Former President Donald Trump is poised to announce a new set of reciprocal tariffs, escalating trade tensions with key international partners. The announcement, expected on Tuesday or Wednesday, will see the implementation of tariffs that respond directly to those imposed by other countries on U.S. goods. This move follows Trump's first-term imposition of 25% tariffs on steel and 10% on aluminum, which included duty-free quotas to Canada, Mexico, and Brazil.
U.S. steel mill capacity utilization has seen a decline in recent years, prompting the need for protective measures. The largest sources of U.S. steel imports include Canada, Brazil, and Mexico, with South Korea and Vietnam also being significant contributors. Trump aims to ensure that the United States is "treated evenly with other countries" by matching their tariff rates.
"And very simply, it's, if they charge us, we charge them"
— Donald Trump
Currently, the European Union charges a 10% tariff on auto imports, while the U.S. imposes a much lower rate of 2.5%. The U.S.'s trade-weighted average tariff rate sits at approximately 2.2%, significantly lower than India's 12%, Brazil's 6.7%, and Vietnam's 5.1%. The European Union countries maintain a tariff rate of 2.7%.
Efforts to balance these discrepancies have seen former President Joe Biden extend quotas to Britain, Japan, and the European Union. Meanwhile, Canada remains the leading supplier of primary aluminum metal to the United States, contributing 79% of total imports in the first 11 months of 2024. Mexico plays a crucial role in providing aluminum scrap and alloy.
The impending reciprocal tariffs will take effect almost immediately following the announcement. This strategy aims to protect domestic industries while also maintaining competitive fairness in international trade practices. Trump's plan reflects his commitment to addressing perceived imbalances in global trade agreements.