Trump imposes mutual import duties both allies and rivals: “If they charge us something, we charge them”

With the Memorandum, Trump does not immediately set up new rates to trading partners, but he does give the impetus to an American answer to the taxes that trading partners use. In this way, those trading partners are given the time to negotiate new trade conditions with the US. According to Trump, the new tariff policy will only make the competition between American and foreign companies fairer. “It’s honest for everyone. No other country can complain, “said the president.

Howard Lutnick, the future American Trade Minister, said that the studies on the rates should have been completed on 1 April. The tariff increases would be tailor -made for each country and intended to start new trade discussions. The countries that raise the highest rates on American products are the first to take their turn.

European VAT

With his plan, the American president tries to eliminate “trading proficiencies” and fulfills one of his most important campaign blows, but his approach can lead to confrontations with rivals and allies of the US. The targets of the plan include China, India, Japan, South Korea, but certainly also the European Union. “The European VAT triples the actual import rate,” said Trump.

The average import rate for industrial goods in the US is 2 percent. Half of all industrial goods that the US imports have even entered the country tax -free. Currently, many countries, including in Europe, raise higher import tariffs on American products than the other way around. “In almost all cases they count (American trading partners, ed.) us much more than we do, but that time is over, “says Trump. “This should have happened for a long time.”

Inflation

The series of new, radical mutual rates fits in perfectly with Trumps America first-Politics and can food the US state treasury, but is not without danger to American companies and consumers. After all, Trump campaigned with the promise to lower inflation, but the higher taxes can just rise the prices up and unleash a global trade war.

In recent weeks, Trump has also imposed rates on Canada and Mexico, the two largest trading partners in Washington. In the meantime, he has also suspended these rates for 30 days, after the two countries had agreed to strengthen their boundaries with the US. The US president has also set 10 percent rates on Chinese imports and a general rate of 25 percent on the import of steel and aluminum.

If Trump continues with the rates of 25 percent on Mexico and Canada, that would amount to a tax increase of more than 1,200 dollars a year for the average American household, researchers from the Peterson Institute calculated. Due to mutual rates, that amount would probably increase.

The US president admitted that “prices can go up” for American households as a result of the mutual rates. He also added that he is confident that prices will eventually fall.

Trump announced his plans during a visit from Indian Prime Minister Narendra Modi. India is the major trading partner of the United States that has the highest rates on American products. Modi has already taken steps to reduce import duties on important products such as motorcycles. Nevertheless, during a joint press conference with Modi, Trump promised reciprocal rates on Indian import products: “Whatever India charges us, we charge them.”