Trump administration readies reciprocal US tariffs as trade war fears mount

Donald Trump's trade advisers were finalizing plans on Wednesday for the reciprocal tariffs the US president has vowed to impose on every country that charges duties on US imports, ratcheting up fears of a widening global trade war.

Trump stunned markets with his decision on Monday to impose tariffs on all steel and aluminum imports beginning March 12. The plans drew condemnation from Mexico, Canada and the European Union, while Japan and Australia said they were seeking exemptions from the duties.

The news sent industries reliant on steel and aluminum imports scrambling to offset an expected jump in costs.

Last week, Trump slapped an additional 10% tariff on Chinese goods, effective February 4, with Chinese countermeasures taking effect this week.

He delayed a 25% tariff on goods from Mexico and Canada for a month until March 4 to allow negotiations over steps to secure US borders and halt the flow of fentanyl.

Some US workers welcomed Monday's metal tariffs, but many manufacturing-heavy firms agonized over the next steps, warning the tariff hike would reverberate across supply chains, affecting all businesses that rely on the materials.

White House officials have been tight-lipped about the structure or timing of the next tariffs, with one source saying the announcement might come later in the week.

Trump said on Monday he would announce reciprocal tariffs over the next two days on all countries that impose duties on US goods, and said he was also looking at separate tariffs on cars, semiconductors, and pharmaceuticals.

Trade experts say structuring the reciprocal tariffs that Trump wants poses big challenges for his team, which may explain why the latest duties were not announced on Tuesday.

William Reinsch, senior fellow at the Center for Strategic and International Studies, said Trump officials could opt for a more easily implemented flat 10% or 20% tariff rate or a messier approach that would require separate tariff schedules matching US tariffs to each other country's rates.

One source tracking work on the tariffs said details were still being worked out late Tuesday.

Damon Pike, a trade specialist and principal with the US division of accounting firm BDO International, said the reciprocal tariffs that Trump envisioned would result in a monumental undertaking, given that each of the 186 members of the World Customs Organization had different duty rates.

"At the international level, there's something like 5,000 different descriptions at the 6-digit (product subheading) level, so 5,000 times 186 nations. It's almost an artificial intelligence project," he said.

Experts say Trump could turn to several statutes, including Section 122 of the Trade Act of 1974, which would only allow a flat rate maximum of 15% for six months, or Section 338 of the Tariff Act of 1930, which provides authority to act against trade discrimination that disadvantages US commerce but has never been used.

Trump also could use the same International Emergency Economic Powers Act used to justify the tariffs imposed on China and pending for Canada and Mexico.

"Absent IEEPA, there would need to be some kind of agency action first before any trade remedy tariffs can be imposed … but everything seems to be on the fast track," Pike said, adding that normally tariffs would be done by Congress.

Reinsch said imposing reciprocal tariff also ceded control of the US tariff schedule to other countries, following whichever tariff rate they set, and could lead to counterproductive results.

"For example, if Colombia has a high tariff on coffee in order to protect its industry, we would put a high tariff on Colombian coffee to match theirs, even though we don't grow coffee. The only people hurt would be US consumers," he said.