On Wednesday, President Donald Trump revealed the implementation of long-anticipated reciprocal tariffs targeting America’s trading partners. The United States plans to impose tariffs set at about half the rate of what other countries levy on U.S. products, with a mandatory minimum of 10%. President Trump emphasized, “We subsidize a lot of countries. We’re not taking it anymore.”
These tariffs represent a significant policy shift that Trump believes will help “make America wealthy again.” The U.S. tariffs will mirror those of its trading partners, approximately halved, as outlined during Trump’s announcement in the White House Rose Garden. With a sign filled with charts, Trump provided specific examples: China imposes a 67% tax on the U.S., which includes what he described as currency manipulation; in response, the U.S. will levy a 34% tax on China. The European Union charges 39% on American goods, prompting a U.S. tariff of about 20%. South Korea, Japan, and Taiwan will face U.S. tariffs of 25%, 24%, and 32%, respectively.
President Trump criticized the limitations on U.S. companies entering foreign markets, remarking, “None of our companies are allowed to go into other countries.” He expressed this sentiment broadly, suggesting that allies could sometimes be more restrictive than adversaries. He also confirmed the imposition of a 25% tariff on foreign-manufactured cars and parts, set to take effect at midnight. The president associated helping other countries with America’s trade deficit and subsequent debt issues, stating, “We’re not taking it anymore.”
Prior to Trump’s election, some economists had cautioned that the proposed tariffs could lead to inflation of consumer prices—an issue that has persisted since. This uncertainty, along with fears of a global trade war, has affected markets, pushing the S&P 500 into correction territory and harming consumer sentiment. The situation has also led major financial institutions to anticipate a potential recession. As a result, the central bank has been adopting a cautious approach regarding interest rate adjustments.
Concerns over the tariffs are rooted in the expectation that businesses, burdened with the additional tax on imports, will pass these costs on to consumers. The U.S. is still grappling with high prices following a period of intense inflation, which peaked nearly three years ago. The Federal Reserve anticipates some tariff-induced inflation, though it may be temporary. If prices increase dramatically, it could dampen both business and consumer spending, potentially slowing economic growth and causing stagflation—a situation characterized by slow growth and elevated inflation. A think tank has recently described these tariffs as “a recipe for making Americans worse off.”
This report first appeared on Fortune.com.
