The Trump administration moved closer on Wednesday to implementing a sweeping plan to impose reciprocal tariffs on all countries that levy duties on U.S. imports, a move that has heightened fears of an escalating global trade war.
President Trump’s decision earlier this week to impose tariffs on all steel and aluminum imports, effective March 12, sent shockwaves through global markets and drew sharp criticism from key allies, including Mexico, Canada, and the European Union. Japan and Australia, meanwhile, have sought exemptions from the new duties.
The announcement has left industries reliant on steel and aluminum imports scrambling to mitigate anticipated cost increases, while manufacturers and trade experts warn of potential disruptions to supply chains that could ripple across the economy.
The administration’s latest trade actions come on the heels of a 10 percent tariff on Chinese goods, which took effect on February 4, and prompted immediate countermeasures from Beijing. Mr. Trump also delayed a planned 25 percent tariff on goods from Mexico and Canada for one month, until March 4, to allow for negotiations over border security and efforts to curb the flow of fentanyl.
While some U.S. workers have welcomed the tariffs on metals, many manufacturing-heavy companies are bracing for the fallout, expressing concerns that the increased costs will reverberate through their operations and ultimately harm businesses that depend on these materials.
White House officials have remained tight-lipped about the specifics of the reciprocal tariffs, including their structure or timing. One source familiar with the discussions suggested an announcement could come later this week.
On Monday, Mr. Trump vowed to unveil reciprocal tariffs within two days on all countries that impose duties on U.S. goods, while also signaling potential new tariffs on automobiles, semiconductors, and pharmaceuticals. However, trade experts caution that crafting such a complex tariff system poses significant challenges, which may explain why the administration has yet to finalize its plans.
William Reinsch, a senior fellow at the Center for Strategic and International Studies, noted that the administration could opt for a simpler approach, such as a flat 10 or 20 percent tariff rate, or a more intricate system that aligns U.S. tariffs with the specific rates imposed by each trading partner.
“At the international level, there’s something like 5,000 different descriptions at the 6-digit (product subheading) level, so 5,000 times 186 nations. It’s almost an artificial intelligence project,” said Damon Pike, a trade specialist at accounting firm BDO International.
The administration may rely on several legal statutes to justify the new tariffs, including Section 122 of the Trade Act of 1974, which allows for a flat tariff rate of up to 15 percent for six months, or Section 338 of the Tariff Act of 1930, which grants authority to counteract trade practices that disadvantage U.S. commerce. The latter provision, however, has never been used.
Mr. Trump could also invoke the International Emergency Economic Powers Act (IEEPA), the same authority used to impose tariffs on China and to justify pending tariffs on Canada and Mexico.
“Absent IEEPA, there would need to be some kind of agency action first before any trade remedy tariffs can be imposed … but everything seems to be on the fast track,” Mr. Pike said, noting that such measures are typically the purview of Congress.
Mr. Reinsch warned that reciprocal tariffs could have unintended consequences, effectively ceding control of U.S. tariff policy to other nations. For example, if a country like Colombia imposes high tariffs on coffee to protect its domestic industry, the U.S. would be forced to match those tariffs, even though it does not produce coffee.
“The only people hurt would be U.S. consumers,” he said.
As the administration races to finalize its plans, the global trade landscape grows increasingly uncertain, with businesses and governments alike bracing for the potential fallout from Mr. Trump’s aggressive trade policies.