Reciprocal Duties Will Cover All Trade Partners

Following his announcement of 25-percent tariffs on automobiles last week, President Donald Trump has added more fuel to the tariff fire.

With days to go until “Liberation Day”—the April 2 deadline set by the White House for the rollout of reciprocal duties—Trump stoked consternation and confusion with comments indicating that the tariffs will affect all countries, not just those with trade imbalances with the U.S.

Doubling back on his comments last week that the tariffs would likely be “more lenient than reciprocal,” the president on Sunday aboard Air Force One told reporters that the tariff agenda would “start with all countries,” and that there would be no “cutoffs” as previously hinted.

This goes against comments from Treasury Secretary Scott Bessent, who in recent weeks has said that the tariffs might only impact the “Dirty 15,” or the 15 percent of countries with the largest and most persistent trade surpluses with the U.S.

Trump economic advisor Peter Navarro told Fox News Sunday that the new duties would raise $6 trillion in government revenue over the course of the next decade, asserting that “Tariffs are tax cuts, tariffs are jobs, tariffs are national security.” A Fox News poll released the same day showed that most Americans disagree; 69 percent said they believe new duties will drive up prices.

The markets, too, felt the shockwaves of continued tariff debate. On Monday, stocks were mixed, with the S&P 500 gaining 0.55 percent, or nearly 31 points, while the Nasdaq Composite dropped 0.14 percent, or 23.7 points. The Dow Jones Industrial Average grew 1 percent, or 417.86 points.

As the rollout of reciprocal duties looms, trading partners are preparing to retaliate and forming new alliances.

Over the weekend, top trade officials from Japan, China and South Korea met in Seoul for the first meeting of its kind in five years, with the goal of deepening trade ties amid growing tensions with the U.S. In a joint statement, South Korean Industry Minister Ahn Duk-geun, Chinese Commerce Minister Wang Wentao, and Japanese Trade Minister Yoji Muto talked of promoting a “rules-based, open, inclusive, transparent, non-discriminatory multilateral trading system with the WTO at its core.”

The trade leaders called for the strengthening of certain WTO functions like negotiations, monitoring, deliberation and dispute settlement in the face of current trade headwinds. The meeting also saw the Asian nations agree to accelerate negotiations for a trilateral free trade agreement and the advancement of the Regional Comprehensive Economic Partnership (RCEP), which includes 15 countries in the region that collectively make up 30 percent of global gross domestic product (GDP), population and trade volume.

White House press secretary Karoline Leavitt said Monday that the president will make his tariff announcement from the Rose Garden on Wednesday.

USTR weighs in

Monday saw the release of a 397-page report from the Office of the U.S. Trade Representative analyzing the trade relationships between the U.S. and 58 of its trading partners. Commissioned by Trump earlier this year, the tome, entitled “2025 National Trade Estimate Report on Foreign Trade Barriers,” may provide clues about which nations might be hardest hit by Trump’s reciprocal duties.

Based on insights gleaned from the U.S. Departments of Commerce and Agriculture, as well as other U.S. Government agencies and embassies and supplemented with information provided in response to a notice published in the Federal Register, covers the country’s largest export markets.

“Trade barriers elude fixed definitions, but may be broadly defined as government laws, regulations, policies, or practices—including non-market policies and practices—that distort or undermine fair competition,” the report said. “These include measures that protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights.”

Though Trump has railed against the European Union (EU) for trade policies he’s described as unjust or unfair, the report, compiled by Trump-appointed USTR Ambassador Jamieson Greer, underscored that the U.S. and the EU “share the largest economic relationship in the world.”

“Trade and investment flows between the United States and the EU are a key pillar of prosperity on both sides of the Atlantic and generate substantial economic opportunities,” it added. However, certain goods and services produced stateside face “persistent barriers” in accessing certain sectors of the EU market, which the USTR said “limits the opportunity of U.S. workers and businesses to benefit from transatlantic trade.”

According to 2023 data, the EU’s average most-favored nation (MFN) applied tariff rate was 5 percent. “Although the EU’s tariffs are generally low for non-agricultural goods, some EU tariffs are high, such as rates of up to 26 percent for fish and seafood, 22 percent for trucks, 14 percent for bicycles, 10 percent for passenger vehicles, and 6.5 percent for fertilizers and plastics,” the report said.

The report also took aim at Mexico, which will face an across-the-board duty rate of 25 percent should Trump allow the duties he announced and deferred in February to commence without further delay.

“Mexico continues to provide insufficient prior notification of procedural changes, inconsistent interpretation of regulatory requirements at different border posts, and uneven border enforcement of Mexican standards and labeling rules,” the report said. Some American goods are not allowed to pass through certain ports of entry, making it difficult for U.S. exporters to arrange transportation and logistics—rules that the USTR said defy the provisions of the U.S.-Mexico-Canada agreement. The agency said Mexico must provide U.S. exporters with simplified procedures.

Canada, a frequent target of Trump’s inflammatory rhetoric, was also called out for using a supply-management system to regulate prices, supply and tariff-rate quotas (TRQs) for imports, which the USTR report said “severely limits the ability of U.S. producers to increase exports to Canada above TRQ levels and increases the prices that Canadians pay for dairy and poultry products.” Under the current system, American imports above quota levels face “prohibitively high” tariffs on agricultural and food products like eggs and butter, for example.

While Canada and the U.S. revised these rules in 2022 and agreed to ensure that TRQs are administered fairly under USMCA, the report said there are still practices in place that are hurting American producers.

The report underscored Trump’s recent claims that India’s MFN applied tariff rate—which sits at 17 percent—is “the highest of any major world economy,” along with high basic customs duties sometimes exceeding 20 percent. The high tariff rates can present a “significant barrier” to the trade of certain U.S. agricultural goods.