Washington – President Donald Trump is taking a torch to the rules that have governed world trade for decades. He “Reciprocal” rates It is likely that on Wednesday he announced on Wednesday he will create chaos for global companies and conflict with United States allies and adversaries equally.
Since the 1960s, tariffs – o import taxes – They have emerged from negotiations between dozens of countries. Trump wants to seize the process.
“Obviously, interrupts the way things have been done for a long time,” said Richard Mojica, Miller’s commercial lawyer AND Gentleman. “Trump is throwing that out the window … This is clearly destroying trade. There will have to be adjustments everywhere.”
Pointing out the huge and persistent commercial deficits of the United States, not since 1975, the United States sold the rest of the world more than it has bought, Trumh loads that the playing field is inclined against US companies. A great reason for that, he and his advisors say, it is because other countries generally tax US exports at a higher rate that the United States tax their own.
Trump has a solution: it is raising US tariffs so that they coincide with what other countries charge.
The president is a supporter of shameless rates. He generously used them in his first term and is deploying them even more aggressively in his second. Since he returned to the White House, he has slapped 20% rates on China, he announced a 25% tax in imported cars and trucks that will enter into force on Thursday, American taxes effectively increased on steel and foreign aluminum and imposed taxes in some goods in Canada and Mexico, which can expand this week.
Economists do not share Trump’s enthusiasm for tariffs. They are an import tax that are generally transmitted to consumers. But it is possible that Trump’s reciprocal rate threat can take other countries to the table and make them reduce their own import taxes.
“It could be win-win,” said Christine McDaniel, former US trade official. Uu. Now at the George Mason University Center. “It is interesting from other countries to reduce those rates.”
He pointed out that India has already reduced tariffs in articles from motorcycles to luxury cars and agreed to increase American energy purchases.
They sound simple: the United States would increase its tariff on foreign goods so that they coincide with what other countries impose on US products.
“If they charge us, we charge them,” said the president in February. “If they are 25 years old, we are at 25. If they are 10, we are at 10 years old. And if they are much more than 25, that is what we are also.”
But the White House did not reveal many details. He has ordered the Secretary of Commerce Howard Lutnick to deliver a report this week on how the new tariffs would really work.
Among the outstanding questions, said Antonio Rivera, a partner of Aentfox Schiff and former lawyer with customs and border protection of the United States, is if the United States will see the thousands of items in the tariff code, from motorcycles to mangoes, and will try to level the rates of rates one by one, country by country. Or if you will see more widely the average rate of each country and how it compares with the United States. Or something completely different.
“It’s just a very, very chaotic atmosphere,” said Stephen Lamar, president and CEO of American Apparel AND Footwear Association. “It is difficult to plan in the long term and sustainable.”
The United States rates are generally lower than those of their commercial partners. After World War II, the United States pressed other countries to reduce barriers and commercial rates, seeing free trade as a way to promote American peace, prosperity and exports worldwide. And mostly he practiced what he preached, generally maintaining his own low tariffs and giving American consumers access to foreign economic goods.
Trump has broken with the former consensus of free trade, saying that unjust foreign competition has affected US manufacturers and factory cities devastated in the American heart. During his first term, he slapped tariffs on strange steel, aluminum, washing machines, solar panels and almost everything from China. The Democratic President Joe Biden, greatly continued Trump’s protectionist policies.
The White House has cited several examples of especially unpleasant rates: Brazilian taxes of ethanol imports, including those of the United States, to 18%, but the US rate on ethanol is only 2.5%. Similarly, India taxes 100%foreign motorcycles, United States only 2.4%.
The highest foreign tariffs that Trump complains were not furtively adopted by foreign countries. The United States agreed after years of complex negotiations known as La Ronda de Uruguay, which ended in a commercial pact that involved 123 countries.
As part of the agreement, countries could establish their own tariffs on different products, but under the “most favored nation” approach, they could not charge one more country than another. Therefore, the tall tariffs that Trump complains are not aimed at the United States alone. They hit everyone.
Trump’s complaints against US business partners also arrive at a strange moment. The United States, which develops with a strong consumer expense and healthy improvements in productivity, is surpassing the other advanced economies in the world. The US economy grew almost 9% since Covid-19 reached the middle of last year, compared to only 5.5% for Canada and only 1.9% for the European Union. Germany’s economy was reduced 2% during that time.
He is not satisfied with fighting the tariff code, Trump also pursues other foreign practices that he sees as unfair barriers to US exports. These include subsidies that provide local producers with an advantage over US exports; Apparent health rules that are used to avoid foreign products; and loose regulations that encourage the theft of commercial secrets and other intellectual properties.
Discovering an import tax that compensates for the damage of these practices will add another level of complexity to Trump’s reciprocal tariff scheme.
The Trump team is also the fight with the European Union and other commercial partners for the so -called value added taxes. Known as Vats, these levies are essentially a sales tax on the products consumed within the borders of a country. Trump and his advisors consider that Vats is a rate because they apply to US exports.
However, most economists do not agree, for a simple reason: VAT apply both to national and imported products, so they do not specifically add up to foreign goods and have not traditionally been seen as a commercial barrier.
And there is a major problem: VATs are large income collectors for European governments. “There is no way that most countries can negotiate on their VAT … since it is a critical part of their income base,” Brad Setser, the main member of the Foreign Affairs Council, published in X.
Paul Ashworth, Economist Economist Economist Economist economist in North America, says that the 15 main countries that export to the US. UU. They have that the average VAT exceed 14%, as well as the duties of 6%. That would mean that the United States retaliation rates could reach 20%, much higher than Trump’s proposal for universal duties of 10%.
Trump and some of his advisors argue that the most steep tariffs would help reverse the long -standing commercial deficits of the United States.
But tariffs have not proven successful by reducing the commercial gap: despite Trump-Biden import taxes, the deficit increased last year to $ 918 billion, the second highest recorded.
The deficit, says economists, is the result of the unique characteristics of the US economy. Because the federal government has a great deficit, already US consumers like to spend so much, the consumption of the United States and the investment far exceed savings. As a result, a part of that demand goes to goods and services abroad.
The United States covers the cost of the commercial gap by borrowing essentially abroad, in part by selling treasure values and other assets.
“The commercial deficit is really a macroeconomic imbalance,” said Kimberly Clausing, an economist at UCLA and former Treasury official. “It comes from this lack of desire to save and this lack of desire to tax. Until fixing those things, we will administer a commercial imbalance.”
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AP Anne D’Onnocezio’s retail writer in New York contributed to this story.
