On Thursday, President Donald Trump declared the implementation of reciprocal tariffs on nations that levy duties on American goods. This strategy aims to level the playing field in trade tariffs, primarily impacting the European Union (EU) and other countries with significant trade deficits with the United States. In a video released by the White House, Trump explained that the new policy means if a nation imposes a tariff on American exports, the U.S. will apply an equivalent duty on their goods. "Whatever a country makes us pay, we will charge them the same, nothing more, nothing less," Trump asserted from the White House.
Furthermore, Trump harshly criticized the EU, accusing it of using the Value Added Tax (VAT) as a "hidden tariff," which disadvantages American products in the European market. According to the news agency EFE, the automotive sector is expected to be among the most affected, with potential tariff hikes reaching up to 27% on imported vehicles. Currently, Washington imposes a 2.5% duty on imported cars, while the EU sets a 10% tariff, along with the community VAT, which is at least 17%.
As a result, under the new policy, the U.S. would apply a matching tariff, adding a 10% duty and the corresponding VAT percentage, potentially raising the total rate to 27%.
Warning to BRICS
In his statement, Trump also issued a stern warning to the BRICS bloc (Brazil, Russia, India, China, and South Africa), threatening a 100% tariff if they attempt to undermine the dollar in international trade. "If the BRICS play with the dollar, we will impose a 100% tariff the same day," the president cautioned.
This initiative is part of Trump's broader strategy to use tariffs as a tool in trade and political negotiations, aiming to secure concessions in areas such as commerce, immigration, and security.
Understanding Trump's Tariff Policy
What are reciprocal tariffs?
Reciprocal tariffs are duties imposed by one country on another in response to similar tariffs placed on its goods, aiming to equalize trade conditions.
How does Trump's policy affect the automotive industry?
The policy could significantly impact the automotive industry by increasing tariffs on imported vehicles to as high as 27%, affecting pricing and potentially sales.
What is Trump's warning to the BRICS about?
Trump warned the BRICS countries that if they attempt to weaken the dollar in global trade, the U.S. would respond by imposing a 100% tariff on their goods.