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Trump’s Import Tariffs Mark Major Shift in Trade Policy

President Donald Trump has introduced extensive new tariffs on all imported goods entering the United States, signaling one of the most significant changes to the international trade system since the post-World War II era.

Under Trump’s new plan, a baseline tariff of at least 10% will be imposed on all imports, a move he had hinted at during his campaign last year. However, specific countries labeled by the White House as “worst offenders”—such as China and members of the European Union—will face even higher tariffs, aimed at renegotiating what Trump perceives as unfair trade practices.

Experts predict that this escalation in trade tensions may result in increased prices for American consumers and potentially slower economic growth domestically, with some nations possibly experiencing a recession due to these shifts. Trump insists that action is necessary to combat what he terms predatory practices that exploit the U.S. economy.

During his announcement in the Rose Garden, flanked by U.S. flags, Trump remarked, “It’s our declaration of economic independence.” He described a long history of the U.S. being “looted, pillaged, raped and plundered” by various nations and asserted that this action would benefit American workers, labeling the day as “one of the most important in American history.”

Previously, Trump had advocated for tariffs to generate government revenue and revitalise manufacturing, promoting the prospect of renewed American prosperity. This latest announcement adds to a series of previous tariff increases targeting imports from China, steel, aluminum, and specific goods from Mexico and Canada.

While dutiable rates on Mexico and Canada remain unchanged, new tariffs will be levied against other allies: the U.K. will face a 10% tariff while the European Union will see rates of 20%. Goods imported from China will incur an additional 34% tariff on top of the existing 20%, with rates of up to 26% on products from India and 24% from Japan.

Some smaller nations could see even more significant tariff increases; for instance, imports from Lesotho will attract a 50% tariff, while Vietnam and Cambodia will face rates of 46% and 49%, respectively. These countries have recently attracted investment as companies have shifted supply chains away from China following tariffs imposed in Trump’s previous term.

The newly announced tariffs are expected to affect trade worth trillions of dollars, likely leading to higher prices for various goods including clothing, bicycles, toys, and European wines. Olu Sonola, the head of U.S. economic research at Fitch Ratings, indicated that the proposed changes could bring the U.S. tariff rate to levels reminiscent of 1910, which he described as a transformative shift that could adversely impact global economies.

According to a fact sheet released by the White House, the baseline tariffs will apply to over 100 countries, with 60 nations facing enhanced rates. Trump characterized these tariffs as “reciprocal,” aiming to counteract existing trade policies that create large imbalances for the U.S., including regulations like the Value Added Tax that disadvantage American exports.

Additionally, Trump signed an executive order to eliminate tax-free treatment for small packages sent from China starting in May, which could have repercussions for companies like Amazon, especially competitors such as Shein and Temu. He reaffirmed a previously announced 25% tax on all foreign-made cars, effective immediately, and indicated plans to apply separate tariffs on certain exempt goods, including copper and pharmaceuticals.

Although the stock market was closed at the time of Trump’s announcement, share prices plunged in after-market trading, with notable declines for companies such as Apple, which fell more than 7%, reflecting concerns about increased costs and disrupted supply chains. Other retailers, including Amazon, Walmart, and Nike, also experienced significant drops in their stock values.

Analyst Dan Ives from Wedbush Securities described the tariffs as having a dire impact, exceeding expectations, though he remained hopeful for potential negotiations and exemptions. Despite the concerns raised regarding inflation and overall economic impacts, Trump has downplayed the potential fallout. The tariffs present a significant political challenge for the administration, amid growing skepticism among the American public regarding their efficacy in promoting economic growth. Recent surveys indicated that nearly half of all Republicans question the beneficial nature of tariffs.

Gustavo Flores-Macias, a professor at Cornell University, expressed doubts about the immediate effect of tariffs on job production in the U.S., predicting a rapid rise in consumer prices instead. He noted that Trump’s announcement represents an unraveling of the post-World War II international trade framework that the U.S. played an instrumental role in establishing.

Source
www.bbc.com