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Author Topic: Trump wants to impose a 'reciprocal tax' on trade partners  (Read 98 times)
Hydrogen
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February 13, 2018, 05:05:51 PM
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U.S. President Donald Trump said on Monday he would push for a "reciprocal tax" against countries, including U.S. allies, that levy tariffs on American products, but officials did not provide details on how such a tax would be structured or what goods it would apply to.

During his populist 2016 presidential campaign, Republican Trump railed at countries that had trade surpluses "taking advantage of the United States" and he revisited the theme on Monday.

"We cannot continue to let people come into our country and rob us blind and charge us tremendous tariffs and taxes and we charge them nothing," Trump told reporters at a White House event to announce a proposed infrastructure plan.

The United States loses "vast amounts of money with China and Japan and South Korea and so many other countries ... It's a little tough for them because they've gotten away with murder for 25 years. But we're going to be changing policy," he said.

Trump said his administration will impose a "reciprocal tax" to charge other countries - "some of them are so-called allies but they're not allies on trade."

He did not specify how such a tax would be structured, or whether he meant that U.S. tariff rates should be raised to equal to those charged by other major trading partners. Administration officials were not immediately able to elaborate on the president's comments.

Trump cited motorcycle maker Harley-Davidson as an example of the problem of unfair trade. Harley is building a factory in Thailand, partly because its U.S.-built bikes face a 60 percent tariff there.

The United States has pledged to the World Trade Organization a relatively low, 3.5 percent applied tariff rate, compared to 9.9 percent for China and 5.2 percent for the European Union. For some products, the gap is much wider, such as in passenger vehicles, where the United States charges 2.5 percent tariffs, versus 25 percent in China and 10 percent in the EU.

It was also unclear whether Trump was reviving the idea of a border adjustment tax, an idea rejected by congressional Republicans in last year's tax reform effort.

Retailers and some import-dependent industries strongly opposed the plan for a 20 percent tax on imports aimed at offsetting the value-added tax refunds that some countries grant to their exporters. The National Retail Federation at the time called it a "bad tax" that would "drive up the prices of countless products Americans use every day."

Trump asked Commerce Secretary Wilbur Ross if he agreed with the idea of a reciprocal tax during the infrastructure event.

Ross said, "sure," and proceeded to say that the United States for too long had offered trade concessions to other countries that were no longer needed.

"Well, we gave away so much unilaterally that we really have to claw it back," Ross added.

https://www.cnbc.com/2018/02/13/us-to-push-for-reciprocal-tax-on-trade-partners.html

....

Looks like a real effort might be made to reverse trade deficits which constitute standard foreign policy for the USA over the course of the past few decades. It'll be interesting to see what the media's take on this is. So far their stance looks neutral. Reading this article, it sounds unbelievable. Nothing like this has been proposed over the past 20 years that I can recall. I can't remember a single nobel prize winning economist, famous investor, real estate mogul or anyone anywhere even hinting at something like this being a legitimate proposal.

That could hint at how much mind control there is in the media & how much control over public opinion is exerted in terms of an effort to control the ideas and opinions people come into contact with. Or it could hint at Trump being insane or a genius to think of this, an idea that no one else has mentioned over the past 20 years.

Would be curious to know what views people have on this. 

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February 13, 2018, 05:10:20 PM
Merited by Hydrogen (1)
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I do think that it will thin out the trade US has with other countries .. since they will opt to go where they don't have much bondages..
Whatever the president is doing..he is keeping the US first..I do think that he should place a board meeting with other countries and decide the needful.
Taking decisions alone might cause his downfall.

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February 13, 2018, 06:28:21 PM
Merited by Hydrogen (1)
 #3

The problem with such measures is there is no guaranteee other countries are not going to retaliate on their own, after all what it is going to stop countries like China to raise their taxes on US Imports? The measures taken by Trump will begin a chain reaction that does not help free trade, it will make products more expensive and at the end no ground will be won, this is why no one makes proposals like that, if the raise was small other countries may let it go but if it is that big they cannot afford it, also trading deficits are something normal for powerful countries, the same happened to the British empire back in the day when it was the most powerful country of the world.
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February 13, 2018, 06:45:11 PM
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Well it does tie in with his "America First" platform but how other countries will react remains to be seen. I remember America also used to act the way they are accusing China now.

What I believe will happen is that this would be negotiated with individual countries first and arrangements would be made for some inequality with certain good that are to balanced with others. Obviously both sides would want to be able to sell more of what they make most for the highest price.
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February 13, 2018, 07:30:33 PM
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Every economist will tell you that tariffs are destructive to everyone.

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February 15, 2018, 02:44:34 AM
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It comes across as a very tit for tat approach. You price us out of exporting to your country so we will do the same for you. From an individual countries point of view it could be for the best or it could not, you encourage spending within your own country but you force your citizens to pay more than they would if they could import.

From an overall world economic point of view it's awful. All tariff's serve to do is act as barriers to trade and slow economic growth. If all countries could trade freely with one another the whole world could be better off.
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February 15, 2018, 05:53:41 AM
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With the existence of this case, i think the US Department of Commerce will have a serious problem.
Because someday the US will be excluded by its trading partners, and deemed has no more interest by any trade organization ever passed by the US.
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