a White House memo. These tariffs aim to address perceived unfair trade practices, including excessive regulations, value-added taxes (VAT), exchange rate manipulation, and inadequate intellectual property protection.

 

The tariffs could be applied in several forms, such as targeting specific products, entire industries, or a general tariff on all goods from a particular country. In some cases, the US might reduce tariffs in response to positive actions from other countries, though this remains uncertain.

 

How did India respond to Trump’s tariff call?

Prime Minister Narendra Modi and US President Donald Trump have agreed to initiate discussions on trade and tariff-related matters, as confirmed by Foreign Secretary Vikram Misri.

 

During a press briefing following a meeting between PM Modi and Trump at the White House, Misri said, “We have indicated, and the two leaders have agreed today to start discussing trade and tariff-related issues.”

 

He further added, “So, I will let those discussions begin before commenting on what may unfold with regard to the plans announced today by the US administration.”

 

Before he met with PM Modi, Trump declared reciprocal tariffs on countries, including India. “On trade, I have decided that for fairness, I’ll charge reciprocal tariffs — meaning, whatever countries charge the United States of America, we will charge them — no more, no less. They charge us with tax and tariffs, it’s very simple we will charge them with exact tax and tariffs,” Trump explained.

 

Which countries would be most affected by the tariffs?

Emerging markets like India, Argentina, and many nations in Africa and Southeast Asia are expected to be hit hardest by these tariffs, according to the report. While these countries will face the most significant impact, other regions will also experience some degree of disruption.

 

[With agency inputs]