President Donald Trump formalised his commitment to “reciprocal tariffs” on Thursday by signing a presidential memorandum.
“They charge us a tax or tariff and we charge them,” Trump said during a press event in the Oval Office.
According to the president, the plan will allow the U.S. to consider other countries’ non-tariff policies as unfair trade practices, thus justifying tariffs in response.
These policies encompass value-added taxes (VATs) and other practices that the U.S. Trade Representative’s office deems to be unfair trade limitations.
Trump specified that foreign countries will not be permitted to send goods to the U.S. through another country. He also hinted at the possibility of additional tariffs, potentially including those on auto imports.
“We want a level playing field,” Trump stated.
VATs, which are consumption taxes applied at various stages of a supply chain, are considered “trade neutral.” The nonpartisan Tax Foundation released a report on Wednesday, challenging the Trump administration’s claim that VATs contribute to a lack of U.S. competitiveness in Europe.
The reciprocal tariffs will not be implemented immediately. Howard Lutnick, Trump’s nominee for commerce secretary, will oversee studies to determine the appropriate tariff levels for each affected country.
Lutnick anticipates that these studies will be completed by April 1, as he mentioned in the Oval Office.
In a post on Truth Social following the event, Trump indicated that his plan would include provisions for “subsidies” and “Nonmonetary Tariffs and Trade Barriers” employed by other countries.
“America has helped many Countries throughout the years, at great financial cost. It is now time that these Countries remember this, and treat us fairly,” Trump wrote.
These new tariffs will be in addition to existing duties imposed on China, Canada, and Mexico, as well as on imports of steel and aluminum. The tariffs on Canada and Mexico are currently suspended because both countries pledged to crack down on illegal crossings and drug trafficking at their borders with the U.S.
During his presidential campaign, Trump considered imposing across-the-board tariffs on all U.S. imports. He also advocated for Congress to pass the “Trump Reciprocal Trade Act,” which would authorise him to impose tariffs on goods from any country with higher tariffs on U.S.-made goods.
Since assuming office, Trump has expressed intentions to impose tariffs on the European Union, citing U.S. trade deficits with European partners and asserting that EU nations do not purchase enough American cars or farm equipment.
EU leaders have pledged to retaliate against new U.S. tariffs, cautioning that Trump’s actions could trigger a widespread trade war that would ultimately harm all parties involved.