Challenge of Trump`s Reciprocal Tariffs.

According to The Economist, since World War II, the United States has developed a global trade framework that emphasizes equitable treatment for all nations. Central to this framework is the “most favored nation” clause, which stipulates that tariffs on specific goods must be uniform among members of the World Trade Organization, irrespective of their country of origin. Consequently, U.S. businesses benefit from the same trading conditions as the majority of their international competitors in any given market. This principle serves to mitigate the rise of protectionism and the influence of special interest groups, as altering tariffs for one trading partner necessitates similar changes for all others.

Nevertheless, this system has also led to certain disparities. For instance, countries can safeguard robust domestic industries through standardized external tariffs. Additionally, varying levels of willingness to embrace liberalization among nations result in discrepancies in average tariffs. The average tariff levied by the United States on global imports stands at 2.71%, while the average tariff imposed by other countries on American goods is 6.7%. This data indicates that the tariffs the United States applies to imports are significantly lower than half of those imposed by other nations on U.S. exports.

Data from the Organization for Economic Cooperation and Development reveals that among various countries, India imposes the highest average tariff on U.S. exports at 17%, followed by Argentina at 13.4%, South Korea at 12%, and China at 7.5%.

Although the United States seems to be at a disadvantage, this is not entirely the case. The low tariffs provide certain advantages, such as American consumers benefiting from low priced imported goods and domestic companies accessing parts and raw materials at lower costs.

Trump is expected to exert significant pressure on nations that maintain substantial trade deficits with the United States and currently impose elevated tariffs on American goods. Although reciprocal tariffs could incentivize these countries to reduce their own trade barriers, they also have the potential to create instability; ultimately, the outcome hinges on the interpretation of “reciprocity.”

The policy of reciprocal tariffs advocated by Trump is not only challenging to execute but may also result in disorder within the global trade framework, leading to escalating tariffs and provoking retaliatory measures. This could ultimately undermine the stability of both the US economy and international markets.

***Photo Reference and information data: https://www.whitehouse.gov/articles/2025/02/reciprocal-trade-and-tariffs/ ***