US President Donald Trump has put a circle around 2 Aprilas a "Liberation Day" to impose an array of new tariffs. Photo: AFP / Mandel Ngan
By Nandita Bose and Susan Heavey, Reuters
White House aides have drafted plans for 20 percent tariffs on most goods imported to the United States, the Washington Post reported on Tuesday (US time), as President Donald Trump prepares to announce new trade barriers that have businesses, consumers and investors fretting about an intensifying global trade war.
Trump has for weeks put a circle around 2 April as a "Liberation Day" to impose an array of new tariffs that could upend the global trade system, but has provided few details. He said on Sunday that reciprocal tariffs will target all nations that impose duties on US goods, and the White House said on Monday that any country that has treated Americans unfairly should expect to receive a tariff.
Trump also says a 25 percent tariff on auto imports will take effect on 3 April.
He is due to unveil his tariff plan at an event in the Rose Garden at 4pm Eastern Time (2000 GMT) on Wednesday. White House officials say no final decision has been made about the size, scope and target of the tariffs.
According to the Washington Post, aides are considering a plan that would raise duties on products by about 20 percent from nearly every country, rather than the more targeted approaches that have also been considered. The administration anticipates the new duties could raise more than US$6 trillion (NZ$10.5 trillion) in revenue that could be sent on to Americans as a rebate, the paper reported.
A White House aide said any report ahead of tomorrow's event is "mere speculation." The Republican president has already imposed tariffs on aluminium and steel imports and has increased duties on all goods from China, raising tensions with the country's largest trading partners.
Canada has vowed to respond with tariffs of its own. "We will not disadvantage Canadian producers and Canadian workers relative to American workers," Prime Minister Mark Carney said in Winnipeg.
US companies say a "Buy Canadian" movement is already making it harder for their products to reach that country's shelves.
Other countries have threatened countermeasures as well.
Trump has argued that American workers and manufacturers have been hurt over the past decades by free-trade deals that have lowered barriers to global commerce and fuelled the growth of a $3 trillion US market for imported goods. The explosion of imports has come with what Trump sees as a glaring downside: Massively imbalanced trade between the US and the world, with a goods trade deficit that exceeds $1.2 trillion.
Economists warn his remedy - hefty tariffs - would raise prices at home and abroad and hammer the global economy. A 20 percent tariff on top of those already imposed would cost the average US household at least $3400, according to the Yale University Budget Lab.
Signs are already emerging that the US economy is losing momentum due in part to uncertainty fostered by Trump's chaotic approach to economic policymaking.
A raft of business and household surveys have shown sagging confidence in the economic outlook, citing worries that Trump's tariffs will lead to resurgent inflation.
Rattled investors have sold stocks aggressively for more than a month, wiping nearly $5 trillion off the value of US stocks since mid-February.
The risks are not just isolated to the US.
Factories around the world, from Japan to Britain to the United States, saw activity slump in March as businesses braced for Trump's new tariffs, though some saw a bounce in the race to get goods to consumers before the new measures hit.
Economists say any increase is likely to be temporary. "It won't be long before US tariffs turn from being a tailwind to being a drag," said Julian Evans-Pritchard of Capital Economics.
-Reuters
