The long-awaited “reciprocal” tariff plan from US President Donald Trump has been revealed, causing financial markets to react and sparking fears of a global trade war.
On Wednesday, Trump announced a 10 percent “minimum baseline tariff” on almost all imports into the United States, with higher duties on targeted countries to follow soon.
The aim of the new import taxes, according to Trump, is to reduce trade deficits, bring foreign manufacturing back to US soil, and pave the way for future tax cuts.
Trump’s move to target the global trading system he believes has taken advantage of the US led to immediate backlash from some of America’s key trading partners.
What was announced?
Using the International Emergency Economic Powers Act of 1977, Trump announced a 10 percent tariff on all countries, set to begin on April 5.
Furthermore, he revealed that countries with large trade surpluses with the US or higher duties on American imports would face “individualised” tariffs starting on April 9.
The calculation of these “individualised” tariffs was based on half of what Trump claimed those countries charged the US for its exports.
For example, the European Union faces a 20 percent tariff, while the United Kingdom is hit with a 10 percent levy. China, on the other hand, is now subject to a total of 54 percent in tariffs.
Mexico and Canada, despite not being included in the latest tariffs, already face 25 percent tariffs on exports not covered by the US-Mexico-Canada (USMCA) trade pact.
Certain goods like copper, semiconductors, energy, and specific minerals not found in the US will be exempt from reciprocal tariffs, as stated in a White House fact sheet.
Reciprocal tariffs may be subject to negotiation, with the possibility of adjustments for trading partners that address non-reciprocal trade arrangements.
What did Trump say?
During his announcement, Trump criticized the past actions of foreign nations and declared that the US was taking a new direction with the implementation of reciprocal tariffs.
He highlighted the significance of the day, claiming it marked a historic moment for American industry and the country’s future.
Despite the potential for full reciprocal tariffs, Trump opted for a more measured approach to avoid significant challenges for other countries.
Trump emphasized the importance of fair trade practices and the need for other countries to adjust their tariffs accordingly.
What have target countries said in response?
Following Trump’s announcement, world leaders swiftly condemned the tariffs, labeling them as harmful and unjust.
Several countries, including China, Taiwan, Australia, and the European Union, expressed disappointment and criticized the tariffs as unwarranted.
China promised countermeasures to protect its interests, urging the US to resolve differences through dialogue and adhere to international trade rules.
While some countries hinted at retaliatory measures, others stressed the importance of diplomacy in resolving trade disputes.
Which countries will hit back with their own measures?
As reciprocal tariffs are set to take effect on April 9, countries have a limited time to negotiate or consider retaliatory actions against the US.
Canada and the European Union are among the countries preparing to respond with countermeasures in the event of a trade war.
China is also expected to retaliate, potentially escalating tensions further in the global trade landscape.
Which countries will likely prefer diplomacy?
Mexico, on the other hand, has opted for a diplomatic approach in handling the situation, emphasizing the importance of dialogue and cooperation to resolve trade disputes.
Pada hari Rabu, Presiden Meksiko Claudia Sheinbaum mengatakan dia akan menghindari mengejar tarif “tit-for-tat”.
Demikian pula, Perdana Menteri Inggris Keir Starmer telah menolak balasan langsung, berjanji pada hari Kamis untuk tetap “tenang … dalam beberapa hari mendatang”.
Menteri Bisnis Jonathan Reynolds mengatakan kepada Dewan Rakyat pada hari Kamis bahwa Westminster sedang dalam pembicaraan dengan Washington untuk mengamankan kesepakatan yang bertujuan untuk menghindari atau mengurangi tarif Inggris.
Di Asia juga, sedikit negara yang bersedia melawan Trump dan mengambil risiko balasan lebih lanjut, kata Marro.
Selain China, “banyak pasar Asia lainnya tidak benar-benar dalam posisi untuk membalas dendam,” karena “pentingnya AS sebagai sumber permintaan akhir,” katanya.
Dario Perkins, direktur manajemen di TS Lombard – sebuah firma riset keuangan yang berbasis di London – secara umum setuju dan mengatakan sebagian besar negara akan lebih memilih “tuas kebijakan lain” daripada tarif balasan.
“Saya pikir bank sentral akan melonggarkan kebijakan moneter [dengan menurunkan suku bunga untuk mencoba meningkatkan pertumbuhan],” kata Perkins kepada Al Jazeera.
Meskipun demikian, katanya “perdagangan global akan lebih lemah dan rantai pasokan internasional akan dipendekkan. Era multilateral sedang mati.”