Xinhua
03 Apr 2025

U.S. President Donald Trump shows an executive order on "reciprocal tariffs" at the Rose Garden of the White House in Washington, D.C., the United States, on April 2, 2025. (Xinhua/Hu Yousong)"They will not boost growth. They are essentially a tax on the average working American," said Hoffman, the CEO and chairman of Founders Space.WASHINGTON, April 3 (Xinhua) -- Amid widespread opposition, U.S. President Donald Trump on Wednesday signed an executive order on so-called "reciprocal tariffs." Calling the day "Liberation Day," Trump claimed that higher tariffs would boost government revenue and revitalize U.S. manufacturing.However, can Trump's "reciprocal tariffs" on U.S. trading partners really help make America great again? Most likely not.After his announcement on sweeping tariffs, economists criticized Trump's latest move, warning it could possibly lead to a trade war that threatens to drive up inflation and stall U.S. and global economic growth.WHAT ARE TRUMP'S "RECIPROCAL TARIFFS"?Calling the reciprocal tariff approach a tit-for-tat strategy aimed at correcting trade imbalances, Trump, in his speech at the White House Rose Garden, said: "Reciprocal. That means they do it to us and we do it to them. Very simple.""We will charge them approximately half of what they are -- and have been -- charging us," he added.Trump signed an executive order enacting a 10-percent "minimum baseline tariff" on all imports, with higher rates for certain trading partners, effective on April 5, except for specified exemptions.Also, beginning April 9, Trump will impose an "individualized reciprocal higher tariff" on the countries and regions with which the United States "has the largest trade deficits," according to a White House document.Some goods will not be subject to the reciprocal tariffs, including steel and aluminum, as well as autos and auto parts already subject to Section 232 tariffs, copper, pharmaceuticals, semiconductors and lumber, the White House said.During his speech, Trump presented a chart on "reciprocal tariffs," outlining the new tariff rates for different trading partners -- the European Union (EU) 20 percent, Japan and Malaysia 24 percent, India 26 percent, Indonesia 32 percent, Vietnam 46 percent and Cambodia 49 percent.Trump also reserved the right to raise the baseline rate "should U.S. manufacturing capacity and output continue to worsen."These tariffs would remain in effect until Trump determines that the threat posed by the trade deficit and underlying non-reciprocal treatment has been "satisfied, resolved or mitigated.""While Mr. Trump had been saying for weeks that he would impose 'reciprocal tariffs,' his announcement went far beyond what many economists and analysts had expected," The New York Times reported.Gary Clyde Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics, said: "There is no basis for the claimed tariff-equivalent rates imposed by other countries. This is pure invention."U.S. President Donald Trump (Rear) delivers remarks on "reciprocal tariffs" at the Rose Garden of the White House in Washington, D.C., the United States, on April 2, 2025. (Xinhua/Hu Yousong)WHY IMPOSE "RECIPROCAL TARIFFS"Trump claimed that other trading partners impose "non-monetary barriers" on the United States, with the chart he presented during his speech illustrating the tariff rates "charged" by different countries or regions to the United States, including "currency manipulation" and "trade barriers."Saying that many U.S. trading partners have been taking advantage of low U.S. tariff rates while maintaining higher duties on U.S. goods, Trump invoked his authority under the International Emergency Economic Powers Act of 1977 to "address the national emergency posed by the large and persistent trade deficit."The large deficit is driven by the "absence of reciprocity in our trade relationships and other harmful policies like currency manipulation and exorbitant value-added taxes (VAT) imposed by other countries," according to the Trump administration.Expressing his belief that tariffs are necessary to ensure fair trade, protect American workers and reduce the trade deficit, Trump claimed that "jobs and factories will come roaring back" and that the reciprocal tariffs would usher in a "golden age" for the country."We will supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers. Ultimately, more production at home will mean stronger competition and lower prices for consumers," Trump said.Some experts suggested the real goal of Trump's tariff announcement is to pressure other nations into negotiating trade deals more favorable to the Trump administration.The "reciprocal tariffs" announcement is "just another Trump hoopla bargaining tactic," said U.S. economist Jack Rasmus, author of "The Scourge of Neoliberalism."Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, told Xinhua that by imposing "reciprocal tariffs," Trump wanted the United States to be in a superior bargaining position in which "it can withhold something the other country wants, or extract a concession in some different area."ADVERSE EFFECTS "President Donald Trump is stepping up his massive global trade war, a move that's certain to weigh on Americans' wallets and could push the U.S. economy into a painful recession," said a report by CNN.U.S. Congressman Josh Gottheimer warned that Trump's tariffs are "regressive," calling the day of the announcement "a day of higher costs and a day of chaos."Many economists believe that "reciprocal tariffs" imposed on key trading partners would be difficult to structure and could harm global trade, increasing costs for U.S. consumers and businesses."Tariffs are a tax on businesses bringing products into the country. They have to pay the duty to have it admitted," said Chris Barrett, a professor at the Cornell SC Johnson College of Business. "You've just added a cost for the business, and those costs get passed on -- at least to some degree -- to consumers."In the most recent consumer confidence survey by the University of Michigan, consumers' long-term inflation expectations saw the biggest three-month jump ever recorded and have reached their highest level in over three decades.The budget lab at Yale University projected that a 20-percent broad tariff could lead to a short-term increase in consumer prices ranging from 2.1 percent -- assuming no retaliation from other countries -- to 2.6 percent if tit-for-tat measures are enacted."I think these tariffs will add 1.5 percent to the U.S. inflation rate," predicted Hufbauer, who is also a former Treasury Department official."The tariffs announced are at the extreme end of forecasts," he said, adding that it is "hard to see the U.S. avoiding a recession. World growth will be down 1 percent or more."Also voicing concern, Silicon Valley entrepreneur Steve Hoffman said: "I don't think the reciprocal tariffs are going to help anyone. They won't bring jobs back to the United States, and they will only increase the cost of goods. American consumers will end up paying this cost, one way or another.""They will not boost growth. They are essentially a tax on the average working American. If global tariffs are widely implemented, prices would rise, consumer spending would fall and a downward economic cycle would likely begin," Hoffman, the CEO and chairman of Founders Space, one of the leading incubators in Silicon Valley, told Xinhua.Similarly, Ramsay said that even if the plan ultimately works, the pain for most parts of society could be extraordinary. "To start with the rich, they will lose financially at the start," he said.This photo taken on Aug. 4, 2022 shows the White House and a stop sign in Washington, D.C., the United States. (Xinhua/Liu Jie)GLOBAL BACKLASHTrump's announcement on "reciprocal tariffs" has drawn widespread opposition and criticism from the international community and business circles.The U.S. tariff policies are adding to global uncertainties and will have a negative impact worldwide, said European Central Bank President Christine Lagarde.Italian Prime Minister Giorgia Meloni criticized Trump's decision to impose tariffs on the European Union (EU), calling it "a mistake that benefits no one."Calling Trump's decision "deeply regrettable," Irish Taoiseach Micheal Martin said it benefits "no one." "The EU will have to respond in a proportionate manner which protects our citizens, our workers and our businesses," said Irish Deputy Prime Minister Simon Harris.Australian Prime Minister Anthony Albanese condemned the new U.S. tariffs on imports from the nation as "unwarranted" and "not the act of a friend."In response to the U.S. tariffs, the Brazilian government said that the country "is evaluating all possible courses of action to ensure reciprocity in bilateral trade, including resorting to the WTO (World Trade Organization), in defense of Brazil's legitimate national interests."Canadian Prime Minister Mark Carney vowed to counter the tariffs with retaliatory measures, saying the levies would "fundamentally change the global trading system."Noting that this is by far the largest tax increase the United States has ever seen, Dean Baker, a senior economist at the Center for Economic and Policy Research, said that "there will be serious retaliation from all U.S. trading partners.""All it does is fuel a trade war, creating uncertainty and instability in the markets. It disrupts economic activity and risks triggering a global recession," Hoffman said.