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Trump again touts 'reciprocal tax' on trade

12 Feb 2018 20:49 GMT
Trump again touts 'reciprocal tax' on trade

Washington, 12 February (Argus) — President Donald Trump said his administration would soon introduce levies on imports from countries with significant trade deficits with the US — resurrecting a proposal he first floated a year ago.

"We are going to charge countries that take advantage of the US," Trump said at the White House during a discussion of the administration's plan to boost spending on infrastructure. "Some of them are so-called allies, but they are not allies on trade."

Trump soon after taking office last year proposed a tariff designed to target US manufacturers moving production overseas. The proposal dovetailed with an unrelated border tax plan proposed by congressional Republicans that would have overhauled the tax treatment of imports and exports, including crude and refined products.

The Republicans dropped the border tax proposal after it ran into opposition from a wide coalition of business interests. Trump also appeared to have buried his own proposal until now.

"We are going to be doing very much a reciprocal tax and you will be hearing about that during the week and the coming months," he said. The US could start levying tariffs at levels matching the charges US exporters face, Trump said.

The fiscal year 2019 proposal released by the White House today makes no mention of "reciprocal trade taxes." The Office of US Trade Representative did not clarify Trump's remarks.

Most trade experts point out that US tariffs are generally low by international standards. The average tariff charged on imports from countries without free trade agreements with the US is 4pc, according to researchers with the Federal Reserve Bank of New York.

Trump and his administration officials present the low tariff rates as a sign of discrimination against the US products.

"They will send in their product, and we do not charge them anything. And we send them our product and they will charge us 50 and 75pc tax, and that is very unfair," Trump said.

The Commerce Department in the past year has increased the number of anti-dumping and countervailing duty investigations, but so far the administration's policies have had little apparent effect. US deficit in trade in goods widened to $796bn in 2017 from $737bn a year earlier, according to the US Bureau of Economic Analysis.

The administration is especially concerned with a rising imbalance in the trade in automobiles — about a quarter of the total US trade deficit.