NEW YORK. US President Donald Trump’s most sweeping tariff ever took effect on Saturday. It could trigger retaliation, escalate trade tensions and destabilize the global economy.
The 10 percent “basic” tariff went into effect at midnight, hitting most US imports except those from Mexico and Canada. In it, Trump invoked emergency economic powers to address the country’s trade deficit.
The White House said the trade gap was driven by a “lack of reciprocity” in the relationship and other policies such as “excessive value-added taxes.”
On April 9, about 60 trading partners, including the European Union (EU), Japan and China, are set to face higher tariffs on each economy.
Trump’s 34-percent tariff on Chinese goods, which will begin next week, comes after Beijing announced it would impose 34-percent tariffs on American products starting April 10. .
Beijing has also said it will sue the United States at the World Trade Organization (WTO) and ban exports of rare earth minerals used in high-end medical and electronics technology.
But other major trading partners have held back as fears of an international standoff and recession grow.
Trump warned on social media on Friday that “China got it wrong” and that it was “something they can’t do.” .
Markets Crash
Wall Street fell on Friday, following similar declines in Asia and Europe. Economists have also warned that tariffs could reduce growth and fuel inflation.
But Trump said on his Truth Social platform that his “policies will never change.” However, there are notable exceptions to Trump’s latest tariffs.
These are not in addition to the 25 percent tariffs recently imposed on steel, aluminum and automobile imports.
Also, copper, pharmaceuticals, semiconductors and lumber, along with “certain important minerals” and energy products, have been temporarily exempted, according to the White House.
But Trump has ordered an investigation into copper and lumber, which could soon lead to additional tariffs. He has also threatened to hit other industries, such as pharmaceuticals and semiconductors. This means any exemptions could be limited.
Canada and Mexico face separate tariffs of up to 25 percent on goods entering the United States outside the North American Free Trade Agreement, so both countries are unaffected by the latest tariffs.
Risk of retaliation
Trump’s tiered timelines give countries room to negotiate but if they fail to get exemptions, they could retaliate, as China has already done, Oxford Economics warned this week. .
EU Trade Chief Maros Sefcovic said the EU, which faces a 20-percent tariff, would act in a “calm, careful, phased, integrated way” and allow time for negotiations. However, he said, “We are not sitting idly by.”
France and Germany have said the EU could retaliate with tariffs on US technology companies.
Japanese Prime Minister Shigeru Ishiba called for a “calm mind” approach after Trump imposed a 24-percent tariff on Japanese-made goods.
Meanwhile, Trump said he had “very productive” talks with Vietnam’s top leaders, citing the 46 percent US tariff on imports from the Southeast Asian manufacturing hub.
President Since returning, Trump has imposed tariffs on imports from Canada and Mexico due to illegal immigration and the drug fentanyl, and has imposed an additional 20-percent tariff on goods from China. By April 9, the additional tax rate on Chinese products this year will reach 54 percent.
Trump’s 25-percent auto tax also took effect this week, and Jeep-owner Stellantis has halted production at some Canadian and Mexican assembly plants.
Trump’s new global tariffs are the most sweeping tax hikes since the Smoot-Haley Tariff Act of 1930, a law best remembered for triggering a global trade war and deepening the Great Depression, according to the Center for Strategic and International Studies. .
Oxford Economics estimates that this action would raise the average effective US tax rate to 24 percent, higher than it was in the 1930s. RSS
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