United States Lifts Reciprocal Tariffs On Most Trading Partners
About 12 hours after reciprocal tariffs on imports into the United States went into effect, President Donald Trump announced he had suspended them for at least 90 days for all U.S. trading partners except China. The president’s decision affects imports from 75 countries. (Because Canada and Mexico were not impacted by the reciprocal tariffs, as Bloomberg explained, nothing changed last week for exporters from those countries.)
The president did keep in place the baseline tariff of 10 percent for all countries that had been announced on April 2 along with the reciprocal tariffs. Not only that: last week, National Economic Council Director Kevin Hassett made clear the 10 percent baseline penalty is not going anywhere even if ongoing negotiations with foreign nations to reduce trade barriers are successful. (Click here to read Connecting the Dots’ original explanation of the reciprocal tariffs and the 10 percent baseline penalty.)
President Trump said he decided to suspend the reciprocal tariffs because so many countries had reached out to discuss how they could work with the United States to reduce trade barriers to U.S. products.
While most of the reciprocal tariffs are gone for at least the next three months, the trade war between the United States and China continues to escalate.
On the morning of April 9, the Chinese government announced an 84 percent retaliatory tariff on all imports from the United States into the country. President Trump responded that afternoon with another tariff hike for Chinese products, bringing the reciprocal tariff rate on that country from 104 percent to 125 percent. (The reciprocal rate comes on top of another 20 percent penalty on Chinese goods the Trump administration put into place earlier this year, for a total rate of 145 percent.) Then, on Friday, April 11, the Chinese government announced it had raised its tariffs on U.S. imports to 125 percent.
In addition to its retaliatory tariffs, the Chinese government has opted to restrict imports and exports for 11 U.S. defense manufacturers and contractors. Read more about that policy at this link.
In related news: last week, U.S. Trade Representative Jamieson Greer told members of the U.S. Senate Finance Committee there would likely be no exclusions or exceptions to the Trump administration Section 232 tariffs on steel and aluminum. Watch the replay of the hearing at this link. As a reminder, you can read MSCI’s statement on the Section 232 tariffs at this link.