President Donald Trump announced at a White House event on Wednesday that he is imposing a baseline 10 percent levy on all imports and reciprocal tariffs on the “worst offender” countries that tariff U.S. goods at a higher rate.
For every tariff another country has imposed on the U.S., the administration will slap what he called a "discounted reciprocal tariff" that amounts to half that country's rate on American exports.
"Because we are being very kind," Trump said during his announcement in the Rose Garden, "we will charge them approximately half of what they are — and have been — charging us."
The baseline 10 percent tariff will go into effect on April 5 at 12:01 AM, and the higher reciprocal rates will go into effect on April 9 at 12:01 AM, senior White House officials said ahead of the announcement. A 25 percent tariff on foreign-made cars will go into effect at 12:01 on April 3.
The White House has characterized the administration's whipsawing trade policy as the beginning of a new economic realignment that Trump believes will bolster domestic manufacturing and rein in unfair trading practices from other countries.
Trump spent most of Wednesday's "liberation day" event speaking about the reciprocal tariffs he is enacting, holding up chart at one point during his remarks to show attendees examples of some of the high tariffs other countries impose on U.S. goods. Trump also told attendees that his new baseline 10 percent tariff on all countries will "help rebuild our economy” and “prevent cheating."
On a press call with reporters ahead of the announcement, senior White House officials acknowledged that many countries are eager to negotiate with the U.S. to settle on lower rates.
"This is not a negotiation," said a senior official on the call. "It’s a national emergency. And any country that thinks that they can simply make an announcement promising to lower tariffs is ignoring the big, massive non-tariff barriers, the institutionalization in their trade model to cheat America."
This person said it will take "a long time" for countries to remove "non-tariff barriers" to trade, citing sweatshops labor, pollution havens, export subsidies, intellectual property theft, and agricultural constraints among the many factors that negatively influence trade with the U.S. The "massive non-tariff barriers" are what "need to go in order to resolve this national emergency," a senior official said.
On Sunday, Trump's chief trade adviser, Peter Navarro, told Fox News, "the message is that tariffs are tax cuts…Tariffs are going to raise about $600 billion a year, about $6 trillion over a 10-year period." In characterizing tariffs this way, the administration is throwing out the old economic rule that U.S. tariffs on imports aren't just taxes on the receiving country – but also the American consumer.
It’s unclear how much tolerance the administration will have for price increases that result from the White House's new trade policy. Trump said during his speech before Congress earlier this year that tariffs will cause "a little disturbance — it won't be much."
More recently, he expressed his indifference to the likelihood that prices on foreign cars will rise in response to his tariffs. "I couldn't care less, because if the prices on foreign cars go up, they're going to buy American cars," the president told NBC News over the weekend. "I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty."
Trump talked constantly about tariffs on the 2024 campaign trail as part of his populist economic agenda, which also includes pledges to codify no taxes on tips, Social Security, and overtime pay.
"Strategically, what he's begun to do is return to the economic policies of the late 19th century, which made America the most powerful, most rapidly growing country in the world," former House speaker Newt Gingrich told National Review in October. "His theory in part, I think, is that tariffs will generate enough revenue to offset all the stuff we're talking about and to enable us to eliminate all these taxes."
That's a tougher sell with free traders who believe that tariffs are indeed a tax on consumers, and that the White House ignores higher prices at its own peril.
"The President's ideological fixation on tariffs is crowding out rational judgments about the consequences," the Wall Street Journal's editorial board wrote earlier this week. "Americans are being told to accept the pain of higher prices, a slower economy, and shrinking 401(k) balances in the name of Mr. Trump's project to transform the American economy into what he imagines it was like in the McKinley era of the 1890s."
In recent weeks, the president has adopted a "who knows?" posture to questions about whether he's worried the U.S. is teetering toward a recession. "All I know is this: We're going to take in hundreds of millions of dollars in tariffs, and we're going to become so rich, you're not going to know where to spend all that money," he told reporters Aboard Air Force One in early March. "I'm telling you – you just watch. We're going to have jobs, we're going to have open factories, it's going to be great.”
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