From NPR:
President Trump has unveiled sweeping “reciprocal tariffs” on goods from the world over, plus a 10% baseline tariff on U.S. imports from all countries, as he seeks to reshape decades of U.S. trade policy despite warnings of higher costs for American businesses and consumers.
The president announced a 10% minimum tariff to apply to goods from all countries. However, certain trading partners will face higher, “reciprocal tariffs” aimed at penalizing them for their trade barriers. Those taxes on imported goods are calculated on a country-by-country basis, and the levels Trump announced for some trading partners are substantial. He said he plans to impose 34% tariffs on China, 20% on the European Union and 24% on Japan, among an array of other trading partners.
Speaking in the Rose Garden on Wednesday at an event unveiling the new policy, Trump cast the new tariffs as payback to a global trade system he feels has been deeply unfair to the U.S.
“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” he said. “American steel workers, auto workers, farmers and skilled craftsmen — we have a lot of them here with us today — they really suffered gravely.”
The 10% minimum tariffs will go into effect on April 5, and the higher reciprocal rates will go into effect on April 9, according to senior administration officials who briefed reporters on Wednesday.
The officials said they had used a variety of factors to come up with the tariff levels, but did not provide data on their calculations.
Consumers and markets are fearful
Trump had been teasing his reciprocal tariffs for weeks, branding April 2 as “Liberation Day.” He has promised the new policy will bring in revenues to be put toward U.S. tax cuts and deficit reduction, and spur a renaissance in U.S. manufacturing.
But the pledge has glossed over the pain expected to be felt by U.S. consumers, who economists expect will end up paying higher prices. Tariffs are taxes paid by U.S. companies as they import goods. While the White House argues foreign countries will lower their prices to compensate, economists broadly agree that U.S. companies and consumers will bear the brunt of the tariffs.
The new tariffs, combined with Trump’s other recent tariffs on goods like steel and aluminum, could also hurt some U.S. manufacturers by raising costs for imported materials. Mainstream economists are skeptical that the tariffs will bring in as much revenue as Trump has promised, with some cautioning they may increase the likelihood of a recession.
The uncertainty over the policy has rattled markets in recent weeks – the S&P 500 stock index just closed out its worst quarter since 2022. Wednesday’s announcement came after U.S. markets closed, meaning stock market reaction won’t come in the U.S. until Thursday morning.
Consumer confidence also recently hit a 12-year low, in part due to consumers expecting higher prices as a result of Trump’s tariffs. Economists have found that tariffs Trump imposed during his first term were largely passed on to consumers.
New, high tariffs … and a possible trade war
The new taxes are an escalation of Trump’s ongoing tariff-centric economic policy. Thus far this term, Trump has imposed tariffs on steel and aluminum, Chinese goods, automobiles and auto parts, and some goods from Mexico and Canada.
These new tariffs will exempt some of those goods, but not all. For example, the new “reciprocal tariffs” do not apply to steel, aluminum, automobiles and auto parts. Rather, the recent tariffs imposed on those goods still apply.
However, the new 34% reciprocal tariff rate on Chinese goods will apply in addition to the 20% tariffs Trump has already imposed on goods from that country. That means Chinese goods are now set to face a 54% tariff rate.
The tariff policy is widely expected to unleash a tit-for-tat trade war between the U.S. and its trading partners. Multiple nations have already signaled plans to retaliate. Canada – America’s second largest trade partner – has said it is prepared to impose its own retaliatory tariffs. So has the European Union.
Trump has acknowledged that Americans could feel “some pain” from tariffs, but that any hit would be temporary. After Trump announced his plan to impose reciprocal tariffs in February, Yale Budget Lab estimated a hypothetical scheme could cost the average American consumer $2,700-$3,400 per year.
Correction: A previous version of this web story incorrectly said that a chart used by the White House in a briefing with reporters included Mexico as one of the countries that imposes steep tariffs on U.S. goods. The chart showed tariffs from Canada, the European Union, India, and Japan.
