Yesterday, President Trump declared a national emergency arising from conditions reflected in large and persistent annual U.S. goods trade deficits, which reached $1.2 trillion in 2024.
In announcing what he has called reciprocal tariffs, his presidential action imposes a 10% baseline tax on imports from all countries, effective April 5, and higher tariff rates on dozens of nations that run trade surpluses with the United States beginning April 9. Some economists do not share Trump’s enthusiasm for tariffs since they are a tax on importers that usually get passed on to consumers. Other economists believe it is possible that the reciprocal tariffs could bring other countries to the table and get them to lower their own import taxes, as Israel did yesterday.
A brief summary from The Wall Street Journal is as follows:
- China is essentially in its own bucket. Trump, since beginning his second term, had already placed 20% additional tariffs on imports from the nation. So his move to slap an additional 34% in duties on Chinese imports brings their total to 54% after April 9. If Trump ends up imposing additional 25% tariffs on China for purchasing Venezuelan oil, then the tariff rate would bump up to 79%.
- Trump planned to impose 25% tariffs on most goods from Canada and Mexico not for unfair trade practices, but for what he said was their role in the fentanyl crisis and illegal immigration into the United States. Canada and Mexico wouldn’t immediately be subject to the new tariff regime, senior administration officials told reporters Wednesday, but instead would still be subject to the previous levies. The administration gave an exemption to those tariffs for cars and other products compliant with the U.S.-Mexico-Canada Agreement. But those exemptions expire on April 2, and the White House didn’t announce a further extension. Energy products from Canada will continue to be tariffed at 10%.
- Then there are about 60 nations the White House considers bad actors on trade. The administration is looking to penalize them for their own tariffs and non-tariff barriers like regulations and taxes that affect U.S. firms. The European Union will get a 20% levy, Vietnam will get 46%, Taiwan will get 32%, India will get 26% and Japan 24%, among other nations.
A number of goods are not subject to the ad valorem rates of duty under the President’s order, including steel, aluminum, and automobiles (25% tariffs on foreign-made automobiles took effect today). An additional listing of goods not subject to the ad valorem rates of duty are outlined in the 37-page Annex II of the President’s order. These include medicines, vitamins, immunological products, cell therapy products, vaccines, human and animal blood products, certain critical minerals, wood, lumber, fertilizers, herbicides, etc.
