US President, Donald Trump has unveiled expansive new tariffs in his sweeping “Liberation Day” reset of American trade global policy.
He referred to the historic move as a “declaration of economic independence.”
Using national emergency powers, Trump announced 10% tariffs on all imports into the United States, and even higher tariffs on goods from about 60 countries or trading blocs that have a high trade deficit with the US.
That includes China and the European Union, which will be levied new duties of 34% and 20%, respectively.
Trump’s latest actions represent the most significant escalation in US tariffs in nearly a century, since the Smoot-Hawley Act of 1930.
Trump’s so-called reciprocal tariffs will not match the ones foreign countries impose on the United States unless a country already had a 10% US tariff. They also won’t stack on top of existing duties by sector.
Trump said from the Rose Garden, “We will charge them approximately half of what they are and have been charging us, so the tariffs will be not a full reciprocal.”
“I could have done that, I guess, but it would have been tough for a lot of countries and we didn’t want to do that.”
Donald Trump
For instance, instead of matching the European Union’s 39% tariff on US goods, the new duty on the EU will be 20% instead.
China, which was already slapped with a 20% tariff for its role in fentanyl trade, will be levied an additional 34% — half of the 67% tariff it imposes on the US — bringing its new rate to 54%.
The baseline 10% tariff goes into effect on Saturday, one minute after midnight, then any higher tariffs will go into effect on April 9.
The 25% tariff on goods from Mexico and Canada that don’t comply with the United States-Mexico-Canada Agreement will remain in place until Trump determines that issues around fentanyl and illegal immigration have been resolved.
Whenever that happens, Canada and Mexico will then default to the administration’s current trade approach for other countries.
Foreign countries, including long-time US allies, say Trump’s tariffs won’t go unanswered, setting the stage for a global, tit-for-tat trade war that could quickly spiral out of control.
Such a development would only fuel inflation further and weigh on US consumers, many of whom are already on the ropes.
China Hit Hardest
China, the second top exporter to the US behind Mexico, was hit the hardest.
China, already subject to a 20% across-the-board tariff on goods it ships to the United States, will now face a 54% tariff.
That is because President Donald Trump imposed a 34% reciprocal tariff on all Chinese imports that will come on top of the existing 20% tariff that Trump slapped on China to incentivize it to restrict the flow of fentanyl into the United States
This could raise prices substantially for a number of goods Americans buy from China.
The United States imported $439 billion worth of goods from China last year, the second top source of imports behind Mexico.
It was reported that starting on May 2, the 54% tariff rate will also be applied to packages worth less than $800 coming to the US from China and Hong Kong, goods that were previously excluded from tariffs because of the so-called de minimis exemption.
This means Americans who order goods from Chinese-based companies like AliExpress, Temu and Shein could have to pay 54% more.
To skirt existing tariffs, some Chinese companies have shifted production to other Asian countries.
However, Trump’s new reciprocal tariffs on other Asian nations announced will hurt China, too.
Vietnam will face tariffs of 46% and Cambodian goods will be tariffed at a rate of 49%.
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