US President Donald Trump said on Monday he would push for a “reciprocal tax” against countries, including US allies, that levy tariffs on American products, but officials did not provide details on how such a tax would be structured or what goods it would apply to. During his populist 2016 presidential campaign, Republican Trump railed at countries that had trade surpluses “taking advantage of the United States” and he revisited the theme on 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,” Trump told reporters at a White House event to announce a proposed infrastructure plan.
The United States loses “vast amounts of money with China and Japan and South Korea and so many other countries … It’s a little tough for them because they’ve gotten away with murder for 25 years. But we’re going to be changing policy,” he said.
Trump said his administration will impose a “reciprocal tax” to charge other countries – “some of them are so-called allies but they’re not allies on trade.”
He did not specify how such a tax would be structured, or whether he meant that U.S. tariff rates should be raised to equal to those charged by other major trading partners. Administration officials were not immediately able to elaborate on the president’s comments.
Trump cited motorcycle maker Harley-Davidson as an example of the problem of unfair trade. Harley is building a factory in Thailand, partly because its U.S.-built bikes face a 60 percent tariff there.
The United States has pledged to the World Trade Organization a relatively low, 3.5 percent applied tariff rate, compared to 9.9 percent for China and 5.2 percent for the European Union. For some products, the gap is much wider, such as in passenger vehicles, where the United States charges 2.5 percent tariffs, versus 25 percent in China and 10 percent in the EU.
It was also unclear whether Trump was reviving the idea of a border adjustment tax, an idea rejected by congressional Republicans in last year’s tax reform effort.
Retailers and some import-dependent industries strongly opposed the plan for a 20 percent tax on imports aimed at offsetting the value-added tax refunds that some countries grant to their exporters. The National Retail Federation at the time called it a “bad tax” that would “drive up the prices of countless products Americans use every day.”
Trump asked Commerce Secretary Wilbur Ross if he agreed with the idea of a reciprocal tax during the infrastructure event. Ross said, “sure,” and proceeded to say that the United States for too long had offered trade concessions to other countries that were no longer needed. “Well, we gave away so much unilaterally that we really have to claw it back,” Ross added.