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Trump Threatens Reciprocal Tax on Trade

Wednesday, February 14, 2018
Sandler, Travis & Rosenberg Trade Report

President Trump said this week that “during the coming months” he will reveal plans to impose a “reciprocal tax” against imports from countries that have high tariffs on U.S. exports. However, an administration official later said no formal proposal for such a tax is “in the works right now.”

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“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 said, reinvigorating rhetoric employed in his presidential campaign. “They’ll send in their product and we won’t charge them anything and we send them our product, same product as they’re sending us, and they’ll charge us 50 and 75 percent tax. And that’s very unfair.” He indicated that this disparity is “why we have these big trade deficits” with countries like China, Japan, and South Korea, which have been a key focus of his administration’s trade policy.

As a result, Trump said, “we’re going to be doing very much a reciprocal tax,” which a Bloomberg article described as “a levy on imports from other countries at the same rates those countries impose on U.S. products.” Trump speculated that “either we’ll collect the same that they collect,” the article said, “or probably what happens is they’ll end up not charging a tax and we won’t have a tax, and that becomes free trade.” However, press reports said the president has yet to indicate which countries or products might be targeted.

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