Trump’s’ high -rise “tax plan

Over the past week, US President Donald Trump has continuously mentioned the reciprocal import tax plan (Reciprocal Tariff) with its trading partners. His purpose is to impose import taxes on goods equivalent to the level they are currently imposing to the US. He confirmed that this tax may take effect immediately.

Since the election, Trump has promised to implement a tax policy to scratch with the playground with countries with unbalanced trade relations with the United States. A few hours before the time of announcement, the US President on the social network Truth Social wrote that “today there will be a big event”, calling for “bringing the great American country again”. “How much they impose us, we will apply it like that,” he said to the press in the oval room on February 13.

Trump’s statements make investors worry that the world will suffer a very strong blow. Earlier, he signed an order to impose import tax with the three largest trading partners, Canada, Mexico, China, and taxed 25% with aluminum and steel imported into the country.

However, when officially announced, the reciprocal tax plan is commented only including vague words, not giving many details and there is no specific timeline on the application date. According to the memorandum, Mr. Trump only requires government agencies to “actively prevent unfair trade activities with partners, by deciding the import tax rate corresponding to each country”.

In other words, he wants them to make a plan to help trade more balanced. Wall Street sighed after this information. The S&P 500 closing session increased by 1%. Nasdaq Composite increased by 1.5% and DJIA increased by 0.8%.

“It is relieved when the government does not rush to apply new taxes. We welcome the president’s selection of more delicate and multilateral plan,” Tiffany Smith – Vice President in charge of global trade at the Foreign Trade Council Gia (NFTC) commented. US officials will have to work with each trading partner, in order to reduce tariff barriers for the United States.

Howard Lutnick – who was nominated by Mr. Trump as US Trade Minister – said the research would be completed before April 1. They will consider the largest trade surplus cases and apply the highest import tax to the US.

However, this also means that the workload they must do will be very large. US officials will have to review from Brazil’s alcohol taxes, motorbike taxes into India, car taxes into the European Union (EU), to the ban on imported animals from 48 US states into the EU.

It is unclear whether Trump’s plan can convince countries to increase buying US goods, or build more factories in the US. But the US President seems to believe this will help create more jobs here. “If you build a factory here, you will not be imposed on import tax anymore. I think that will happen. This country will have a lot of new jobs,” he announced on February 13.

Some economists were also relieved after the press conference of Mr. Trump. Analysts at Goldman Sachs do not think that the reciprocal import tax will cause great damage to the economy, because the implementation will be very complicated and some countries also do not export to the US corresponding products to impose taxes. .

And even if applied, this tax is considered softer than the threat from Mr. Trump’s campaign, which is 10% of the tax on all goods into the US. “Despite causing risks, reciprocal import tax can end trade instability after being published,” Goldman Sachs said.

In addition, the lack of specific timelines also left the possibility of negotiating countries with the US to have a lower tax rate. Mr. Trump can even postpone part or the whole plan.

“Just like the previous times. He declared something very loud, then withdrew. We were afraid of the worst thing that would happen, but then realized it was just the art of negotiation.” , Michael Block – a market strategist at Third Seven Capital. On February 3, just a few hours before the import tax with Mexico and Canada took effect, Mr. Trump announced its postponement for a month because the two countries reached an agreement on immigration and smuggling with the United States.

Keith Lerner – Investment Director in Truist Wealth – said that the investor evaluated the import tax will be once again used as a negotiating tool. Therefore, their impact will not be big and come immediately as before. “It is not the next day, the tax will increase 50%,” Lerner said.

However, businesses, investors and consumers know that import tax is Mr. Trump’s favorite tool. And reciprocal taxes can still be applied, sooner or later. Besides, despite the postponement of tax impulses with Mexico and Canada, Mr. Trump still holds taxes on China.

These policies will still affect the US economy, in the context of this country struggling with inflation. “The fight against inflation will be even more difficult when we apply high taxes on imported goods,” Christine McDaniel, a senior researcher at George Mason University.

The US Labor Statistics Office this week announced the January Consumer price index (CPI) in January. Accordingly, the US CPI in January increased by 3% compared to the same period last year and the core CPI (excluding fuel and food prices) by 3.3%. The January production price index (PPI) announced on February 13 is also stronger than forecast. These data strengthened the expectation of the Federal Reserve (Fed) to keep the interest rate in the March meeting and may wait until at least September to reduce interest.

“The Trump administration still wants to impose reciprocal taxes, despite serious economic consequences on American consumers,” the Tax Foundation research organization said in a post on February 13.

Since the election, Mr. Trump has always asserted that import taxes are a key tool in the plan to cool inflation and increase budget revenue to compensate for domestic tax reduction policies. Therefore, the US may continue to impose taxes. However, analysts said that up to now, the reciprocal tax plan announced by the Trump administration is still more threatening.