Trump threatens new trade penalties, but it could be a hard bargain

US President Donald Trump said more information would be forthcoming as soon as this week, but White House officials quickly played down his comments.


WASHINGTON (NYTIMES) - US President Donald Trump said that the United States would soon announce a "reciprocal tax" on countries that take advantage of the United States on trade, including trading partners he described as "so-called allies."

"They'll send in their product, and we won't charge them anything," the president said on Monday (Feb 12) during a meeting with mayors and governors to discuss his proposal for rebuilding US infrastructure. "And we send them our product - same product as they're sending us - and they'll charge us 50 and 75 per cent tax, and that's very unfair."

Though the president said more information would be forthcoming as soon as this week, White House officials quickly played down his comments, with one senior administration official saying that the proposal was "nothing formal right now."

"The reciprocal tax is, simply, what you do to us, we'll do to you," the official said.

But when it comes to imposing reciprocal tariffs, trade analysts said the president's hands were somewhat tied. The relatively low tariffs that the United States charges on many foreign goods were hammered out through decades of bargaining and bartering at the World Trade Organisation.

Tariffs charged on individual products in various countries can vary widely. Most countries, especially wealthier ones like the United States, have relatively low tariffs on imports but may have negotiated at the WTO to protect some sensitive industries with a higher tariff.

The WTO might have the authority to overrule the administration should it enact new tariffs, an action that would then allow other countries to raise their own tariffs on US products as a punishment. To substantially raise its tariffs, the United States would most likely have to leave the WTO - a prospect that could damage the US economy given how globally integrated many companies have become.

The White House has already taken action to impose tariffs on washing machines and solar power modules and is considering several other trade actions that could raise tariffs on specific products or countries.

On Tuesday, the president will meet with lawmakers, including Ohio's senators - Mr Sherrod Brown, a Democrat, and Mr Rob Portman, a Republican - to discuss an ongoing investigation into whether steel imports pose a national security threat by harming that industry in America. The administration began the investigation last spring, but the results were delayed amid pushback from economic and defence advisers. Mr Brown and Mr Portman both support the tariffs.

The administration is also weighing actions to penalise China for what it says is infringement on US intellectual property. That could result in tariffs on high-tech Chinese products, or restrictions on some kinds of Chinese investment in the United States.

"We cannot continue to be taken advantage of by other countries," Mr Trump said Monday. "We cannot continue to let people come into our country and rob us blind, and charge us tremendous tariffs and taxes, and we charge them nothing."

He added that the United States was losing "vast amounts of money with China and Japan and South Korea and so many other countries." "They've gotten away with murder for 25 years," he added. "But we're going to be changing policy."

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