President Trump has enacted a new order imposing reciprocal tariffs on countries that are found to impose unfair trade practices on U.S. goods, targeting nations such as the European Union, India, and Japan.
The directive issued on Thursday instructs the U.S. Trade Representative and Commerce Secretary-designate Howard Lutnick to promptly develop recommendations, while the Office of Management and Budget must submit a report on the financial impact within six months, potentially after the tariffs are already in place.
“This should have been done years ago,” Trump, 78, told the press in the Oval Office.
A White House representative shared with the press that the U.S. will focus particularly on India, referring to it as “the maharaja of tariffs,” along with the European Union’s value-added tax (VAT), which averages 21.8%, and functions similarly to a tariff. The official also criticized Japan for having stringent non-tariff barriers to U.S. imports.
“We expect every country to take action, because it is patently obvious on its face that they are cheating us,” the official stated, criticizing India’s trade practices just hours before Trump met with visiting Prime Minister Narendra Modi at the White House.
“If we can balance our trade, that’s a trillion-dollar gain annually.”
Lutnick and U.S. Trade Representative-designee Jamieson Greer will act “quickly” in drafting proposed actions, with retaliatory tariffs to be implemented “in Trump time, which is to say very rapidly … a matter of weeks or a few months,” according to the official.
It’s possible that some retaliatory tariffs may not be enforced if other countries adjust their policies, the official added.
Previously, the president has highlighted the European Union’s VAT as a major target in his trade strategy.
The official explained that Germany’s exports to the U.S. are rising due to “pure mercantilism,” calling out the practice of refunding VAT on car exports while charging it on imports, as well as pointing out that Germany’s 10% car import tariff is higher than the 2.5% rate in the U.S.
After Trump’s inauguration last month, BMW CEO Oliver Zipse proposed reducing Germany’s car import tariff to 2.5%.
“America runs its more than a trillion-dollar pernicious trade deficit,” White House trade adviser Peter Navarro commented, “because the major exporting nations of the world attack our markets with punishing tariffs and even more punishing non-tariff barriers.”
Navarro added, “A poster child is the EU’s value added tax, which almost triples the EU’s tariff rate on American exports, even as it heavily subsidizes the EU’s exports.”
The new trade order also includes the potential for tariffs on countries suspected of manipulating their currency to make their exports more competitive.
Trump has previously gained trade concessions by announcing tariffs, including pushing back the potential 25% tariff on both Canada and Mexico until March 5, after both countries agreed to increase efforts to curb illegal immigration and fentanyl trafficking.
The president’s planned 10% tariff on Chinese imports is also moving forward as Beijing braces for retaliatory measures.
On Monday, Trump implemented a 25% tariff on steel and aluminum imports, removing exemptions for the leading importing countries and raising the previous 10% rate on aluminum. However, he later mentioned the possibility of exempting Australia from these tariffs due to a trade surplus with the U.S.
Additional tariffs are anticipated, including potential charges on copper, computer chips, and pharmaceuticals, though no specific timelines have been announced.
These early-term tariff actions coincide with the Department of Government Efficiency project, led by Elon Musk, which is working to cut $1 trillion in federal spending. This includes drastic reductions in agencies such as the U.S. Agency for International Development, the Consumer Financial Protection Bureau, and the Department of Education, with the aim of halving the federal deficit, which is currently nearly $2 trillion.
The White House reports that 75,000 federal workers have accepted buyout offers to leave their positions, and foreign aid programs have been suspended.
Trump is also pressing Congress to adopt tax cuts that he promised during his campaign, which would eliminate taxes on tips, overtime, Social Security benefits, and car interest, as well as removing the $10,000 state and local tax deduction.
He has suggested that the revenue from tariffs could offset the tax cuts, although fiscal conservatives are concerned about the long-term impact on the budget.
{Matzav.com}