Could set off retaliations by trading partners that may roil growth around the globe, hamper US relations with allies
Tesla CEO Elon Musk and his son X Æ A-Xii join US President Donald Trump as he signs executive orders in the Oval Office of the WHite House in Washington, DC. Pic/AFP
US President Donald Trump is taking additional action to upset the world trade system, with plans to sign an order as soon as Wednesday that would require that US tariffs on imports match the tax rates charged by other countries.
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“It’s time to be reciprocal,” Trump told reporters earlier this week. “You’ll be hearing that word a lot. Reciprocal. If they charge us, we charge them.”
A reciprocal tariffs order could amount to a substantial tax hike to be shouldered largely by US consumers and businesses as the Census Bureau reported that the country had total imports of $4.1 trillion last year. The tariffs could set off retaliatory measures by trading partners that could roil growth around the globe and reset where the US stands with allies and rivals alike.
Many of America’s dominant trading partners are preparing for an economic rupture in reaction to Trump’s possible actions.
In response to the steel and aluminum tariffs announced on Monday, European Union chief Ursula von der Leyen said: “Unjustified tariffs on the EU will not go unanswered... they will trigger firm and proportionate countermeasures.” That means motorcycles, jeans, bourbon and peanut butter from the US could face new taxes abroad. Mexico and Canada—America’s two largest trading partners—have also prepared countermeasures.
“Of course, even if President Trump views reciprocal tariffs as an alternative to more sweeping measures at the moment, we are entering only the fourth week of a four-year presidential term and it seems likely there will be many further tariff announcements,” a Goldman Sachs’ analyst said.
Shutting down of USAID
The Trump administration will present an unforgiving argument for dismantling the US Agency for International Development (USAID) to a federal judge on Wednesday. The USAID is rife with “insubordination” and must be shut down for the administration to decide what pieces of it to salvage, was the argument made in an affidavit by political appointee and deputy USAID administrator Pete Marocco. The lawsuit was filed by two groups representing federal employees.
USAID staffers deny insubordination and call the accusation a pretext to break up the more than 60-year-old agency—one of the world’s biggest donors of humanitarian and development assistance.
Musk defends actions
Trump’s most powerful adviser, Elon Musk, made a rare public appearance at the White House on Tuesday to defend the swift and extensive cuts he’s pushing across the federal government while acknowledging there have been mistakes and will be more.
Musk stood next to the Resolute Desk with his young son ‘X Æ A-Xii’ as Trump praised Musk’s work with his Department of Government Efficiency (DOGE) to slash spending and as the president signed an executive order to continue downsising the federal workforce.
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