WASHINGTON (AP) — President Donald Trump declared on Wednesday a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States, threatening to upend much of the architecture of the global economy and trigger broader trade wars.
Trump held up a chart while speaking at the White House, showing the United States would charge a 34% tax on imports from China, a 20% tax on imports from the European Union, 25% on South Korea, 24% on Japan and 32% on Taiwan.
The president used aggressive rhetoric to describe a global trade system that the United States helped to build after World War II, saying “our country has been looted, pillaged, raped, plundered” by other nations.
Trump declared a national economic emergency to launch the tariffs, expected to produce hundreds of billions in annual revenues. He has promised that factory jobs will return back to the United States as a result of the taxes, but his policies risk a sudden economic slowdown as consumers and businesses could face sharp price hikes on autos, clothes and other goods.
“Taxpayers have been ripped off for more than 50 years,” Trump said in remarks at the White House. “But it is not going to happen anymore.”
Trump was fulfilling a key campaign promise as he imposed what he called “reciprocal” tariffs on trade partners, acting without Congress through the 1977 International Emergency Powers Act in an extraordinary attempt to both break and ultimately reshape America’s trading relationship with the world.
The president’s higher rates would hit foreign entities that sell more goods to the United States than they buy, meaning the tariffs could stay in place for some time as the administration expects other nations to lower their tariffs and other barriers to trade that it says have led to a $1.2 trillion trade imbalance last year.
The tariffs follow similar recent announcements of 25% taxes on auto imports; levies against China, Canada and Mexico; and expanded trade penalties on steel and aluminum. Trump has also imposed tariffs on countries that import oil from Venezuela and he plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.
None of the warning signs about a falling stock market or consumer sentiment turning morose have caused the administration to publicly second-guess its strategy, despite the risk of political backlash as voters in last year’s election said they wanted Trump to combat inflation.
Senior administration officials, who insisted on anonymity to preview the new tariffs with reporters ahead of Trump’s speech, said the taxes would raise hundreds of billions of dollars annually in revenues. They said the 10% baseline rate existed to help ensure compliance, while the higher rates were based on the trade deficits run with other nations and then halved to reach the numbers that Trump presented in the Rose Garden.
In a follow-up series of questions by The Associated Press, the White House could not say whether the tariff exemptions on imports worth $800 or less would remain in place, possibly shielding some imports from the new taxes.
Based on the possibility of broad tariffs that have been floated by some White House aides, most outside analyses by banks and think tanks see an economy tarnished by higher prices and stagnating growth.
Trump would be applying these tariffs on his own; he has ways of doing so without congressional approval. That makes it easy for Democratic lawmakers and policymakers to criticize the administration if the uncertainty expressed by businesses and declining consumer sentiment are signs of trouble to come.
Heather Boushey, a member of the Biden White House’s Council of Economic Advisers, noted that the less aggressive tariffs Trump imposed during his first term failed to stir the manufacturing renaissance he promised voters.
“We are not seeing indications of the boom that the president promised,” Boushey said. “It’s a failed strategy.”
Rep. Suzan DelBene, D-Wash., said the tariffs are “part of the chaos and dysfunction” being generated across the Trump administration. The chair of the Democratic Congressional Campaign Committee stressed that Trump should not have the sole authority to raise taxes as he intends without getting lawmakers’ approval, saying that Republicans so far have been “blindly loyal.”
“The president shouldn’t be able to do that,” DelBene said. “This is a massive tax increase on American families, and it’s without a vote in Congress ... President Trump promised on the campaign trail that he would lower costs on day one. Now he says he doesn’t care if prices go up — he’s broken his promise.”
Even Republicans who trust Trump’s instincts have acknowledged that the tariffs could disrupt an economy with an otherwise healthy 4.1 % unemployment rate.
“We’ll see how it all develops,” said House Speaker Mike Johnson, R-La. “It may be rocky in the beginning. But I think that this will make sense for Americans and help all Americans.”
Longtime trading partners are preparing their own countermeasures. Canada has imposed some in response to the 25% tariffs that Trump tied to the trafficking of fentanyl. The European Union, in response to the steel and aluminum tariffs, put taxes on 26 billion euros’ worth ($28 billion) of U.S. goods, including on bourbon, which prompted Trump to threaten a 200% tariff on European alcohol.
Many allies feel they have been reluctantly drawn into a confrontation by Trump, who routinely says America’s friends and foes have essentially ripped off the United States with a mix of tariffs and other trade barriers.
The flip side is that Americans also have the incomes to choose to buy designer gowns by French fashion houses and autos from German manufacturers, whereas World Bank data show the EU has lower incomes per capita than the U.S.
“Europe has not started this confrontation,” said European Commission President Ursula von der Leyen. “We do not necessarily want to retaliate but, if it is necessary, we have a strong plan to retaliate and we will use it.”
Italy’s premier, Giorgia Meloni, on Wednesday reiterated her call to avoid an EU-US trade war, saying it would harm both sides and would have “heavy” consequences for her country’s economy.
Because Trump had hyped his tariffs without providing specifics until Wednesday, he provided a deeper sense of uncertainty for the world, a sign that the economic slowdown could possibly extend beyond U.S. borders to other nations that would see one person to blame.
Ray Sparnaay, general manager of JE Fixture & Tool, a Canadian tool and die business that sits across the Detroit River, said the uncertainty has crushed his company’s ability to make plans.
“There’s going to be tariffs implemented. We just don’t know at this point,” he said Monday. “That’s one of the biggest problems we’ve had probably the last — well, since November — is the uncertainty. It’s basically slowed all of our quoting processes, business that we hope to secure has been stalled.”
https://apnews.com/article/trump-tariffs-liberation-day-2a031b3c16120a5672a6ddd01da09933 (Archive)
) is my reaction to this.
