The White House announced that April 2nd will be the date for the next round of tariffs initiated by the U.S. This round will be based on reciprocal tariffs, and it is a bit of a roulette wheel with what the outcome will be. How much tariffs will increase, and what industries and countries they will apply to are all on the table. All the reporting from the past week shows the upcoming tariffs are a moving target with the policy still being discussed internally in the White House. It is guaranteed that there is still a lot of backroom negotiating with various world leaders and industry heads.
What are reciprocal tariffs?
Reciprocal tariffs are a trade policy meant to fix trade imbalances and stop unfair trade practices. If implemented, a country imposes tariffs on imports from another country that match the tariffs the other country imposes on its exports. The idea behind reciprocal tariffs is that they are supposed to create a balance in the trade between nations by equalizing the tariffs between nations and through negotiations bringing the tariffs down to acceptable levels between the two parties.
Moreover, reciprocal tariffs are meant as a negotiating tool to encourage other countries to reduce or cut tariffs. They can be used to protect domestic industries by neutralizing foreign government incentives and helping to level the playing field in a certain industry.Â
However, the downside is when the other country retaliates and initiates additional trade barriers or increased tariffs. It creates a tit-for-tat situation and the resulting trade war damages both economies and has the opposite effect by disrupting supply chains, raising consumer prices and hampering economic growth.
For the U.S., the goal is to match the duty amounts on U.S. imports that other countries apply to U.S. products. Ultimately, the goal is to force other counties to lower their duties and, hopefully, lower the trade deficit.
Reuters has published the average tariff rates for the U.S. versus its top 15 trading partners. To view the chart, please click here.
There has been some softening of rhetoric this week when it comes to applying the tariffs on April 2nd.
On Monday, Bloomberg and The Wall Street Journal reported that U.S. President Donald Trump said the administration are now focusing on applying tariffs to “about 15% of nations with persistent trade imbalances with the U.S.” The report said he, “may give a lot of countries breaks” from the so-called “reciprocal” tariffs he’s set to impose on foreign trade next week. Tariffs may end up being narrower and exempt some countries and specific industries.
The Wall Street Journal also said that reciprocal taxes on targeted nations would still take effect on April 2nd. However, those in sectors such as automobiles, pharmaceuticals and semiconductors likely won’t be announced.
Additionally, other reporting said that additional tariffs could be applied in the near future. Reuters reported that Trump said the U.S. would impose tariffs on autos, pharmaceutical and aluminum in “the very near future,” arguing that the U.S. would need all those products in case of wars or other problems.
Once approved, reciprocal tariffs could be imposed based on reasons of national security, unfair trading practices or emergency economic powers. The White House also wants to target other factors that put U.S. manufacturers at a disadvantage including subsidies, regulations, value-added taxes (VAT), currency manipulation and intellectual property rights.
Furthermore, Bloomberg Economics advised that emerging markets including India, Argentina, Africa and Southeast Asia could be hit the hardest. The White House has been highlighting Brazil, pointing out that the U.S. has a 2.5% tariff rate on ethanol while the Brazilian government imposes an 18% tariff rate on U.S. ethanol.
Also, economists are warning that increases in tariffs could increase consumer prices and increase U.S. inflation.
Until they are announced and fully implemented, it remains unknown the full effect reciprocal tariffs will have on U.S. inflation. More than likely, imported raw material costs will increase and there could be some supply chain disruptions.
Countries are already trying to avoid these new tariffs. The E.U. and China have already announced countermeasures. Other countries are trying to negotiate. India, for example, has cut tariffs on dozens of goods after the recent meeting between President Trump and Prime Minister Modi. Both countries are working on a deal to resolve trade issues within the next several months.
Some companies are initiating plans themselves to avoid tariffs.
Since the new administration came to power in January 2025, multiple companies have announced plans to invest in the U.S. and avoid tariffs.Â
Hyundai is the latest company to that announced plans this week to invest $21 billion in the U.S. including a new steel plant in Louisiana and expanding their auto manufacturing in Georgia. These past few months have seen announcements by major corporations to expand in the U.S. Some include Honda to build their new Civic hybrid in Indiana and not Mexico and Taiwanese company Inventec, which makes AI servers, is looking for a U.S. location. LG Electronics is considering moving a factory in Mexico to Tennessee and Volkswagen is considering setting up production sites in the U.S. for Audi and Porsche to avoid tariffs.
The big question is what happens next.
Will all this uncertainty cause a recession? Will the result be a trade war that spirals out of control? Will all the parties involved sit down and talk and resolve trade issues that have been simmering for years? Only time will tell. We hope that this is a negotiating tool, and all this uncertainty is meant to bring all the parties together to come to a resolution.
