“On Trade, I have decided, for purposes of Fairness, that I will charge a RECIPROCAL Tariff meaning, whatever Countries charge the United States of America, we will charge them – No more, no less!” said President Donald Trump in a Saturday Truth Social post.
Previously, Trump announced plans to increase tariffs on goods from Canada, Mexico and China. He first announced the plan for reciprocal tariffs in a Thursday memorandum. According to The New York Times, it would be an “ambitious move that could shatter the rules of global trading and is likely to set off furious negotiations.”
While The Hill noted that the tariffs were not immediately imposed, it said the memo allows the Trump administration to begin a review process that could ultimately result in the tariffs.
In his announcement Saturday, Trump also said that “for purposes of this United States Policy, we will consider Countries that use the VAT System, which is far more punitive than a Tariff, to be similar to that of a Tariff.” The Tax Foundation describes VAT as a “consumption tax assessed on the value added in each production stage of a good or service,” and said that, while businesses along the value chain receive tax credits, the end consumer does not.
Per the Times, Peter Navarro, the president’s senior counselor for trade, called the European Union’s VAT the “poster child” for unfair trade toward American business. Navarro said that it allowed Germany to export more cars to the U.S. that it bought from the U.S.
“Sending merchandise, product, or anything by any other name through another Country, for purposes of unfairly harming America, will not be accepted,” said Trump’s post. “In addition, we will make provision for subsidies provided by Countries in order to take Economic advantage of the United States. Likewise, provisions will be made for Nonmonetary Tariffs and Trade Barriers that some Countries charge in order to keep our product out of their domain or, if they do not even let U.S. businesses operate.”
He said the system should correct what he called a pattern of unfairness against the U.S. by other nations. The president said his plan should help establish “A LEVEL PLAYING FIELD FOR AMERICAN WORKERS,” and said he instructed his cabinet to review the proposal. The Hill reported that White House officials suggested it should be “weeks” and no longer than “a few months” until the tariffs are in place.
“It is fair to all, no other Country can complain and, in some cases, if a Country feels that the United States would be getting too high a Tariff, all they have to do is reduce or terminate their Tariff against us,” Trump said. “There are no Tariffs if you manufacture or build your product in the United States.”
CBS News MoneyWatch correspondent Kelly O’Grady joined CBS Mornings Friday to discuss how the proposed tariff plan might impact American taxpayers. She identified three areas that might be impacted by the change: Brazil, India and Europe. Goods from Brazil that could be impacted include petroleum, beef and coffee; goods from India that could be impacted include agricultural products, textiles and medical devices and goods from Europe that could be impacted include wine, cars and weight loss drugs.
“If the U.S. puts a tariff on these countries that already tax us, you will see prices potentially go up on those items,” O’Grady said.
She added that the tariffs could go into place April 2 and that it would take about six to nine months to see prices go up. However, O’Grady also said that things could escalate into a trade war or that the proposal might be more of a negotiation tactic and not move forward exactly as proposed.
Though tariffs might come with higher prices, she said that Trump is hoping that they would encourage countries to buy more from American companies – something that, in theory, could increase demand for American goods and lead to more jobs. However, the last time tariffs went into effect the did actually result in job loss, O’Grady said.