After claiming his country “has been looted, pillaged, raped, plundered by nations near and far, both friend and foe alike”, the US president announced he would impose reciprocal tariffs to match duties on American goods by other nations.
“Taxpayers have been ripped off for more than 50 years. But it is not going to happen anymore,” he said.
Donald Trump declared a national economic emergency to impose a baseline 10% tariff on all imports, and “individualised reciprocal higher tariffs” on countries with which the US has the largest trade deficits.
Those include 20 per cent for the EU, 24 per cent for Japan, 25 per cent for South Korea, 26 per cent for India, 34 per cent for China and 46 per cent for Vietnam. Other countries facing above-baseline figures include Switzerland, Israel, South Africa, Thailand, Sri Lanka and Pakistan.
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Canada and Mexico, which already face 25 per cent tariffs, were exempt from the fresh round of duties, which one business leader likened to “dodging a bullet into the path of a tank”.
Trump also shut a loophole used to ship low-value packages from China, which is likely to hurt its giant online retailers.
“These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated,” the White House said.
Trump with his list of countries and the different tariffs he plans to impose on them (AP Photo/Mark Schiefelbein)Why is he doing this?
The White House has said the tariffs and other trade imbalances led to an $1.2tn imbalance last year.
Trump’s top economist, Stephen Miran, told Fox the tariffs would work out well for the US in the long run, even if they cause some initial disruption.
Global markets have already taken the first shocks from the statement, with the Asian markets tumbling in the hours after.
“This is a game-changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession.” Olu Sonola, head of US economic research at Fitch Ratings, said.
Thousands of car manufacturing jobs could be put at risk by Trump’s tariffs on the auto industry alone (Photo: Ben Stansall/ AFP)
How will the UK be impacted?
Britain’s car industry is already braced for 25 per cent tariffs the US president confirmed would come into effect at 5am on Thursday, and could cost the sector up to 25,000 jobs.
The value of the dollar has already edged up in reaction to Trump’s announcement, and if that continues it could push import costs for UK firms even higher, which would then be passed onto consumers.
There have also been warnings about the potential for petrol prices, inflation and interest rates – and mortgages – to go up. Tariffs on the EU would also have a knock-on effect for the UK.
What will happen now?
Some trading partners – including the EU – are expected to respond with countermeasures of their own that could lead to dramatically higher prices. The EU has said it has a “strong plan” to retaliate and Ursula von der Leyen is expected to make a statement early Thursday.
Former US vice president Mike Pence said: “These tariffs are nearly 10x the size of those imposed during the Trump-Pence Administration and will cost American families over $3,500 per year.”
And economists have said the 5 April date leaves a small window for some last-minute negotiations that could delay or alter the tariffs.
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