US President Trump announced a major policy adjustment on Thursday (February 13), planning to narrow the US goods trade deficit of up to $1.2 trillion by raising tariffs to the same level as other countries and offsetting non-tariff barriers. This "reciprocal tariff" plan may be implemented as early as early April, involving 186 countries and over 17000 imported goods, and may trigger a huge change in the global trade pattern.

The core content of equivalent tariffs

Trump instructed departments such as the Department of Commerce and the Office of the United States Trade Representative to recalculate the tariff rates imposed by the United States on each country, with the goal of achieving tariff equivalence.

For example, Brazil imposes an 18% tariff on US ethanol, while the US almost exempts Brazilian ethanol from taxes. According to the new plan, the United States may raise tax rates to be comparable to Brazil or require Brazil to lower tax rates.

Key target countries

White House officials stated that countries with large trade surpluses or "adverse" situations with the United States will be prioritized as targets, including China, Mexico, Vietnam, Ireland, and Germany.

The average tariff rate in India is as high as 17%, far higher than the 3.3% in the United States, and may become a key adjustment target.

Calculation of non-tariff barriers

Trump's order requires calculating the cost of non-tariff barriers, including regulatory restrictions, unfair taxation (such as EU value-added tax), and subsidy activities of Chinese state-owned enterprises.

These costs will be included in the new tariff rates, and White House officials say the impact of non-tariff barriers may even exceed standard tariffs.

Implementation Schedule

US Commerce Secretary nominee Lutnik stated that Trump will be prepared to take new tariff actions before April 1st.

The Ministry of Commerce, the Office of the Trade Representative, and the Ministry of Finance will submit a series of reports, and the Office of Management and Budget (OMB) will evaluate the fiscal impact of the tariff action within 180 days.

The impact on global trade

This plan may trigger global trade tensions, especially with countries with large trade surpluses with the United States.

If the United States unilaterally increases tariffs, other countries may take retaliatory measures, leading to an escalation of the global trade war.

The impact on the US dollar

In the short term, the policy of reciprocal tariffs may trigger global trade tensions, leading to a rise in market risk aversion and supporting the strengthening of the US dollar.

However, if trading partners take retaliatory measures, it may weaken the competitiveness of US exports, exacerbate the trade deficit, and exert downward pressure on the US dollar.

In the long run, the success of policies will depend on their ability to effectively reduce trade deficits. If successful, it may boost the US dollar; If it fails, it may drag down the US dollar.

summary

Trump's "reciprocal tariffs" plan marks a significant shift in US trade policy, aimed at narrowing the trade deficit by raising tariffs and offsetting non-tariff barriers. However, this measure may trigger global trade frictions, especially with countries with large trade surpluses with the United States. In the coming months, the global trade landscape may face significant challenges due to this policy adjustment by the United States.