Trump Signs Order on Reciprocal Tariffs

President Donald Trump signed a memorandum on Thursday (early Friday morning IST) mandating US trade authorities to study trade relationships and impose reciprocal tariffs on all countries that charge higher rates and impose non-tariff barriers on American imports than the US does for their imports.

- Prashant Jha

WASHINGTON:

The President asked officials to come up with new tariffs that take into account tariffs that other countries charge the US, the taxes they charge on foreign products, the subsidies they give their industries, their exchange rates, and other actions.

"I have decided, for purposes of fairness, that I will charge reciprocal tariffs, meaning whatever other countries charge the US," said Trump in the Oval Office.

India was likely to be among those countries affected by the policy given the disparity in rates. "India has more tariffs than nearly any other country," Trump was quoted by Reuters as saying at the time of signing the order, just two hours before he was due to meet Prime Minister Narendra Modi. However, the exact details of how this would affect trade between the two countries were not clear at the time of going to press.

Reuters reported this week, based on data from the World Trade Organization, that India's simple average tariff rate is 17%, compared to about 3.3% for the US. On a trade-weighted basis, India's rate is about 12%, versus the US rate of 2.2%. Given the expansive mandate Trump has introduced, India's production linked incentive scheme, and its subsidies for different sectors including agriculture.