Former President Donald Trump ordered that as of August 1, 2017, the U.S. government should start sending warning letters to numerous other countries. These letters will outline the new, higher tariff rates. Overall, this effort is meant to increase revenue for the benefit of the U.S. government. It pushes American consumers to purchase American-made products by increasing the cost of imports.
According to his latest announcement, it sounds like Trump will be releasing 10 to 12 of these letters on Friday. He noted that additional communication is forthcoming in the coming days. The new import duties will be very unpredictable—from new tariffs of as high as 60% or 70% all the way down to 10% to 20%. This is an improvement over rates previously described, which had a 40 percent maximum threshold.
“The import duties will help ensure that more money flows into the U.S. government,” Trump stated, emphasizing the economic benefits of these measures. He acknowledged that some of the increasing costs would be borne by U.S. firms. Yet most are planning to impose these costs onto ratepayers. This massive package of tariffs is just an expansion of the ongoing strategy to strengthen American manufacturing by raising the costs of foreign goods.
That announcement comes against a highly publicized and at times convoluted backdrop of U.S.-China trade negotiations. Earlier this month, the U.S. placed retaliatory tariffs on some Chinese imports, including an astounding 145% tariff on Chinese bicycles. In retaliation, China imposed 125% tariffs on some American products. Last month, the two countries signed a series of deals focused on the export of rare earth materials and suspended some technology bans in the process. Furthermore, both countries had already agreed to lower their tariffs to 30% and 10% respectively in their offer lines during negotiations.
The tariff baseline that Trump initially established was just 10% (at most 50% all-in). Now, he is challenging those increases with his new, more holistic approach. In November, he gave countries a hard deadline of July 9 for negotiation of import tax rates. This new policy urges CMS to prioritize speedy resolutions.
“My inclination is to send a letter out and say what tariff they’re going to be paying.” – Donald Trump
The introduction of these tariffs comes on the heels of a very long and damaging trade war marked by tit-for-tat tariff escalations beginning in April. Each side retaliated with measures that proved instrumental in changing the overall balance of trade between the two countries—permanently, we hope!