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President Donald Trump signed a memorandum Thursday directing his administration to impose “fair and reciprocal” trade tariffs on all major U.S. trading partners. The move aims to counter what Trump describes as an imbalance in trade policies, where foreign nations impose higher tariffs on American goods than the U.S. does on theirs.
“I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said at the signing. “In almost all cases, they’re charging us vastly more than we charge them, but those days are over.”
Under the directive, Commerce Secretary nominee Howard Lutnick and Global Trade Representative Jamieson Greer must assess each country’s trade policies within 180 days and recommend potential remedies. Office of Management and Budget nominee Russell Vought will also submit a fiscal impact report on the proposed measures.
Trump also announced that additional import taxes on cars, semiconductors, and pharmaceuticals would follow after the initial reciprocal tariffs.
Financial markets reacted positively to the announcement, with the Dow Jones Industrial Average surging over 350 points. Borrowing costs, represented by the 10-year Treasury note, also fell. Peter Navarro, White House senior trade adviser, emphasized that the U.S. has suffered from a “pernicious, trillion-dollar” trade deficit and singled out the European Union’s value-added tax as a key trade barrier.
Trade analysts warn that implementing tariffs on a country-by-country basis will be highly complex. “Declaring reciprocal tariffs will not be easy,” said Josh Teitelbaum, a senior trade counsel who helped negotiate the Trans-Pacific Partnership. “Identifying tariff gaps across multiple nations and products would require extensive research.”
Business leaders and economists remain divided on the policy’s impact. Ford executives warned that auto industry tariffs could cause severe disruptions, while a Brookings Institution report estimated potential job losses of up to 177,000.
However, some financial leaders support the move. JP Morgan CEO Jamie Dimon argued that if tariffs enhance national security or result in better trade deals, they are worth the cost. “If it’s a little inflationary but it’s good for national security, so be it. I mean, get over it,” Dimon said at the World Economic Forum in Davos.
Federal Reserve Chair Jerome Powell refrained from commenting on the tariffs’ economic consequences, stating that trade policy is the responsibility of elected officials. However, economists caution that if tariffs lead to higher prices and slower economic growth, they could impact future interest rate decisions.
Trump’s tariff policy has sparked debate over its long-term effects on the economy, international trade relations, and American consumers. While supporters see it as a necessary step toward trade fairness, critics warn it could lead to retaliatory measures from foreign governments, ultimately harming U.S. businesses and workers.
