What is Reciprocal Tariffs
The Reciprocal Tariff Act was designed to empower the US President to negotiate tariff agreements with other countries, especially Latin American countries, in exchange for reciprocal tariff reductions of up to 50 percent. This policy aimed at fostering fairness in international trade, encouraging mutual reductions in duties between countries.
Fast forward to the Trump administration, and President Donald Trump has reignited this principle by ordering the development of reciprocal tariffs, staying true to his campaign promise of an “eye for an eye” approach in global trade. In a bold statement, Trump declared that the US would charge equivalent tariffs to those imposed on it by other countries, emphasising fairness—“No more, no less.”
This announcement came on the heels of several other tariff decisions, including a 10 percent tariff on Chinese imports and potential new levies on steel and aluminum. Additionally, Trump has threatened a 25 percent tariff on imports from Canada and Mexico, though negotiations have temporarily paused the implementation of this measure.
Trump’s stance is rooted in his longstanding belief that the U.S. is being unfairly treated in global trade. He points to countries like India, which, according to Global Trade Alert, impose tariffs 5 to 20 percent higher than those the US charges on 87 percent of imports. For Trump, these imbalances are a glaring issue that he aims to address through reciprocal measures.
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