President Donald Trump said today he would impose "reciprocal tariffs" on imports from an undisclosed number of countries sometime in the future, a move that could affect imports of ethanol and likely many other energy commodities.
The idea behind the next major wave of tariffs Trump plans to unveil is to raise the US import tariffs to the same level foreign countries charge on exports from the US. Trump's trade advisers previously cited Brazil's tariff on US-sourced ethanol, which is higher than the US customs duty on ethanol, as an example of the disparity they would attempt to address.
"They charge us a tax or tariff, and we charge them the exact same tax, very simple," Trump told reporters at the White House.
As with his first tariffs against Canada and Mexico — paused until 4 March — and against China, which went into effect on 4 February, there is a great deal of regulatory uncertainty on how the tariffs will be implemented.
"Nobody knows what that number is, unless you go by the individual country, and you can see what it is," Trump said. Trump's directive does not set a specific deadline for when the reciprocal tariffs will be imposed.
The intent of the order is to force foreign countries to lower their tariffs against the US. But that outcome is not guaranteed. Trump's 10pc tariff on imports from China, and Beijing's more limited counter-tariffs, went into effect this month despite his claim that he would quickly negotiate with Beijing to avert a trade war.
In what is becoming a norm with the tariff announcements, the Trump administration is alternatively downplaying inflationary effects of such tariffs, or casting any negative effects as justified.
"Last year, US-based companies paid foreign governments $370bn in taxes," White House National Economic Council director Kevin Hassett said today. "Meanwhile, foreign companies paid the US $57bn in taxes. Are we supposed to keep doing that because of some economic model that doesn't have the whole real world in it?"
The White House, at least, no longer rejects descriptions of tariffs as a tax, even though it continues to insist that only foreign exporters — not US consumers — will be paying it.
Trump has imposed a 25pc tariff on imported steel and aluminum that will become effective on 12 March.
He set a deadline of 1 April for all US government agencies to investigate the causes of "our country's large and persistent annual trade deficits in goods" — a review that likely will result in additional tariffs later this year against imports from the EU, UK, India, Vietnam and other major economies.
The large deficit the US runs in trade in goods with India will be a subject of Trump's meeting later today with Indian prime minister Narendra Modi. The US expects India to step up purchases of crude and other energy commodities to better balance bilateral trade.
Trump likewise told Japan's prime minister Shigeru Ishiba last week that Tokyo should ensure that Japanese energy companies source more US oil, LNG and ethanol to "get rid of" the US' trade deficit with Japan.
