Trump Declares "Eye for an Eye" in Escalating Global Tariff War

The U.S. President’s new reciprocal tariff policy signals a global trade conflict

U.S. President Donald Trump, ahead of his meeting with Japanese Prime Minister Shigeru Ishiba, announced his intentions to escalate the global tariff war, emphasizing a policy of "reciprocal tariffs." This move, which was made during a press briefing, signals a significant shift in the United States' trade strategy, potentially impacting countries around the world.

The U.S. government is expected to announce more detailed plans regarding these reciprocal tariffs on February 10-11. Trump has previously revealed intentions to impose tariffs on various goods, including semiconductors, steel, aluminum, oil, gas, and pharmaceuticals. His declaration of tariffs on China, Canada, and Mexico due to issues such as fentanyl trafficking has now expanded the scope of the tariff war, affecting nearly every major trade partner globally.

Although "reciprocal tariffs" is not an official term, President Trump clarified during his comments that the new tariffs would be a form of "equal treatment" between the U.S. and its trade partners. This is in line with his rhetoric from his presidential campaign, where he stated that if countries like India and China imposed tariffs of 100% or 200% on U.S. goods, the U.S. would impose equal tariffs in return. Trump emphasized the principle of "an eye for an eye, tariff for tariff."

This policy suggests that the U.S. will raise its tariffs on specific imports from countries that apply higher tariffs on U.S. products. Trump's rhetoric aligns with his previously expressed desire to introduce the "Trump Reciprocal Trade Act," a law aimed at leveling the playing field in international trade by matching tariffs.

The European Union (EU) and India are likely to be the primary targets of these new tariffs. Trump has frequently criticized the EU for its tariffs on U.S. cars, especially since the U.S. imposes a significantly lower tariff on European cars. Currently, the EU levies a 10% tariff on U.S. cars, while the U.S. applies only a 2.5% tariff on European imports. Recently, there have been reports suggesting that the EU may be willing to reduce its tariff on U.S. cars to 2.5%, which could potentially address some of Trump's concerns.

Trump has also expressed frustration with India's high tariffs on U.S. goods and has pointed to other countries like Brazil as unfair trade partners. The concept of reciprocal tariffs could also extend to non-tariff barriers such as subsidies or anti-dumping regulations, areas in which the Trump administration has already started investigations.

In fact, the U.S. Trade Representative (USTR) nominee, Jamison Greer, recently hinted that "Section 301 of the Trade Act" could be used to address discriminatory practices by foreign governments, showing that the Trump administration may target non-tariff barriers as well.

While South Korea's free trade agreement (FTA) with the U.S. means that most U.S. goods enter the country with minimal tariffs, American industries have continued to raise concerns about non-tariff barriers. This sentiment was echoed during Greer's confirmation hearing, where he linked trade deficits to non-tariff barriers, suggesting that the U.S. might take action to address these issues.

Trump also hinted at a shift in his approach to tariffs, indicating that he might prefer a targeted reciprocal tariff approach rather than imposing a blanket tariff across all imports. He stated, "If they impose tariffs on us, we will impose them on them," suggesting a more tailored response to each country's trade policies.

Meanwhile, the U.S. has imposed additional tariffs on Chinese imports starting February 4th, citing issues such as fentanyl trafficking. In response, China announced it would increase tariffs on U.S. goods starting February 10th, including a 10-15% tariff on U.S. coal, LNG, and various agricultural and automotive products. These actions continue to intensify the trade tensions between the two nations.

President Trump had previously signaled that he would speak with Chinese President Xi Jinping soon, but he later indicated that there was no rush for such a conversation, as he sought to finalize the details of the trade dispute. Reports from Hong Kong suggest that President Xi is cautious about rushing into talks without a clear agenda, signaling the complexity of the ongoing trade war.

Ultimately, Trump’s strategy is designed to force trade partners to level the playing field by matching tariffs on U.S. goods, thus creating more favorable conditions for U.S. industries. However, it remains to be seen whether this approach will lead to a comprehensive trade agreement or further escalate the ongoing global trade conflict.