Trump's Trade Turmoil: New Tariffs, Reciprocal Measures, and Ongoing Tensions

As President Trump resets the US trade landscape, a whirlwind of activity awaits, with potential moves on multiple fronts affecting importers, industry leaders, and foreign nations. Uncertainty prevails as crucial details remain obscure, but the President has pledged "highly detailed" announcements in the coming days.

Steel and Aluminum Duties

First on the agenda is the newly unveiled plan for 25% tariffs on steel and aluminum, set to be announced officially on Monday. The President plans to sign executive orders implementing these measures, which will reportedly apply to all imports. However, it remains unclear how they will interact with existing metal tariffs.

Reciprocal Tariffs

Later in the week, Trump intends to unveil reciprocal tariffs, promising official implementation by Tuesday or Wednesday. Designed to counterbalance global trade imbalances, these measures raise questions about their implementation and potential impact on countries that currently charge low tariffs on US goods.

Ongoing Trade Conflicts

The week's developments unfold amid an escalating trade war with China over narcotics and migration issues, potentially involving Canada and Mexico. President Trump has expressed dissatisfaction with concessions offered by Canada and Mexico, potentially leaving the door open to blanket tariffs on those countries.

New Tariffs on Steel and Aluminum

The announcement of new steel and aluminum tariffs raises concerns about their interaction with existing duties. In 2018, Trump imposed 25% tariffs on steel and 10% on aluminum, with exemptions granted to several nations. However, the President now appears less inclined towards carve-outs. While the process could take weeks or months due to public comment requirements, Trump's previous experience with the process may expedite things.

Reciprocal Tariffs: Complex Implications

After announcing clarity on steel and aluminum, Trump vowed to introduce reciprocal tariffs. Details will be revealed at a news conference, but the concept involves imposing symmetric tariffs on countries that charge the US higher rates. Data suggests the US currently has average tariff levels, meaning a true reciprocal system would necessitate lowering duties on some countries. Conversely, close US allies could face significant increases.

Implementation Challenges

Implementing country-specific tariffs at US ports of entry would be logistically complex. Trade expert Professor Henry Gao warns of potential bureaucratic hurdles if Trump proceeds with the plan.

Trade Tensions with China, Canada, and Mexico

Trump's recent decision to impose 10% tariffs on China has been met with retaliatory measures. China hit back with tariffs on American goods, prompting Trump to threaten higher duties. As for Canada and Mexico, Trump has expressed dissatisfaction with concessions offered to avoid blanket tariffs.