New Delhi: US President Donald Trump has created a stir in the world with his tariff policy. He has instructed his economic team to plan to impose ‘reciprocal tariff’ on those countries which impose tax on American imports. This has increased the risk of trade war across the world. This war can be with both friends and enemies. Trump said in the Oval Office on Thursday, ‘In terms of trade, I have decided to be fair that I will impose reciprocal tariff i.e. ‘reciprocal tax’. Meaning, whatever country imposes tariff on America, we will impose the same tariff on them. Neither less nor more.’ He further said, ‘This is for every country and basically, when they treat us well, we also treat them well.’
Trump instructed his team to start calculating tariffs that match the tariffs imposed by other countries. Also, they will have to look at non-tariff barriers. For example, vehicle safety regulations that exclude American automobiles and value-added taxes that increase their cost. The directive will not immediately lead to additional tariffs. Rather, it begins a lengthy investigation of tariffs imposed on American goods by other trading partners. A response will then be formulated.
During his meeting with Prime Minister Narendra Modi, US President Donald Trump told the PM that we missed you a lot. Before the meeting between PM Modi and Trump, the US President took such a decision related to tariff, after which the discussion on tariff started in full swing.
What is reciprocal tax?
President Trump signed the order to implement reciprocal tariff. This means that whatever tax the countries impose on America, America will also impose the same tax on them.
That is, if a country imposes a 20 percent tax on goods imported from America, then America will also impose 20 percent tax on goods imported from that country. After taking oath, the US President had announced to impose heavy tariff on some countries, due to which there was a fear of a trade war breaking out in the world. However, Trump withdrew his decision after some time.
Global trade will be balanced.
The US President says that to balance the global tax, it is necessary to impose equal tax. During the election too, Trump had promised to impose reciprocal tax.
When will it be implemented?
It is not yet clear when this order will be implemented. Currently, the average import tariff imposed by the US on industrial goods is 2%.
Impact on India-US trade relations
This decision may affect India-US trade relations in the coming times. Earlier too, Trump had said that India is among the countries imposing the highest tariffs. Now if the tariffs imposed by India are not reduced, then the US can also impose higher tariffs.
US President Donald Trump announces plan to impose 25% tariffs on Mexico and Canada from February 1
Why has the US announced heavy tariffs on imports from China, Canada and Mexico? What are the terms and conditions? Why are countries around the world in a panic due to Trump’s decisions related to this? Are Trump’s decisions not a violation of the free trade agreement?
US President Donald Trump has taken a series of decisions in the early days of his second term to fulfill his election promises. These decisions are certainly being appreciated in the US. But this has created a stir in the world. From Canada to Mexico and China, all countries are reacting sharply to his decision to increase tariffs.
Trump imposed a 25% tariff on Canadian and Mexican goods using executive orders and a 10% tax on energy products from Canada and many types of goods from China. This created turmoil in stock markets around the world, especially in Asia. Trump did not stop here. When US President Donald Trump announced a 25% tariff on all steel and aluminium imports, steel manufacturers around the world panicked.
