Trump orders up a plan for more tariffs, even as inflation heats up – CNN
Source: CNN
President Donald Trump doubled down on his extraordinary push for more balanced trade, ordering on Thursday that agencies should investigate plans for new reciprocal tariffs that could boost America’s revenue — but could also ignite a global trade war and add to America’s rebounding inflation problem.
Howard Lutnick, Trump’s Commerce Secretary nominee, said he anticipates the investigation will be complete by April 1. It is then up to Trump to decide, as of April 2, when to enact any of the new recommended tariffs, he said.
Reciprocal tariffs were one of Trump’s core campaign pledges — his method for evening the score with foreign nations that place taxes on American goods and to solve what he has said are unfair trade practices.
“They charge us a tax or tariff and we charge them the exact same,” Trump told reporters Thursday in the Oval Office before signing a memo dubbed the “Fair and Reciprocal Plan.”
“Nobody knows what that number is unless you go by country,” Trump said. In calculating what reciprocal tariff rate to levy on other nations, he said his administration will also be taking into account nations with value-added tax (VAT), which he labeled “far more punitive than a tariff.”
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Trump said America needs a fairer trade policy that makes US goods more attractive on the market.
“The United States is one of the most open economies in the world, yet our trading partners keep their markets closed to our exports,” according to a White House fact sheet outlining the plan. “This lack of reciprocity is unfair and contributes to our large and persistent annual trade deficit.”
The announcement comes as Trump is scheduled to meet with Indian Prime Minister Narendra Modi.
After signing the memo, Trump singled out India, saying, “They charge more tariffs than any other country.”
Trump and a fact sheet of the action specifically drew attention to tariffs India charges on motorcycles from the US. “I remember when Harley Davidson couldn’t sell their motorbikes into India because of the fact that .. the tax was so high,” Trump said.
The fact sheet claimed India “charges a 100% tariff on U.S. motorcycles, while we only charge a 2.4% tariff on Indian motorcycles.”
Trump said India could potentially avoid new tariffs if they bring more production to the US.
“If you build here, you have no tariffs whatsoever. And I think that’s what’s going to happen. I think our country is going to be flooded with jobs,” the president said.
The US currently has a weighted average import tariff rate of 2% on industrial goods, according to the US Trade Representative.
Weighted average tariff rates give special consideration to the value of a country’s imports. That means that if one country’s exports are subject to tariffs in another country and they constitute a large portion of the country’s overall imports, their weighted average tariff rate will be higher compared to another country whose exports accounts for a small share.
Industrial goods, an umbrella category that includes cars, clothing, oil and more, account for practically everything the US imports aside from agricultural goods. Half of all industrial goods the US imports have been entering the country duty-free, according to the USTR.
U.S. President Donald Trump’s potential tariffs on the global marketplace are looming over this year’s World Governments Summit in Dubai. CNN’s Anna Stewart and Becky Anderson discuss the mood and reactions from business leaders and dignitaries at the annual event.
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“Our workers and industries bear the brunt of unfair practices and limited access to foreign markets,” the White House official said, noting how many countries charge much higher tariff rates on US exports. “This situation is untenable.”
Tariffs are a key part of Trump’s plan to raise revenue to pay for the extension of his 2017 tax cut on top of other promised tax cuts. But the burden of tariffs could ultimately fall on American consumers, economists say — a potentially troubling self-inflicted wound as inflation has begun to creep higher again.
“Prices could go up somewhat short term, but prices will also go down,” Trump said Thursday. “So Americans should prepare for some short-term pain,” he added.
Importers who pay the tariffs pass the costs on to retailers, which then raise prices for consumers. That has left some Trump proponents stunned and angry, including the Wall Street Journal editorial board, which snarkily asked: “Does President Trump understand money?” And Republica
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