United States President Donald Trump has announced plans to impose “reciprocal tariffs” on US trading partners, marking a significant escalation in trade tensions.
“Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!” Trump declared in all capital letters in a post on his Truth Social platform on Thursday.
The proposed measure would match US tariff rates on imports to the levels that other countries impose on American goods.
Trade analysts have warned that reciprocal tariffs could result in significant duty hikes for emerging market economies such as India and Thailand, which typically have higher tariff rates on US products.
However, countries with trade agreements with Washington, such as South Korea, are expected to face less impact from this policy.
During his election campaign, Trump had vowed: “An eye for an eye, a tariff for a tariff, same exact amount.”
For instance, under this policy, if India imposes a 25 per cent tariff on US automobiles, the US would, in turn, impose a 25 per cent tariff on Indian auto imports, according to a report by Nomura this week.
“Trump’s objective of implementing reciprocal tariffs is to ensure fair treatment for US exports, which could indirectly also address US trade imbalances with partner countries,” Nomura analysts stated.
Among Asian economies, India has a 9.5 per cent weighted average effective tariff on US exports, while Indian exports to the US face a three per cent tariff. Thailand imposes a 6.2 per cent tariff on US products, while China’s rate stands at 7.1 per cent.
Economists have noted that higher tariffs are often used by poorer nations as a means of revenue generation and protection, as they lack the resources to implement alternative trade barriers such as regulatory protectionism.
Scott Lincicome, vice president of general economics at the Cato Institute, previously told AFP that these tariffs are commonly employed by developing nations for economic stability.
It remains unclear whether Trump sees reciprocal tariffs as an alternative to the universal tariff of 10 to 20 percent that he floated during last year’s US presidential campaign or as an entirely separate policy initiative.