Roving Periscope: Trump’s ‘reciprocal tariffs’ may come in April

Virendra Pandit

New Delhi: US President Donald Trump, who has said “India has more tariffs than any other country,” is likely to impose ‘reciprocal tariffs’ by April, 2025, which may affect the South Asian country expected to become the world’s third-largest economy in the next few years, Bloomberg reported on Friday, quoting officials.

In Washington, where he met Prime Minister Narendra Modi on Thursday, he also told reporters that he would enact import taxes on cars, semiconductors and pharmaceuticals “over and above” the reciprocal tariffs at a later date, the media reported on Friday.

He has ordered his administration to consider imposing reciprocal tariffs on several trading partners, raising the prospect of a wider campaign against a global system he claims is tilted against the US.

On Thursday, the President signed a measure directing the US Trade Representative and Commerce Secretary to propose new levies on a country-by-country basis in an effort to rebalance trade relations — a sweeping process that could take weeks or even months to complete.

Howard Lutnick, Trump’s nominee to lead the Commerce Department, told reporters that all studies are expected completed by April 1 and that the US President could act immediately afterward.

President Trump also said on Thursday that the BRICS nations could face 100 percent tariffs from the United States “if they want to play games with the dollar.” “If any trading gets through, it’ll be 100 percent tariff, at least,” he said in response to a question about the BRICS nations–Brazil, Russia, India and China–setting up their own currency, the media reported.

New tariffs would be customized for each country, to offset not just their own levies on US goods but also non-tariff barriers the nations impose in the form of unfair subsidies, regulations, value-added taxes, exchange rates and other factors that may limit US trade.

“I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said in the Oval Office. “In almost all cases, they’re charging us vastly more than we charge them but those days are over.”

The text of Trump’s directive on tariffs was not immediately provided by the White House. Trump cited barriers in the European Union, including a VAT, as an example of what the US is looking to respond to, while the official said Trump has also singled out Japan and South Korea as nations that he said are taking advantage of the US, and thus could be targeted in his latest push.

Reciprocal tariffs could be his broadest action to reduce US trade deficits and  “an unfair treatment” of American exports around the globe. Trump has already imposed 10 percent tariffs on Chinese goods and plans to slap 25 percent duties on all US steel and aluminium imports next month.

Yet his decision not to implement tariffs right away could be viewed as an opening bid for negotiation — following the same strategy he’s already used to extract concessions from Mexico, Canada and Colombia — rather than a sign he’s committed to following through.

Trump hopes to discuss with other nations about how existing policies have created an imbalanced trade environment and he is more than happy to lower tariffs if countries want to pare their levies or remove other trade barriers, the media quoted an official as saying.

But he said he did not expect to issue exemptions or waivers, and noted that despite giving Apple Inc. a pass on tariffs he imposed on China during his first term to compete with Samsung Electronics Co. Ltd., this tariff package “applies to everybody across the board.”

Trump’s tariff brinkmanship has injected uncertainty into the global economy, with businesses and consumers waiting to see how he proceeds on decision that could disrupt the US’s trade relationships with the rest of the world.

Reciprocal tariffs are expected to hit hard in less-developed economies where average duties on US products are higher. It differs from a universal levy on all imports, as Trump proposed during the 2024 presidential campaign. The official said Trump could divert back to a global tariff strategy later on.

The US President’s move came hours before he hosted the Indian Prime Minister, Narendra Modi, whose country stands to be affected by reciprocal tariffs more than many other major trading partners. Trump has repeatedly criticized India’s its high tariff barriers.

Trump has taken repeated aim at the EU’s 15 percent VAT. Japan also has a VAT, known as a consumption tax.

The President and his advisers have long argued that US goods face higher tariffs and other trade barriers overseas than other countries’ products do when they come into the US. With this move, his goal is to raise US barriers to match those of other countries he says have taken advantage of the US.

If carried out, that marks a sea change in how the US approaches trade and one of the fundamental tenets of the global trading system that the US shaped after the Second World War.

As the world’s largest economy, the US has long dangled access to its market as an incentive and seen openness as an economic advantage. It also advocated for what is known as the “most favored nation” approach to tariffs that had guided global trading rules since the 1940s. It holds that all countries should treat trading partners equally and give them the same access as their most-favored ones other than in cases where special free-trade agreements have been signed.

Trump blames US bilateral trade deficits on unfair trade practices, bad deals negotiated by his predecessors or a combination of both. He’s been especially critical of the EU and what he sees as the unfair treatment of American-made products, especially automobiles and agricultural commodities.

Most economists argue that trade deficits are the product of forces far stronger than mismatched tariffs — they also reflect broader macroeconomic factors such as the consumption of American households relative to those elsewhere, the US dollar’s reserve currency status and the appetite globally for US assets.