Recently, President Trump signed a memorandum for a “Fair and Reciprocal Trade Plan” on Thursday, February 13th, advocating for reciprocal tariffs to restore fair trade. This comprehensive program may start as early as April and could reshape international trade rules.
Reciprocal, when used in a trade context, usually refers to measures taken by both parties to ensure fairness in bilateral trade. Historically, it has involved reducing trade barriers between countries. The Reciprocal Trade Agreements Act passed by the U.S. in 1934 marked the end of America’s protectionist era, allowing negotiations with partner countries to lower tariffs.
Trump and his advisors believe that the lack of reciprocal trade relationships is one of the reasons for the continuing massive U.S. trade deficit.
The White House stated that “closed overseas markets reduce U.S. exports, and an open U.S. domestic market leads to substantial imports, both weakening America’s competitiveness.”
According to a memorandum released by the White House, the new import taxes will be tailored to each trading partner, aiming not only to counter the tariffs imposed on American goods but also to offset other factors deemed disadvantageous to American manufacturers, such as unfair corporate subsidies, regulations, value-added tax (VAT), currency exchange rates, and lack of intellectual property protection.
Non-tariff barriers are challenging to quantify, posing a new challenge to the U.S. Trade Representative Office and the Department of Commerce in proposing new taxation schemes for each country.
Reciprocal tariffs can be implemented in various ways: on specific products, entire industries, or as the average tariff on goods from a particular country.
In theory, the U.S. could reduce tariffs in specific cases to achieve reciprocity.
Whether reciprocal tariffs are truly “fair” depends on the definition of “fair” – whether it is fairness in outcomes or opportunities.
This is a subjective issue, reflected in whether tariff setting is flexible enough and considers the different economic development stages of countries, as well as the complementary and competitive relationships between countries in industries and products.
Emerging markets tend to impose higher tariffs on certain imports to protect domestic industries and jobs, primarily in agriculture, until they reach a certain level of competitiveness globally.
On Thursday afternoon, Trump posted on the social media platform Truth Social, stating, “Regarding trade, for the sake of fairness, I have decided to impose reciprocal tariffs. In other words, whatever amount countries charge the U.S., we will charge them the same – not a penny more, not a penny less!” he wrote.
He mentioned that in addition to tariffs, the costs of non-tariff barriers and trade barriers would also be considered.
If the U.S. imposes the same specific tariffs on American goods as the highest-tariff countries, emerging markets will be hit the hardest.
Bloomberg Economics research compared the tariff rates of the U.S. and its trading partners, suggesting that countries like India, Argentina, and most regions in Africa and Southeast Asia would face the most severe impact.
The Wall Street Journal’s analysis also indicated that countries like Japan and EU member states may have to endure higher tariffs than the actual tariffs imposed on American goods. Meanwhile, China, with many non-tariff barriers, may face further tariffs on imports from the U.S.
If the Trump administration considers a broader definition of trade “fairness,” many countries around the world may be affected. Because of America’s overall trade deficit, it imports more goods from other countries than they import from the U.S.
Reportedly, the Trump administration plans to start its review by targeting its largest trade partners regarding the deficit and taking corrective measures. America’s top three trade partners are Mexico, Canada, and China. Since Trump initiated tariff hikes on Chinese goods in 2018, China has fallen from being the top U.S. trade partner to the third. However, many Chinese goods find their way into the U.S. through Mexico and Canada.
Trump also stated that the practice of rerouting goods through third countries to evade tariffs would not be tolerated.
The White House’s statement has laid the groundwork for future trade negotiations and tariff reductions. A section in the White House statement, titled “The Art of International Trade,” resembles Trump’s famous autobiography “The Art of the Deal.”
Past examples have shown that Trump prefers to implement tariffs first before negotiating. During his first term as president, after lobbying from domestic industries potentially affected by tariffs, he granted tariff exemptions to some countries and imports.
In early February 2025, Trump postponed imposing a 25% tariff on imports from Mexico and Canada by one month as both neighboring countries agreed to take stricter measures against border immigration and drug trafficking activities.
However, indications suggest that Trump will take stricter measures in trade during his second term. For instance, he initially hinted that Australia might be exempt from his plan to impose steel and aluminum tariffs on all countries. Later, his trade advisor poured cold water on the idea, stating that Australia’s aluminum industry was “strangling” America’s.