The recent implementation of "reciprocal tariffs" by the U.S. has significantly altered the landscape of international trade. Here's a breakdown of the key developments:
U.S. Actions:
The U.S. has imposed a baseline 10% tariff on imports from most of its trading partners.
Initially, higher "reciprocal tariffs" were announced for specific countries with larger trade deficits, but these were largely rolled back, with the exception of those relating to China.
China has agreed to lower retaliatory tariffs on products imported into China from the U.S. from 125% to 10%.
The U.S. has agreed to lower additional tariffs on products imported into the U.S. from 145% to China to 30%.
The additional 10% and 30% tariffs will remain in place for the 90-day pause, agreed on May 12, while the two countries negotiate a more detailed trade agreement.
Global Reactions:
Reactions have been varied, from China which initially implemented retaliatory tariffs to Israel and the UK which have quickly developed framework agreements.
News reports are that more than 15 countries, including India, Israel, Korea, Japan, Vietnam and the UK have initiated negotiations.
What they are saying:
The Trump Administration has proposed "reciprocal tariffs" as a means to address unbalanced tariff and non-tariff barriers that have driven U.S. trade.
Some political economists consider the U.S. dollar as a reserve currency to be the driver of deficits while others have raised concerns about the potential for a global trade war and its drag on global economic growth.
The bottom line:
These actions are changing the way that global trade is being conducted and could have a huge effect on the global economy.
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