President Trump on Thursday signed a memorandum directing his administration to weigh reciprocal tariffs, threatening to impose levies on U.S. imports from nations that put higher duties on American products.
The plan “will seek to correct long-standing imbalances in international trade and ensure fairness across the board,” the White House said in a statement about the tariffs.
“Gone are the days of America being taken advantage of: this plan will put the American worker first, improve our competitiveness in every area of industry, reduce our trade deficit, and bolster our economic and national security.”
The Trump administration did not disclose when the tariffs would take effect.
The development marks an escalation of a budding U.S. trade war as Mr. Trump tries to wring concessions from the country’s economic partners and moves to leverage trade policy to accomplish other foreign policy aims.
The announcement came before a meeting between Mr. Trump and Narendra Modi, prime minister of India, a country that could be targeted by reciprocal tariffs. Modi has recently sought to assuage the Trump administration’s concerns regarding trade issues, moving to cut import India’s tariffs on some motorbikes and bourbon whiskey, while also agreeing to receive planes carrying undocumented migrants.
President Trump has already unveiled tariffs on Canada, China and Mexico. He paused tariffs on Canada and Mexico for a month after both countries vowed to increase border security. He also this week announced 25% tariffs on steel and aluminum that are scheduled to take effect in March.
Applying a matching tariff against select U.S. trading partners is likely an alternative to imposing a more sweeping levy, according to economists. Argentina, Brazil, India and Turkey have the biggest gaps in tariffs with the U.S., trade data shows.
“While most developed markets would come out relatively unscathed, emerging markets would suffer a greater loss of competitiveness, with India, Brazil and Turkey looking among the most exposed,” Shilan Shah, deputy chief emerging markets economist with Capital Economics, told investors in a report. “It is probable that their governments (among others) would provide concessions to President Trump in an attempt to prevent reciprocal tariffs from being imposed.”
Trump administration officials say tariffs can protect domestic manufacturers and also spur both American and foreign companies to create more jobs in the U.S.
Economists warn that tariffs, which act as taxes on foreign goods, could lead to higher prices for consumers. The latest round of U.S. tariffs come amid signs that inflation is flaring. The Consumer Price Index in January rose to 3% on an annual basis, top analyst forecasts.
Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.
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