President Donald Trump takes over the rules that have been ruled by world trade for decades. A“Mutual” tariffsIt is expected that on Wednesday it is likely to create chaos for the world business and contradict the allies of America and opponents.
Since the 1960s tariffs –Either taxes on imports– They left the negotiations between dozens of countries. Trump wants to capture the process.
“Obviously, this violates how everything has been done for a very long time,” said Richard Majik, a trading lawyer Miller & Chevalier. There must be adjustments here. “
Specifying the massive and sustainable trade deficit – not since 1975, the US has sold the rest of the world more than they buy – Trump accuses that game conditions are tilted against US companies. The big reason for this, according to him and his advisers, is that other countries usually tax by US exports at higher speed than taxes in America.
Trump has a fix: it brings up tariffs to the US to match that other countries are charged.
The president is a restless supporter of the tariffs. He used them in his first term and deployed them even more aggressively in his second. Since returning to the White House, it hit 20% of the tariffs for China, submitted 25% of the import tax and trucks that came into force on Thursday, effectively raised taxes in the US for foreign steel and aluminum and imposed on some products from Canada and Mexico that it can expand this week.
Economists do not share Trump enthusiasm for tariffs. This is a tax on importers that are usually transferred to consumers. But it is possible that the mutual threat of Trump tariffs can lead other countries to the table and make them reduce their own import taxes.
“It can be a win-win,” said Christina McDaniel, a former US trading official at the Mercatus of George Meisson University. “In the interests of other countries to reduce these tariffs.”
She noted that India had already reduced tariffs for items: from motorcycles to luxury cars and agreed to increase US energy purchases.
What are the mutual tariffs and how do they work?
They sound simple: the United States raises their tariff to foreign goods to match that other countries impose on American products.
“When they charge us, we take the fee,” the President said in February. “If they are 25 years old, we are 25 years old. If they are 10, we are 10. And if they are much higher than 25, that’s what we’re too.”
But the White House did not reveal many details. This week, he ordered the secretary of trading Howard Lutnik on how new tariffs actually work.
Among the wonderful questions, noted by Antonio River, the partner Arentfox Schiff and the former US Customs Protection lawyer – whether the US will look at thousands of subjects in the tariff code – from motorcycles to mangoes – and try to align the tariff rates on one country around the country. Will look more widely on the average tariff of each country and how it is compared to America. Or completely different completely.
“It’s just a very, very chaotic environment,” said Stephen Lamar, president and CEO of the American Association and Shoes. “It’s hard to plan any long -term, sustainable way.”
How did the tariffs be so overcome?
America’s tariffs are usually lower than trading partners. After World War II, the United States pushed other countries to reduce trade barriers and tariffs, considering free trade as a way of promoting peace, well -being and American exports worldwide. And this mainly practices what he preached, usually keeping his own tariffs and giving US consumers access to inexpensive foreign goods.
Trump crashed with the old consensus of free trade, saying that unfair foreign competition had damaged American manufacturers and the destroyed town at the American Heartland plant. During his first term, he hit the tariffs for foreign steel, aluminum, washing machines, solar panels and almost everything from China. Democratic President Joe Biden has greatly continued Trump’s protectionist policy.
The White House gives several examples of particularly confused tariffs: Brazilian Import Imports, including in America, by 18%, but the US tariff for ethanol is only 2.5%. Similarly, India provides 100%foreign motorcycles taxes, America is only 2.4%.
Does this mean that the US used?
The higher foreign tariffs that Trump complains were not adopted by foreign countries. The United States agreed with them after many years of difficult negotiations known as the Uruguayan round, which ended with a trade pact with 123 countries.
As part of the country’s transaction, they could set their own tariffs for different products – but when they approach the “most supportive nation” they could not charge one country more than they accused of another. Thus, the high tariffs that Trump complains are not directed only to the US.
Trump’s complaints against US trading partners also come at a strange time. The United States working on strong consumer costs and healthy productivity improvement are superior to other developed economies. The US economy increased by almost 9% from the COVID-19 in the middle of last year-in comparison with only 5.5% for Canada and only 1.9% for the European Union. During this time, the German economy decreased by 2%.
Trump’s plan goes beyond tariffs for foreign countries
Without satisfying the tariff code, Trump also follows other foreign practices he perceives as unfair barriers for US exports. These include subsidies that give manufacturers homegrown than US exports; allegedly the health rules used to keep foreign products; and free rules that stimulate the theft of commercial secrets and other intellectual property.
Finding out the import tax that compensates for the damage from these practices, will add another level of the complexity of the mutual tariff scheme of Trump.
Trump’s team also chooses a fight with the European Union and other trading partners at the so -called value -added taxes. These levies are known as Vats, essentially a tax on sales consumed within the country. Trump and his advisers consider the tariff tariff as they extend to US exports.
However, most economists do not agree, for a simple reason: VAT applies to domestic and imported products, so they do not specifically focus on foreign goods and are traditionally not regarded as a trading barrier.
And there is a big problem: vats are huge profits for European governments. “There is no way that most countries can agree on VAT … as it is an important part of their revenue base”, “Brad Seter, senior employee of the Foreign Relations Council, located further X.
Paul Ashworth, the chief economist of North America in capital, says that in the top 15 countries exported to the United States averages 14%, and 6%. This will mean that the retaliation tariffs can reach 20% – much higher than Trump’s proposal universal 10%.
Tariffs and trade deficit
Trump and some of his advisers claim that more steady tariffs will help change the long -standing US trade deficit.
But the tariffs did not prove success in the narrowing of the trading space: despite Trump-Biden’s import taxes, the deficit rose to $ 918 billion last year, the second largest.
The deficit, according to economists, is the result of unique features of the US economy. Because the federal government manages a large shortage and US consumers like to spend so much, US consumption and investments do not go out of savings. As a result, a piece of this demand goes to foreign goods and services.
The United States covers the cost of the trading break, essentially borrowing from the border, partly selling securities Treasury and other assets.
“Trade deficit is a really macroeconomic imbalance,” said Kimberly Claising, UCLA economist and former treasury. “This proceeds from this lack of desire to preserve and lack the desire of tax.
Originally this story was presented on Fortune.com
https://fortune.com/img-assets/wp-content/uploads/2025/03/GettyImages-2202615099-e1743453325657.jpg?resize=1200,600
2025-04-01 01:38:00
Paul Wiseman, Christopher Rugaber, The Associated Press
