On Wednesday, Donald Trump's trade advisers were finalizing plans for reciprocal tariffs that the U.S. president has pledged to impose on countries charging duties on U.S. imports, escalating fears of a broader global trade conflict.
Trump shocked markets with the decision earlier in the week to implement tariffs on all steel and aluminum imports starting March 12. The move was met with criticism from Mexico, Canada, and the European Union, all of whom indicated they were in talks to seek exemptions.
The announcement had industries dependent on steel and aluminum imports bracing for increased costs. Last week, Trump imposed tariffs on Chinese goods effective February 4, prompting Chinese retaliatory measures this week.
In addition, he delayed a 25% tariff on Mexican and Canadian goods until March 4, aiming to facilitate negotiations on border security and fentanyl trafficking.
While some U.S. workers supported the metal tariffs, manufacturing companies expressed concerns about disruptions across supply chains affecting businesses reliant on these materials.
The White House has been secretive about the timing and scope of future tariffs, teasing a potential announcement later in the week. Trump hinted at forthcoming tariffs and mentioned considerations for imposing separate duties on cars, semiconductors, and pharmaceuticals.
Implementing the reciprocal tariffs poses significant challenges for Trump's team, with considerations ranging from a simplified flat tariff rate to the complex task of matching U.S. tariffs to those of individual countries.
According to trade specialist Damon Pike, aligning reciprocal tariffs with the myriad duty rates of 186 World Customs Organization nations presents a monumental hurdle akin to an "artificial intelligence project" due to the vast product descriptions involved.
Trump could potentially leverage existing statutes like Section 122 of the Trade Act of 1974 or Section 338 of the Tariff Act of 1930, both offering limited tariff options, besides the International Emergency Economic Powers Act used for justifying previous tariffs.
William Reinsch cautioned that reciprocal tariffs effectively surrender control of the U.S. tariff schedule to other nations, potentially resulting in counterproductive outcomes for American consumers.