US President Donald Trump is set to announce reciprocal tariffs on a host of nations on Wednesday (Apr 2) at a White House event. Trump has deemed the day as “Liberation Day” to “make America wealthy again.”
Here are some of the biggest questions about what Trump has planned.
Which countries will be affected by Trump’s tariffs?
In March, Treasury Department Secretary Scott Bessent suggested that the administration would target 15 per cent of countries, which are the biggest trade allies of the US. Calling them ‘the Dirty 15’, Bessent did not specify their names.
Also read | Trump reciprocal tariffs: Date, time and what to expect from the ‘Liberation Day’ announcement
According to a CNBC analysis based on countries with highest goods trade deficits with the US, it will likely include China, Canada, Mexico, the European Union, India, Germany, Italy, Switzerland, France, Austria, Sweden, Ireland, Japan, Taiwan, South Korea, Thailand, Malaysia, Indonesia and Vietnam.
How will the tariff rates be calculated?
Bessent earlier said that the administration would not only consider tariffs but also a wide range of trade policies and economic barriers imposed by each nation to calculate its reciprocal tariff rate.
He added that if a country doesn’t change its policies they “will put up the tariff wall to protect our economy, protect our workers, and protect our industries.”
Also read | ‘IT’S LIBERATION DAY IN AMERICA’: How world is reacting as Trump sets tone for reciprocal tariffs’ announcement
If Trump imposes a flat universal tariff, the administration will have to decide whether to impose the new levies as additional tariffs to the existing ones or replace them.
Trump has already imposed new taxes on goods from Canada, Mexico and China, along with all steel and aluminium imports.
Why is Trump imposing tariffs?
Trump has cited a wide range of reasons to defend his sweeping tariffs on foreign goods. He views tariffs as a flexible economic tool, using them to pressure trade partners and support US industries.
Also read | Who is Howard Lutnick? Trump’s ‘tariff man’ facing heat as reciprocal tariff threat looms
The Trump administration says that tariffs will put pressure on Canada, Mexico, and China to reduce illegal migration and drug trafficking into the US. In addition, it would protect US industries like steel, aluminium, and copper, which are essential for national security.
The US president also believes that tariffs on foreign vehicles will support domestic car manufacturers. He further introduced the “reciprocal” tariffs to prevent other countries from retaliating and imposing higher levies on US goods.
Trump also aims to generate revenue through tariffs that will help fund tax cuts, government spending, and even balance the federal budget.
Also read | US auto sales surge ahead of Trump tariffs, benefiting pickups and SUVs
What impact will tariffs have on the economy?
The tariffs imposed by Trump could result in huge costs for businesses and consumers. Higher levies on foreign food, energy and auto parts could lead to higher costs for Americans amid high inflation.
According to economists at Goldman Sachs, Trump’s tariffs could boost inflation, slow the economy and raise the unemployment rate.
(With inputs from agencies)