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For several weeks, President Donald Trump has been trying to rally his supporters behind his so-called reciprocal tariffs, which he says will rectify years of unfair trading practices.
“This is the beginning of Liberation Day in America,” Trump said last week as he announced 25% tariffs on all vehicle imports, which kick in on April 3.
“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years,” he added. “They’ve taken so much out of our country, friend and foe. And, frankly, friend has been oftentimes much worse than foe.”
Here’s what you need to know.
What’s behind the tariffs?
The White House is set to announce its plans for the tariffs on Wednesday, April 2. Although the exact details of Trump’s plans are still unclear, what has been consistent is the reasoning behind them.
Trump has long been fixated on trade deficits, which means that a country is importing more than it is exporting. In 2024, the U.S.’ trade deficit in goods hit a record $1.2 trillion. Imports and exports, likewise, hit new records of $4.1 trillion and $3.2 trillion, respectively.
“We have deficits with almost every country — not every country, but almost — and we’re going to change it,” Trump said in February.
Trump sees trade deficits as a sign that other countries are taking advantage of the U.S, and that it makes the nation seem weak. It’s a view he’s held for as far back as 1990, when he told Playboy that allies “are making billions screwing us.”
Beyond helping close that gap, Trump also sees tariffs as a way to raise revenue and a possible alternative to income taxes. However, replacing the $2 trillion in revenue generated by the income tax would require tariffs of almost 70% on all imports, according to the non-partisan Tax Foundation. That estimate doesn’t account for several factors, such as noncompliance.
Read More: Tracking Trump’s trade war: Where tariffs are in effect — and what’s coming next
Peter Navarro, a senior trade adviser to President Trump, on Sunday told Fox News (FOXA+2.21%
) that Trump’s broad tariff plans will raise more than $6 trillion in revenue over the next decade, or $600 billion each year. That would amount to the largest tax hike in U.S. history, more than triple the tax increase put in place in 1942 to pay for the cost of World War II, according to CNN.
Goldman Sachs (GS-0.54%
) analysts recently increased their forecasted odds of a recession over the next 12 months to 35% from 20%. It’s the second time in less than a month that the firm has raised its expectations. In part, they cited White House statements “indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.”
The targets
It’s still unclear what nations will get hit with tariffs, although it is increasingly likely that just about every country engaging in goods trade with the U.S. will be affected.
The Trump administration is focusing on issuing tariffs on the 15% of countries with persistent trade imbalances with the U.S., which Treasury Secretary Scott Bessent has called the “dirty 15.” While there is not an official list that has been made public, it’s expected that the targeted nations will likely line up with the countries called out by the U.S. Trade Representative last month.
The USTR outlined a list of countries that cover 88% of the U.S.’ total goods trade: Argentina, Australia, Brazil, Canada, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Russia, Saudi Arabia, South Africa, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, and Vietnam.
Trade with China resulted in the U.S.’ largest goods trade deficit for 2024, at $295 billion. The next largest deficits came from trade with the E.U.’s 27 member states, Mexico, Vietnam, Taiwan, and Japan.
However, those nations are unlikely to be the only ones slapped with tariffs this week. The Wall Street Journal (NWSA+0.92%
) reports that Trump has been telling his team to be more aggressive and outline plans to issue higher rates of tariffs on a broader set of nations.
“You’d start with all countries so let’s see what happens,” Trump told reporters on Sunday, according to a transcript. “There are many countries in the world. I haven’t heard a rumor about 15 countries, 10 or 15 countries.”
Goldman Sachs analysts said last week that Trump administration officials have said initial duties are meant as a basis for talks — which incentivizes them to set high rates. A recent survey shows market participants expect an initial 9% reciprocal tariff rate. The bank expects the average rate of U.S. tariffs will rise 15 percentage points this year.
Beyond the reciprocal
The reciprocal tariffs aren’t all some of those countries have to worry about.
Mexico and Canada have been hit with 25% tariffs on all products, with an exemption Trump ordered after companies complained set to expire this week. Canada has already retaliated with its own tariffs, while Mexico has so far abstained from doing so.
China was slapped with 20% tariffs this month and could soon face more duties. A 25% tariff has been imposed on all goods imported into the U.S. from a nation that either indirectly or directly imports oil from Venezuela, according to an executive order. China was the largest export market for Venezuelan oil and gas last year and Trump has confirmed those duties would be added on top of existing tariffs.
In response to new U.S. duties on steel and aluminum, the E.U. hit back with proposed tariffs on some $28 billion worth of American exports, which are set to take effect on April 13. Trump had responded to that proposal by threatening to spike U.S. tariffs on European spirits to 200% unless the tariffs on whiskey were nixed.
Trump has also threatened to hike “large scale” tariffs “far larger than currently planned” on Canada and the E.U. if they work together to do “economic harm” to the U.S.
