In a bold move, President Donald Trump signed an executive order on Thursday to implement reciprocal tariffs on imports, aiming to align duties with those imposed on U.S. exports. Announcing this via his platform, Truth Social, he highlighted the potential for swift implementation post-review by his trade team, targeting those countries that impose the highest tariffs on American goods, particularly those with significant trade surpluses.
Goldman Sachs’ economists, led by Jan Hatzius, provided insight into the ramifications of this policy. It is projected that reciprocal tariffs could elevate the average import tariff by approximately two percentage points, particularly if applied at a product-specific level, although they may also provide a more stable trade environment.
While this latest tariff strategy appears to be a shift from Trump’s previous discussions of broad tariffs, it poses risks, too, particularly concerning how non-tariff barriers might be assessed. The economists warned that including factors like value-added taxes could further elevate the average effective tariff significantly, adding complexity to the trade landscape.
Kevin Hassett, director of the National Economic Council, affirmed that reciprocal tariffs are a priority for the administration, indicating that preliminary talks with foreign countries are already underway. As negotiations progress, he emphasised that the groundwork is being laid to ensure fairness in international trade, where current tariffs favour trading partners more than the U.S.
This unfolding tariff saga marks just the beginning of potential policy shifts as Trump’s presidency evolves. With only weeks into a four-year term, many more trade announcements may emerge, further reshaping the contours of U.S. trade dynamics and international relations.
President Trump has initiated a reciprocal tariff plan to match U.S. import duties with those imposed by trading partners. Economists forecast this could raise average import tariffs but may help reduce trade unpredictability. While discussions are underway, there are concerns about how non-tariff barriers will be integrated into this approach, adding complexity and potential risks to the unfolding trade strategy.
In essence, Trump’s executive order for reciprocal tariffs signifies a strategic pivot in U.S. trade policy, focusing on equity between U.S. tariffs and those of trading partners. While the Goldman Sachs analysis highlights the potential rise in average tariff rates, it also hints at a stabilising effect on trade uncertainty. However, risks concerning the calculation of non-tariff barriers must be monitored closely as these policies develop.
Original Source: www.foxbusiness.com
