US President Donald Trump
| Photo Credit: AFP

US President Donald Trump announced plans Thursday for sweeping “reciprocal tariffs” hitting both allies and competitors, in a dramatic escalation of an international trade war that economists warn could fuel inflation at home.

Speaking in the Oval Office, Trump said he had decided to impose the reciprocal duties, telling reporters that US allies were often “worse than our enemies” on trade issues.

The levies would be tailored to each US trading partner and consider factors including value added tax (VAT).

Trump has announced a broad range of tariffs targeting some of the biggest US trading partners since taking office, arguing that they would help tackle unfair practices — and in some cases using the threats to influence policy.

The president has referred to tariffs as a way to raise revenue, remedy trade imbalances and pressure countries to act on US concerns.

Trump’s announcement came hours before he was due to meet Indian Prime Minister Narendra Modi in Washington.

It remains unclear when exactly the tariffs would take effect, if imposed.

Analysts have warned that reciprocal duties could bring a broad tariff hike to emerging market economies such as India and Thailand, which tend to have higher effective tariff rates on US products.

Countries such as South Korea that have trade deals with Washington are less at risk from this move, analysts believe.

Inflation concerns

Cost-of-living pressures were a key issue in the November election that saw Trump sweep to power, and the Republican has promised to swiftly reduce prices.

But economists caution that sweeping tariffs on US imports would likely boost inflation, not reduce it, in the near term and could weigh on growth eventually.

Trump’s nominee for commerce secretary Howard Lutnick, however, has pushed back on the idea that duties would cause widespread inflation, even as certain costs might rise.

Trump’s deputy chief of staff for policy Stephen Miller previously said countries use the VAT to get an unfair trade advantage, although analysts have challenged this characterization.

During election campaigning, Trump promised: “An eye for an eye, a tariff for a tariff, same exact amount.”

For example, if India imposes a 25-percent tariff on US autos, Washington will have a 25-percent tariff as well on imports of autos from India, explained a Nomura report this week.

The consideration of non-tariff factors might shift this calculus.

Modi will hold talks with Trump on Thursday and New Delhi offered some quick tariff concessions ahead of his visit, including on high-end motorcycles.

“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,” analysts at Nomura said.

Among Asian economies, India has a 9.5-percent weighted average effective tariff on US exports, while there is a three-percent rate on India’s exports to the United States.

Thailand has a 6.2-percent rate and China a 7.1-percent rate on US products, Nomura noted.

Higher tariffs are often imposed by poorer countries, who use them as a tool for revenue and protection because they have fewer resources to impose non-tariff barriers, Cato Institute’s Scott Lincicome earlier told AFP.

President Donald Trump said that he’ll sign an order that increases U.S. tariffs to the rates other countries charge on imports. File
| Photo Credit: AP

President Donald Trump said Thursday (February 13, 2025) that he’ll sign an order that increases U.S. tariffs to the rates other countries charge on imports.

“TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!!” Mr. Trump posted on his social media site, Truth Social. “MAKE AMERICA GREAT AGAIN!!!”

PM Narendra Modi U.S. visit LIVE

The prospect of a dramatic hike in tariffs could send shockwaves through the world economy, possibly depressing growth while also causing inflation to intensify.

Mr. Trump has maintained that such tariffs will help to create domestic factory jobs, but most economists say there would effectively be a tax increase on U.S. consumers that would add to inflationary pressures.

The Republican president has openly antagonised multiple U.S. trading partners over the past several weeks, levying tariff threats and inviting them to retaliate with import taxes of their own that could send the economy hurtling into a trade war.

Mr. Trump has put an additional 10% tariff on Chinese imports due that country’s role in the production of the opioid fentanyl.

He also has readied tariffs on Canada and Mexico, America’s two largest trading partners, that could take effect in March after being suspended for 30 days.

On top of that, on Monday (February 10, 2025), he removed the exemptions from his 2018 steel and aluminium tariffs. And he’s mused about new tariffs on computer chips and pharmaceutical drugs.

The European Union, Canada and Mexico have countermeasures ready to inflict economic pain on the United States in response to Mr. Trump’s actions, while China has already taken retaliatory steps with its own tariffs on U.S. energy, agricultural machinery and large-engine autos as well as an antitrust investigation of Google.

Mr. Trump has not specified how he defines the term “reciprocal” and whether his order would apply only to matching tariffs or to including other foreign taxes that he views as a barrier to exporting American goods.

Washington:

US President Donald Trump committed Wednesday to announcing “reciprocal tariffs” on other countries, saying he could sign an order for them within a day, a move that could open new fronts in a trade war.

During election campaigning, Trump had promised: “An eye for an eye, a tariff for a tariff, same exact amount.”

Analysts expect reciprocal duties involve hiking tariff rates on US imports to match the rate that exporting countries charge on American products.

Speaking in the Oval Office on Wednesday, Trump said that he could sign an order for reciprocal duties later in the day, or on Thursday morning.

Analysts have warned that such levies could bring a broad tariff hike to emerging market economies like India and Thailand.

Earlier on Wednesday, White House Press Secretary Karoline Leavitt told reporters she believed Trump’s tariff plan could be announced before he meets with Indian Prime Minister Narendra Modi on Thursday.

Since taking office on January 20, Trump has unveiled sweeping levies on US trading partners.

On Wednesday, a White House official told AFP that Trump’s planned 25 percent tariffs on all steel and aluminum imports will stack on top of the hefty duties he earlier announced on Canada and Mexico.

Trump had in early February unveiled sweeping tariffs of 25 percent on Canadian and Mexican goods, with a lower rate of 10 percent on Canadian energy imports.

But shortly after making that announcement, he halted the blanket levies on the United States’ immediate neighbors for a month as both countries vowed to implement measures against illegal immigration and fentanyl smuggling.

If those tariffs are reimposed at the end of a 30-day deadline, the levies on Canadian and Mexican steel and aluminum could hit 50 percent, the official said, speaking on condition of anonymity.

Canada’s finance minister Dominic LeBlanc, who is in Washington with Canadian provincial leaders, told reporters Wednesday that Ottawa would not get ahead of America’s decision on tariffs.

“We have a number of weeks to work together, and President Trump’s words were very precise to structure an economic deal with Canada,” said LeBlanc, who is meeting US policymakers including National Economic Council director Kevin Hassett and Commerce Secretary nominee Howard Lutnick.

Wab Kinew, premier of Manitoba in western Canada, added that his country has critical minerals that could help the US economy.

Mexican President Claudia Sheinbaum separately added that economy minister Marcelo Ebrard has been in talks with his expected US counterpart.

While talks between the North American trading partners continued, Trump signed separate orders to impose 25 percent tariffs on steel and aluminum imports from March 12.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)