US president Donald Trump signed a memo on February 13, 2025 ordering his economics team to create plans for reciprocal tariffs on every country that tax imports from the United States. Dubbed the ‘Fair and Reciprocal Plan’, this push for more balanced trade could ignite a global trade war and further impact the country’s inflation. The first salvo has already been fired earlier this month with countries affected responding in kind.
“The United States is one of the most open economies in the world, yet our trading partners keep their markets closed to our exports. This lack of reciprocity is unfair and contributes to our large and persistent annual trade deficit,” read a White House fact sheet outlining the plan, which also included examples of unfair trade practices.
One of the examples involves ethanol, which the US charges a tariff of 2.5% on. “Yet Brazil charges the US ethanol exports a tariff of 18%. As a result, in 2024, the US imported over USD200 million in ethanol from Brazil while the US exported only USD52 million in ethanol to Brazil,” the fact sheet claimed.
It is also stated that the US average applied most favoured nation (MFN) tariff on agriculture goods is 5%, but India’s average applied MFN tariff is 39%. India also charges a 100% tariff on US motorcycles, while we only charge a 2.4% tariff on Indian motorcycles. The European Union (EU) was also called out, with the fact sheet stating that the bloc imposes a 10% tariff on imported cars compared to the US that only charges 2.5%.
“The European Union can export all the shellfish it wants to America. But the EU bans shellfish exports from 48 of our states, despite committing in 2020 to expedite approvals for shellfish exports. As a result, in 2023, the US imported USD274 million in shellfish from the EU but exported only USD38 million,” the fact sheet claimed.
It was also claimed that US exporters face higher tariffs more than two-thirds of the time based on a 2019 report that covered 132 countries and more than 600,000 product lines. “The United States has run a trade deficit of goods every year since 1975. In 2024, our trade deficit in goods exceeded USD1 trillion,” read the fact sheet.
“Reciprocal tariffs will bring back fairness and prosperity to the distorted international trade system and stop Americans from being taken advantage of,” it added. According to a CNN report, the investigation is expected to be completed by April 1 this year, after which it is up to Trump to decide when to impose any of the new recommended tariffs.
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