President Donald Trump’s sweeping reciprocal tariff plan went into effect overnight, fulfilling a key campaign promise by raising U.S. taxes on foreign goods to narrow the gap with the tariffs the White House says other countries unfairly impose on U.S. products.
Ahead of the tariffs, economists have long-warned that the move could raise a risk of recession. After they were announced, concerns continued, with global markets plunging overnight.
“Our country and it’s taxpayers have been ripped off for more than 50 years,” Trump said during a speech Wednesday, announcing the plan which he dubbed “Liberation Day.” “But its not going to happen anymore.”
“This will indeed be the golden age of America,” Trump went on to say.
The plan, Trump said, which places a minimum 10% tariffs on all trading partners, plus much higher, reciprocal tariffs for countries he deemed as bad actors, will mean “stronger competition and lower prices for consumers.”
Later in the speech, Trump unveiled a “reciprocal tariffs” chart, listing rates that more than 180 countries and territories, including European Union members, will face under his sweeping new trade policy.
Those purported rates include the countries’ “Currency Manipulation and Trade Barriers,” according to CNBC. An adjacent column shows the new U.S. tariff rates on each country, as well as the European Union.
Those rates are, in most cases, roughly half of what the Trump administration claims each country has “charged” the U.S. The reciprocal rates are not necessarily the only U.S. tariffs these countries will face, CNBC added.
Some economists say they were not anticipating both the minimum 10% and the higher reciprocal tariffs to be part of the plan, leading to more concerns.
“President Trump just finished his tariff speech at the White House and we would characterize this slate of tariffs as ‘worse than the worst case scenario’ the Street was fearing,” wrote Dan Ives, an analyst at the investment firm Wedbush Securities, in a note sent Wednesday.
‘I don’t know where he got those numbers’
In an interview with NBC 5 Investigates, Animesh Ghoshal, a professor of economics at DePaul, said the move wasn’t unexpected, but he questioned the numbers in the chart.
“I don’t know where he got those numbers” Ghoshal said. “They’re quite different from numbers that we normally see. And, he was going to be lenient and charge only half what those other countries were supposedly charging us.”
According to Trump, the calculations were provided by the Secretary of Commerce.
Ghoshal went on to say that the numbers don’t align with those he has seen from the World Trade Organization, the United Nations, or any other economic body. Ghoshal also warned that the tariffs imposed can be expected to be passed onto consumers.
“We have evidence from the previous tariffs increases, when, in the last Trump administration, tariffs were put on, on washing machines and dryers, Ghoshal said. “Prices here rose immediately to about the level of the tariffs. So I would expect certainly this would cause prices to go up, which is going to make the Fed’s job more difficult because the fed obviously would like to lower interest rates, but it cannot do that when there’s inflationary pressure.”
How tariffs could raise car prices by thousands
Part of Trump’s plan includes a 35% tariff on all foreign made automobiles. White House trade adviser Peter Navarro on Sunday estimated tariffs would raise about $600 billion a year and $6 trillion over a decade, with auto tariffs adding another $100 billion a year, he said on “Fox News Sunday.”
The United Autoworkers Union praised the move, saying the tariffs are a “long-overdue shift away from a harmful economic framework that has devastated the working class and driven a race to the bottom across borders in the auto industry.”
Others, including, Ghoshal say the tariffs could result in higher car prices.
“I have not, made any calculations myself, so I don’t know,” Ghoshal said. “What I do know, for example, is that, with the tariffs on cars, where the government has imposed 25% tariffs on imported cars, I would expect the price of cars to go up by anywhere between $3,000 and $10,000 dollars, depending on what car.”
Illinois Gov. J.B. Pritzker speaking from Mexico as part of a trade mission, said Illinoisans can expect to feel the impact, especially when it comes to auto parts.
“Here in Mexico, there is deep concern. Lets start with just the concern that the tariffs seem just so broad-based, and not well negotiated or thought out.”
The 25% tariffs are on any vehicle not assembled in the U.S., CNBC reported, which S&P Global Mobility reports accounted for 46% of the roughly 16 million vehicles sold domestically last year. The White House has said it also plans to place tariffs on some auto parts such as engines and transmissions, but those are set to take effect no later than May 3.
But even if vehicles are produced in the U.S. — meaning the final assembly takes place in the country — the thousands of parts for new cars and trucks come from a global supply chain.
“There’s no such thing as an All-American car,” Ghoshal said. “Especially now, with NAFTA and the subsequent US Mexico trade agreement, which of course, was signed by Mr. Trump himself. The auto industry is completely integrated in North America now, so some products cross the border three or four times, not just once. So if every time they cross the border, you put a tariff on, you can see how much the prices will go up.”
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