U.S. Trade Representative Jamieson Greer joined Bangladesh’s Adviser Sheikh Bashir Uddin in signing the U.S.–Bangladesh Agreement on Reciprocal Trade. Photo: X/@USTradeRep.

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Washington, United States:

US President Donald Trump has threatened to open new fronts in his tariffs war by announcing reciprocal levies on other countries as soon as Tuesday, branding this “the only fair way” to trade.

Trump’s fresh salvo could bring a broad tariff hike to emerging market economies like India and take aim at European Union value-added taxes, fanning tensions with the bloc, analysts warn.

What are reciprocal tariffs?

Tariffs are taxes imposed on goods imported from another country.

As for reciprocal tariffs — during election campaigning, Trump promised: “An eye for an eye, a tariff for a tariff, same exact amount.”

And on Sunday, he said he would make a detailed announcement on the tariffs on Tuesday or Wednesday, adding that “every country will be reciprocal.”

One approach is to hike tariff rates on imports to match the rate that other countries apply to US products, said Goldman Sachs analysts in a note.

Matching this based on different products would raise the United States’ average tariff rate by around two percentage points. Doing so to match the average tariff imposed by countries raises the US rate by a smaller amount.

But taking a product-focused approach has complexities.

While Washington has relatively low average tariffs at a 2.7 percent rate in 2022, it has higher rates in “very politically sensitive” areas such as apparel, sugar and pick-up trucks, said Cato Institute vice president of general economics Scott Lincicome.

Similarly, including non-tariff barriers like regulations in the calculus would add to complications.

Who will be impacted?

Reciprocal tariffs may open the door to “a broad tariff hike” on emerging market economies who have high duties on US products, JPMorgan analysts expect.

If officials go by average tariff rates applied on all products, countries like India or Thailand — which tax imports at higher average rates than the United States does — could be affected.

Trump has previously slammed India as a “very big abuser” on trade and this week, National Economic Council Director Kevin Hassett told CNBC that India had high tariffs that lock out imports.

Lincicome cautioned that high tariffs are often also imposed by poorer countries, who use them as a tool for revenue and protection as they have fewer resources to impose non-tariff barriers like regulatory protectionism.

Goldman Sachs estimates that “there should be no effect on countries with free trade agreements like Mexico, Canada, and Korea, limiting the overall impact” if Washington took a country-based approach to reciprocal tariffs.

What are the complications?

It remains unclear if Trump views the policy of reciprocal tariffs as an alternative to a 10-20 percent universal tariff he floated on the campaign trail — or a separate policy.

One risk is that the Trump administration “could attempt to equalize non-tariff barriers to trade,” said Goldman Sachs in a note. In particular, he could consider value-added taxes (VATs) when deciding how much to adjust tariffs.

Doing so stands to raise the average effective tariff rate by another 10 percentage points, Goldman analysts added.

Such a move might also be a response to high European Union VATs, JPMorgan said.

What is the goal?

“One of the objectives is to create uncertainty as a negotiating tactic, but uncertainty is a tax on doing business,” Jeffrey Schott, senior fellow at the Peterson Institute for International Economics, told AFP.

Unpredictability surrounding tariffs, retaliation and non-trade issues all contribute to a situation that weighs on American and foreign firms, he said.

In the case of allies like Europe, Schott said, US objectives in negotiation could involve “economic and geopolitical priorities, including Ukraine.”

They could include finding a better resolution of the situation in Ukraine, which has been fighting off a Russian invasion since 2022, but also to expand US exports in key sectors like LNG.

Two-way street?

The United States, however, does not have the lowest tariffs in the world and stands around the middle when it comes to wealthy, industrialized countries, said Cato’s Lincicome.

“Should Trump’s system be based on average tariff rates, then ‘true’ reciprocity would require US tariff rate reductions on goods from dozens of countries,” he added in a recent report.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

New Delhi:

Donald Trump on Tuesday denounced India, China, and Brazil as “tremendous tariff-maker(s)” and said his government would not allow the three to continue down this path, declaring, “… we’re not going to let that happen any longer because we’re going to put America first.”

Speaking to House Republicans at a Florida retreat, the United States President acknowledged the three countries – founding members of the increasingly influential BRICS bloc – were acting in their respective best interests, but seemed also to insist “… they mean us harm”.

“We’re going to put tariffs on outside countries and people that really mean harm to us. Well… they mean us harm, but they basically want to make their country good. China is a tremendous tariff-maker, and India, Brazil, and so many other countries. (But) we’re not going to let that happen any longer… because we’re going to put America first,” Trump declared to cheers.

The comments came shortly after it emerged Prime Minister Narendra Modi is likely to meet Trump in Washington, as early as next month. The two leaders spoke on the phone Monday night; it is unclear if tariffs were on the agenda, but New Delhi’s view on ‘illegal immigrants was.

READ | “Mutually Beneficial, Trusted Partnership”: Modi-Trump Phone Call

However, the US President’s view on India and tariffs is seen by many as problematic, given he slammed Delhi – the US’ largest trading partner – as a “very big abuser” during his campaign.

Trump also spoke of a “very fair system” to “very quickly” make the US “richer and more powerful”, repeating what he said after he was sworn in last week; he said, “Instead of taxing our citizens to enrich other countries… we will tariff and tax foreign countries to enrich our citizens.”

And if foreign companies – Indian, Chinese, Brazilian, or others – want to avoid these high tariffs, Trump said, they would have to “build your plant right here in America”.

He also told the House Republicans of plans to slap tariffs on steel, aluminium, copper, and other materials required by the American military. “We have to bring production back… There was a time we made a ship a day. Now we can’t… We don’t know what the hell we’re doing.”

READ | “America First”: Trump Vows Tariffs On Nations That “Mean Harm” To US

High tariffs on goods imported into the US – specifically from China – were a frequent refrain during Trump’s campaign. He also warned of “100 per cent tariffs” on BRICS nations to (in his mind) shut down talk of member-nations not using the dollar as the common currency.

Trump’s tariffs tirade has a clear economic agenda, questionable though the means may be, and that is to jumpstart manufacturing in the US. By marking up the prices of key commodities like steel, semi-conductors, medicines, etc., he is hoping to do just that. “Under the ‘America First’ economic model, as tariffs on other countries go up, taxes on American workers and businesses will come down and massive numbers of jobs and factories will come home.”

READ | How Donald Trump Is Using “Tariffs” As A Weapon

The other perspective is ‘tariff as a weapon’, a point-of-view underlined by Trump’s clash with Colombia over deportations. The South American country initially refused to accept a plane loaded with ‘illegal immigrants’, only then to face massive 25 per cent tariffs and a trade war.

Colombian President Gustavo Petro eventually relented; he had to, of course.

READ | “Cooperate Or…”: In Colombia Face-off, Trump’s Strong Message

White House Spokeswoman Karoline Leavitt was quick to claim a ‘victory’, saying: “Today’s events make clear to the world that America is respected again”, and Trump echoed that sentiment Monday, telling reporters “it serves the world well to look at” the Colombia spat.

With input from agencies

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