US President Donald Trump has announced the introduction of large-scale duties on US imports. The tariffs are expected to affect trade volumes worth trillions of dollars.
Speaking in the Rose Garden near the White House, the US president announced “very, very good news”.
“In a few minutes, I will sign a historic executive order on reciprocal tariffs for countries around the world. Reciprocal. That means what they do to us, we’ll do to them. Very simple. Very simple,” Trump said.He criticised Thailand, India, Vietnam and other countries for what he saw as unfair tariff policies and tax regimes on US goods. And cited the example that the US levies only 2.4 per cent duty on motorbikes, while India levies 70 per cent and Vietnam 75 per cent.
He also detailed the “unfair tariffs” that other countries have imposed on American goods before signing the executive order. “Sometimes friends are worse than enemies,” Trump said, referring to the high tariffs that certain allied countries like Japan have imposed.
“This is one of the most important days in American history. This is our declaration of economic independence,” the US president emphasised.
“As for countries that treat us badly, we will subtract the sum of their tariffs, non-monetary barriers and other forms of fraud,” he said, explaining exactly how much “reciprocal tariffs” the US will impose.
He also reiterated that the US will impose 25 per cent tariffs on all foreign-assembled cars at midnight on April 2 to 3. He also announced the imposition of a universal or “minimum base tariff” on imports of 10 per cent.The magnitude of duties on major US trading partners
According to the decree, the U.S. imposes additional duties in the amount of:
China-34% European Union-20% Vietnam-46% Taiwan-32% Japan-24% South Korea-25% Thailand-36% Switzerland-31% Indonesia-32% Malaysia-24% Cambodia-49% UK-10% South Africa-30% Brazil-10% Bangladesh-34% Singapore-10% Israel-17% Philippines-17% Chile-10% Pakistan-29% Sri Lanka-44%
The reciprocal tariffs will come into effect from 9 April 2025. And all countries will start paying the minimum base tariff from 5 April.
And the base tariff of 10% will be added to tariffs imposed against specific countries. This means, for example, that on Chinese goods the tariff will be 44% (34+10), on goods from the EU – 30% (20+10).
How the new duties were prepared
Trump and his inner circle have previously named the European Union, Mexico, Canada, Japan, South Korea, Vietnam and India as likely targets of future duties in an effort to “punish unfair trade practices.”
According to Bloomberg, $33 trillion worth of global trade is in the crosshairs, with countries from Brazil to China facing a 4 to 90 per cent drop in exports to the US. Presumably, average duties could rise by 15 per cent, pushing up inflation and increasing the risk of a US recession.
The measures taken today are in addition to steps taken since Trump took office in January. His administration has imposed an additional 20% tax on all imports from China and 25% on many goods from Mexico and Canada. There is also a global 25% tariff on steel and aluminium imports. An executive order was also signed imposing 25% duties on imports of cars and some parts (effective 3 April).
What the consequences could be
According to Bloomberg, under the maximum approach, average tariff rates in the US would increase to 2%, which would reduce US GDP by 4% and increase prices by almost 2.5% over two to three years.
The impact on trading partners in any scenario would be severe. China, the EU and India could top the list of countries that would be affected by the impact on exports to the US, although their economies could endure. Canada and Southeast Asian countries are likely to experience a larger overall impact.