In a significant move, former President Donald Trump announced a new tariff of 145% on Chinese goods destined for the United States during a Rose Garden event on April 2. This decision has raised a number of questions about the arcane and convoluted U.S. tariff classification system. It consists of more than 17,000 unique product codes and millions of possible combinations on which to base tariff rates. Originally, officials intended to apply these tariffs right away. They have continued to delay the action as negotiations with other major economies continue.
Ever since former President Trump made the announcement that has gotten the world’s attention. It underscores the confusing U.S. tariff system that applies different rates to entirely identical products. This complexity presents obstacles to international commerce. Lots of countries with high levies blame it on their proximity to China. Even as these discussions progress, Trump is now personally pushing to implement a regional tariff plan. Through this proposal, it would implement distinct tiered rates for different areas, like Central America and Africa.
Scott Bessent, Treasury Secretary, indicated that this regional approach could provide countries with more options when retaliating against U.S. tariffs. Under this plan, responding countries believe they will be punished by the U.S. with even higher tariffs above 50%. Even for them, experts acknowledge that the situation is complicated. Keith Rockwell, former director of the World Trade Organization, told NPR how impossible it was to negotiate tariffs when everything was on the table.
“The tariffs will be not a full reciprocal. I could have done that, yes, but it would have been tough for a lot of countries. We didn’t want to do that.” – Donald Trump
Taken together, Trump’s comments betray his desire to not go down the road of a completely reciprocal tariff regime that would punish the rest of the world. Rather, he hopes to develop solutions that fit the distinct economic realities of each area. With great conviction, he explained that nations were indeed banging down the door. They were eager to hammer out agreements before the tariffs went into effect.
“These countries are calling us up, kissing my a**. They are dying to make a deal. ‘Please, please, sir, make a deal. I’ll do anything, I’ll do anything, sir.” – Donald Trump
Negotiations over these tariffs include heavily tied commodities merchants, Secretary of Commerce Howard Lutnick, and Bessent. Chamber and Edney are both responsible for coming up with the terms, which will be spelled out to businesses impacted by the new tariffs. Trump promised to mail the letters over the next few weeks. These letters will explain some of the much higher costs companies are experiencing.
“At a certain point over the next two or three weeks, I think Scott and Howard will be sending letters out essentially telling people — it will be very fair — but we’ll be telling people what they’ll be paying to do business in the United States.” – Donald Trump
Unfortunately, the broader U.S. trade agreement landscape makes this delicate balancing act even more difficult. The United States-Mexico-Canada Agreement (USMCA) and the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) already shape how tariffs are applied among participating nations. These pre-existing agreements will likely have an outsized effect on how any regional tariffs are ultimately proposed.
Bessent expressed optimism about the potential for regional deals that would simplify negotiations by clearly defining rates for specific areas. He stated, “My other sense is that we will do a lot of regional deals: ‘This is the rate for Central America, this is the rate for this part of Africa.’”
What makes the tariffs strategic is the overall strategy of balancing American interests with international relations. This places the needs of Americans first. All experts we spoke with agreed that setting regional rates would make negotiations easier. It would likely provoke tit-for-tat reactions from countries on the receiving end.
“President Trump has been clear, however, that new trade deals must be custom-tailored to reduce the unfair trade barriers that have left American industries and workers behind.” – Kush Desai
Such concerns were foreshadowed by a tariff administration caveat from artist Rockwell. Specifically, he pointed out the benefits of negotiating on a Most-Favored Nation basis, where the terms are a whole lot clearer.
“There’s a reason why you negotiate things on a Most-Favored Nation basis: it’s just a heck of a lot easier.” – Keith Rockwell