This week, President Trump announced the United States will be implementing reciprocal tariffs against foreign trading partners. “I’ve decided for purposes of fairness that I will charge a reciprocal tariff,” the commander in chief said earlier this week in a press conference. “In other words, [other countries] charge us a tax or tariff, we charge them the exact same tax or tariff.”
These new tariffs will not immediately go into effect, perhaps as late as April, as the administration determines the different tariff rates for each nation. How is the latest news going to impact Trump’s other tariff plans as well as international trade? We get into it.
On this week’s episode of Capitol Gains, Yahoo Finance anchor Madison Mills, Washington Correspondent Ben Werschkul, and Senior Columnist Rick Newman talk to Tax Foundation Policy Analysis Director Garrett Watson about Trump’s reciprocal tariffs and how these are a change from universal tariffs.
“There’s been a debate about whether or not the White House would try to go forward with a simpler, more universal approach [to tariffs] that may be a bit more sweeping or try to be much more selective,” Watson says. “You could see this discussion of reciprocal tariffs is a move in that latter direction.”
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Watson explains that instead of blanket tariffs, the Trump administration will look at different criteria determining tariffs against different nations, some of which include whether a country has had a valued-added tax (VAT) already levied or whether they have non-tariff barriers that impact American companies disproportionately.
“That leaves a lot of leeway for the US trade representative and for the White House to pick and choose under those criteria what applies or doesn’t apply” Watson says. “On the other hand, that does have the risk to create a political bonanza where you have companies coming asking for exemptions under these criteria. That both makes the situation complicated and uncertain and can create political winners and losers.”
To learn more, listen to the full episode of Capitol Gains here. For more expert insight and the latest market action, click here to watch more Capitol Gains.
Capitol Gains is Yahoo Finance’s unique look at how US government policy will impact your bottom line long after the Presidential election polls have closed.
This post was written by Lauren Pokedoff.