Trump sets out process for imposing global reciprocal tariffs

President Donald Trump signed a presidential memorandum Thursday moving the United States one step closer to a “reciprocal” tariff system that could dramatically raise duties on certain imports from around the world.

The memo lays out a process for Trump to impose reciprocal tariffs on trading partners, effectively raising tariffs on a country’s exports to the U.S. based on the level of tariff and non-tariff barriers that country imposes on U.S. goods.

“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!,” Trump wrote on his social media platform Truth Social. ”America has helped many Countries throughout the years, at great financial cost. It is now time that these Countries remember this, and treat us fairly – A LEVEL PLAYING FIELD FOR AMERICAN WORKERS.”

A White House official said top Cabinet officials would study the matter further before deciding on specific rates for each country. That process could take weeks or months, added the White House official, who was granted anonymity per the ground rules of the call with reporters.

Howard Lutnick, Trump’s nominee to lead the Commerce Department, indicated the administration could move quickly after executive branch agencies deliver a number of trade reports to the White House.

“Our studies should be all complete by April 1. So we’ll hand the president the opportunity to start on April 2,” Lutnick said at the White House.

Ultimately, the new, higher tariff rates could result in steeper prices for countless goods Americans buy from abroad, something economists have warned will increase inflation. Trump and his top aides were quick to downplay the inflationary impact on Thursday, however.

“Prices could go up short-term, but prices will also go down,” Trump said in remarks at the White House, according to the press pool. “Long-term it’s going to make our country a fortune.”

Pressed in an interview on MSNBC about reciprocal tariffs driving up inflation, National Economic Council Director Kevin Hassett said that while he expected that “prices will fluctuate,” he is confident that “there won’t be strong evidence of a price effect of tariffs.”

The new memo builds off the executive order the president issued on trade on his first day in office, the White House said. That order set an April 1 deadline for federal agencies and departments to deliver reports to the president that could be the legal basis of new sweeping duties.

The White House official said the president could ultimately use a mix of trade authorities including Section 301 of the Trade Act of 1974, which was used by both the first Trump and Biden administrations to impose tariffs on hundreds of billions of dollars worth of Chinese trade. As well as Section 232 of the Trade Expansion Act of 1962, and the International Emergency Economic Powers Act, which grants a president sweeping economic power in an emergency.

The White House said Lutnick and Trump’s pick for U.S. trade representative, Jamieson Greer, are being tasked with delivering a report to the president on a country-by-country basis, which will be completed in consultation with the treasury secretary and Homeland Security secretary and other senior officials.

Trump’s proposal would mark a radical departure from the tariff regime that the United States has long used and be unlike any other tariff system in the world.

Currently, the United States has one primary set of tariffs — known as the “most-favored nation” rate — covering thousands of products. Although the tariff rates vary by product, the basic structure is the same for almost every country in the world.

“If President Trump does move the United States to a reciprocity-based tariff system, that would arguably be a fundamental change to U.S. trade policy, and among the biggest in more than 75 years — since the creation of the current multilateral trading system,” said Tim Brightbill, a trade attorney at the law firm Wiley Rein in Washington, D.C.

Under Trump’s proposal, the U.S. would develop different tariffs rates for different countries based on an overall assessment of their trade openness, the White House official said. That would include an examination of both tariffs and non-tariff measures, such as value-added taxes, subsidies for local industries, regulations, exchange rate actions and any other practice that U.S. trade officials determine to be unfair, the official added.

The expected result is an individual additional tariff rate for each country or trading partner, rather than attempting to set corresponding tariff rates on every product the United States imports from the trading partner, the White House said.

“There’s two things that this memorandum draws attention to. One is tariffs, which everybody is well familiar with, but the president also is focusing like a laser beam on what he calls non-monetary barriers, or non-tariff barriers,” the White House official said. “For example, Japan has relatively low tariffs, but high structural barriers.”

The senior official also took aim at value-added taxes used by members of the 27-nation European Union, which he said effectively increases the EU’s tariff on autos to almost 20 percent from its nominal level of 2.5 percent. He also charged that VAT rebates that EU exporters receive “act as a significant export subsidy.”

However, mainstream economists dispute the idea that VATs are a trade barrier, saying they are merely a tax on domestic consumption, regardless of where a product is made, similar to the sales tax imposed by most U.S. states.

In another example, the White House noted the U.S. tariff on ethanol is only 2.5 percent, while Brazil charges an 18 percent rate. India, it said, charges a 100 percent tariff on motorcycles, while the U.S. rate is only 2.4 percent.

A White House fact sheet also took aim at digital services taxes imposed by many European countries as well as Canada. Those are seen as discriminatory because they primarily affect large U.S. tech companies such as Alphabet and Meta.

“Though America has no such thing, and only America should be allowed to tax American firms, trading partners hand American companies a bill for something called a digital service tax. Canada and France use these taxes to each collect over $500 million per year from American companies,” the White House fact sheet said.