By Chao Deng
President Trump is quickly ramping up his tariff war with the rest of the world.
On April 7, he said he planned to add an additional 50% tariff on China starting April 9 if the country doesn't withdraw its retaliatory tariff increase on the U.S. That comes on top of 10% across-the-board tariffs on all U.S. imports that went into effect on Saturday, April 5, and even higher rates starting April 9 for many nations that the White House considers bad actors on trade.
Earlier in his second term, Trump imposed tariffs on many products from Canada, Mexico and China, as well as on steel, aluminum and foreign-made automobiles.
Together, the policies represent a fundamental rethinking of U.S. trade policy on a scale not seen since the post-World War II era.
Trump's rationale is that tariffs will resuscitate U.S. manufacturing, cut the U.S. trade deficit and help reduce the national debt. Detractors say the tariffs could upend global trade and lead to higher inflation.
Here's what to know about his latest announcements:
What tariffs did Trump impose?
The tariff regime Trump unveiled April 2 included 10% across-the-board tariffs on all imports and higher rates for dozens of nations, including a 34% duty for China, 20% for Europe and 24% for Japan.
Beijing then said it would respond by hitting all U.S. goods with an additional 34% tariffs too, leading Trump to declare he might add an additional 50% on China starting April 9. He also said the U.S. will end talks to arrange meetings with Chinese officials.
The tariffs on China starting this week will add to the 20% tariff Trump imposed over China's role in fentanyl, plus tariffs that existed previously. The older tariffs include ones that Trump imposed during his firm term and that former President Joe Biden imposed.
The White House has pegged the new country-specific tariffs to calculations of amounts it said other countries impose on the U.S. For nearly 100 nations, including those in the European Union treated as a bloc, those amounts appear to match a basic formula: the size of a country's goods-trade imbalance with the U.S. divided by how much America imports from that nation. The Office of the U.S. Trade Representative has said that those rates were calculated "to balance bilateral trade deficits between the U.S. and each of our trading partners."
What are U.S. tariffs and who pays them?
Tariffs are import duties on goods coming into the U.S., so American companies and other businesses buying directly from foreign suppliers will pick up the initial tab. Who bears the ultimate burden evolves, however, as businesses in the supply chain factor in new prices and their own demand.
Importers wanting to limit the hit from tariffs can raise their prices, effectively passing along the tariff burden to American consumers and other businesses. But pain can be felt in the other direction too as American importers may decrease orders for newly tariffed imports that they can no longer afford.
What sorts of goods and countries will be affected?
Firms will have to pay additional 10% tariffs on all items they import to the U.S., from small, everyday items like cereal from Mexico, to large, expensive goods like Volkswagen cars from Germany.
Since the duties vary by country, some goods will be affected much more than others.
Vietnam, Sri Lanka and Laos will face some of the highest tariffs of 46%, 44% and 48%, respectively.
Why is Trump using tariffs?
Trump has recently said tariffs are needed to the U.S.'s trade imbalances with other nations and avoided explaining what exactly countries can do to avoid getting hit. He said Monday there "can be permanent tariffs" and there can "also be negotiations." He also dismissed a proposal by the European Union to offer "zero-for-zero" tariffs on industrial goods.
Trump's administration has offered little clarity. "This is not a negotiation," wrote Peter Navarro, his top trade advisor, in a Financial Times op-ed. "For the U.S., it is a national emergency triggered by trade deficits caused by a rigged system."
During his presidential campaign, Trump used tariffs to rally swaths of his political base.
Trump has said tariffs will help protect American businesses, move manufacturing to the U.S. and create jobs for American workers. He has also argued that tariffs would help narrow the U.S. trade deficit -- the gap between how much the country imports and exports.
Trump has previously turned to tariffs to extract political concessions from U.S. trading partners. After his threats to impose tariffs on Canada and Mexico earlier this year, both countries pledged to step up border-control efforts to curb migration and illegal drug flow into the U.S.
Many economists have been critical of Trump's use of tariffs, warning that they are too blunt a tool for protecting the U.S. economy and addressing trade imbalances. Some argue that tariffs aren't a good negotiating tool, especially when it isn't clear what Trump wants in exchange.
How might tariffs affect American consumers and businesses?
Trump's tariffs have sent U.S. stocks tumbling. Investors are increasingly worried about the prospect of inflation and a U.S. economic recession.
Many businesses have said they can't stomach the high tariff rates and will pass on some of the cost to consumers in the form of higher prices. While some firms have announced expanded production lines in the U.S., most big multinationals are reluctant to move entire supply chains as they assess whether the tariffs will be permanent.
Especially high tariffs on China has led Apple to plan to ship more iPhones to the U.S. from India, while the company also attempts to get a tariff exemption from the Trump administration. If all of Trump's tariffs on China get implemented, additional duties would amount to around 94%, compared to a 26% rate on Indian goods.
Trump's tariffs have spurred some Americans to buy imported goods like TVs, soy sauce and Lululemon clothes, in anticipation of higher prices. Some business executives have also said that Americans might also see fewer choices at the store, as businesses sell less to the U.S. or pull out of the market altogether.
This explanatory article may be periodically updated.
Write to Chao Deng at chao.deng@wsj.com
(END) Dow Jones Newswires
April 07, 2025 17:16 ET (21:16 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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