Top financial analysts, such as those at Morgan Stanley and Nomura Holdings Inc., have determined that President Trump’s proposal to impose reciprocal tariffs on trading partners poses a significant danger to India and Thailand.
By declaring reciprocal tariffs for foreign nations on Thursday, President Donald Trump further upended the international trade system by bringing US import duties into line with those of other nations.
“A reciprocal tariff will be charged by me. The same amount of tariffs will be applied to any nation that imposes one on the US. Not a bit more or less. To put it another way, we will impose the same taxes or tariffs on them that we do on them. “Very easy,” he said to reporters.
Hours before Trump was due to visit Prime Minister Narendra Modi in the White House, the announcement was made. Trump then reaffirmed his stance that India is a “high tariff” nation and said he would not make any compromises.
In order to allow countries time to maybe negotiate new trade conditions with the US, Trump implemented the tariffs through an executive action on Thursday, but they won’t go into force right away, a White House official stated Thursday.
Reciprocal tariffs: what is it?
Tariffs are levied on items that are imported from other countries.
“If China, India, or any other country hits us with a 100 or 200 percent tariff on American-made goods, we will hit them with the same exact tariff,” Trump stated frequently during his presidential campaign, referring to reciprocal tariffs. Stated differently, 100 percent is 100 percent. An eye for an eye, a tariff for a tariff—the same precise amount is what we tax them if they charge us.
He recently stated that “every country will be reciprocal” and that a specific order on the subject would be issued by Wednesday or Thursday.
The statement was made shortly before Prime Minister Narendra Modi’s trip to the US. India’s tariff policies have drawn criticism from the Trump administration, which says they restrict US imports.
According to experts, there is no official definition of “reciprocal tariffs” in international trade. Rather, Trump uses it to characterize modifications to US customs intended to support his campaign’s goal of equitable and reciprocal trade.
Who will be affected by the relocation?
India and Thailand are among the countries most in danger from President Trump’s promise to slap reciprocal tariffs on trading partners, according to a Bloomberg story cited by economists at international banks ranging from Morgan Stanley to Nomura Holdings Inc.
India was previously criticized by Trump as a “very big abuser” of import duties.
Both Asian countries impose taxes on US imports that are, on average, much greater than the US imposes on them, according to analysts.
If Washington adopted a country-based strategy for reciprocal tariffs, “there should be no effect on countries with free trade agreements like Mexico, Canada, and Korea, limiting the overall impact,” according to Goldman Sachs’ estimations.
According to Cousin’s analysis, the average rate that India charges US imports is over 10 percentage points greater than the US levies on Indian goods.
Given last year’s $4.1 trillion in US imports, the reciprocal tariffs order may also result in a significant tax increase that would mostly affect American businesses and consumers. Trade partners may retaliate, upending international markets and changing America’s reputation among both allies and rivals.
