Trump stated that a press conference regarding reciprocal tariffs would be held at 1 PM that day (2 AM on February 14 Beijing time).

Analysts believe that multiple countries and regions including the European Union, India, and Vietnam will be significantly affected.

"Reciprocal tariffs" have finally taken effect.

The so-called 'reciprocal tariffs' refer to the tariffs imposed on imports from the USA that are the same as the tax rates imposed by trade partners on commodities exported to the USA, meaning that for any tariff that one country imposes on the USA, the USA will impose an equal tariff on the other party.

Last Sunday (the 9th), Trump stated that he plans to impose reciprocal tariffs on every country that imposes tariffs on the USA. "It is time to announce reciprocity," Trump said, "You will hear this word, reciprocity, frequently from now on. If they charge us, we will charge them."

Trump expressed dissatisfaction with the USA's long-term massive trade deficit, believing that trade counterparts have been extracting huge profits from the USA.

In Trump's team, Peter Navarro, senior adviser on trade and manufacturing, is the main advocate for the concept of reciprocal tariffs. During Trump's first term, then-Congressman Sean Duffy (a Wisconsin Republican, now Trump's Transportation Secretary) proposed a reciprocal tariff bill, and Navarro advocated for lawmakers to sign the bill.

Despite a similar bill being submitted by the House of Representatives last month, Trump seems eager to have this bill "passed". Trump now intends to sign an executive order directly to advance the implementation of the plan.

Previously, Navarro stated to the media that the U.S. Secretary of Commerce, Secretary of the Treasury, and U.S. Trade Representative will assess the tariffs and non-trade barriers of U.S. trading partners. "We will examine all trading partners, starting with those with the largest trade deficits, to see if they are deceiving the American people, and if so, we will take steps to correct the mistakes."

Trump ally and Missouri Republican Senator Eric Schmidt stated that he recently discussed tariff actions with the president and believes that reciprocal tariffs could serve as a "negotiating tool" which could also be used to increase revenue, helping to offset the costs incurred from Trump's tax cuts. "I believe countries should be able to move on this," Schmidt said.

Which countries and regions will be affected?

The Research Report written by HTSC analysts Yi Shen and Chang Huili suggests that, analyzed from the perspective of comparison with U.S. tariff rates, the most favored nation (MFN) tariff rates implemented by the top 15 trading partners of the USA in 2024 (in 2022) are mostly higher than those in the USA.

The report shows that in 2022, the MFN trade weighted tariff rates of India, South Korea, Brazil, Vietnam, Mexico, Canada, the United Kingdom, mainland China, and the European Union (which acts as a single customs union with uniform import tariffs among member countries) are all higher than those in the USA, with the weighted average tariff rates of India, South Korea, Brazil, and Vietnam exceeding 5%, significantly higher than the USA's 2.2%. At the same time, the MFN simple average tariff rates in Taiwan and Japan are higher than those in the USA, with Taiwan at 6.5%, exceeding the USA's 3.3%. Moreover, although the weighted average tariff rate of the European Union is not significantly higher than that of the USA, Trump has repeatedly mentioned the 10% tariff rate imposed by the EU on U.S. Autos, which is significantly higher than the 2.5% tariff imposed by the USA on EU Autos.

From the perspective of both absolute and relative trade surpluses with the USA, in 2024, mainland China, the EU, Mexico, Vietnam, and Taiwan rank among the top five countries/regions for absolute surpluses with the USA, accounting for about three-quarters of the total. In relative surplus terms, Vietnam, mainland China, Taiwan, the Swiss Franc, India, and South Korea show relatively large surpluses with the USA.

The report indicates that considering both the comprehensive tariff parity and trade balance, the EU, India, Brazil, Vietnam, Taiwan, and South Korea might have a certain possibility of being "named" by Trump and becoming targets of increased "reciprocal tariffs" from the USA — however, the experiences of Mexico and Canada indicate that the implementation of tariffs may still have considerable uncertainty.

Editor/lambor