San Francisco Frontiers - Trump unveils 'reciprocal tariffs' plan targeting friends and foes

Speaking in the Oval Office, Trump said he had decided to impose the reciprocal duties, telling reporters that US allies were often "worse than our enemies" on trade.

In particular, he singled out the European Union for being "absolutely brutal" in its trade ties with Washington.

The levies would be tailored to each US trading partner and consider the tariffs they impose on American goods, alongside taxes seen as "discriminatory," such as value-added taxes (VATs), said a White House official on condition of anonymity.

With the memo Trump signed on Thursday, the US trade representative, commerce secretary and other officials will propose remedies on a country-by-country basis.

Washington will start by examining economies with which the United States has its biggest deficits or "most egregious issues," the White House official added.

"This should be a matter of weeks, in a few months, but not much longer than that," the official said.

Ahead of Trump's Oval Office comments, Trump trade advisor Peter Navarro told reporters: "Major exporting nations of the world attack our markets with punishing tariffs and even more punishing non-tariff barriers."

- Inflation fears -

Cost-of-living pressures were a key issue in the November election that saw Trump return to power, and the Republican has promised to swiftly reduce prices.

But economists caution that sweeping tariffs on US imports would likely boost inflation, not reduce it, in the near term and could weigh on growth eventually.

Trump acknowledged Thursday that US prices "could go up" due to tariffs, but he expressed confidence that they would ultimately ease.

Since taking office, Trump has announced a broad range of tariffs targeting some of the biggest US trading partners, arguing that they would help tackle unfair practices -- and in some cases using the threats to influence policy.

The president has referred to tariffs as a way to raise revenue, remedy trade imbalances and pressure countries to act on US concerns.

- 'Unfair' treatment -

The White House official said Thursday that the United States has been "treated unfairly," saying a lack of reciprocity is a reason behind the country's "persistent annual trade deficit in goods" which topped $1 trillion last year.

One issue US officials singled out was the EU's 10 percent tariff on US vehicles, while the United States charges only 2.5 percent.

But Sean Bray, policy director of Tax Foundation Europe, noted that the United States might have higher levies on other products, such as a 25 percent rate on imports of light trucks.

Trump also criticized "certain areas of Europe" for a VAT tax of about 20 percent, with Navarro calling the EU the "poster child" for unfair trade with the United States.

Trump's announcement came shortly before he was due to meet Indian Prime Minister Narendra Modi in Washington.

Analysts have warned that reciprocal duties could bring a broad tariff hike to emerging market economies such as India and Thailand, which tend to have higher effective tariff rates on US products.

Countries such as South Korea that have trade deals with Washington are less at risk, analysts believe.

New Delhi offered some quick tariff concessions ahead of Modi's visit, including on high-end motorcycles.

During election campaigning, Trump promised: "An eye for an eye, a tariff for a tariff, same exact amount."

For example, if India imposes a 25 percent tariff on US autos, Washington will have a 25 percent tariff as well on imports of autos from India, financial services group Nomura said in a report this week.

The consideration of non-tariff factors might shift this calculus.

"Trump's objective of implementing reciprocal tariffs is to ensure fair treatment for US exports, which could indirectly also address US trade imbalances with partner countries," Nomura analysts said.

C.Lewis--SFF