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US global 'supplemental tariffs' to target trade-surplus countries

2025-01-21 00:00:00.0 商业标准报-经济和政策原网页

After assuming office as the 47th president of the United States, Donald Trump laid out an “America First Trade Policy”, which includes imposing global “supplemental tariffs” to address what he termed “unfair and unbalanced trade”. He also threatened a 100 per cent tariff on Brics nations, including India, if the bloc attempts to reduce its reliance on the dollar for foreign trade.

During his presidential campaign, Trump had proposed a flat 10 per cent tariff on all imports to the US, regardless of their origin. A memorandum issued by the new US administration also calls for a review of existing trade agreements and measures to counter currency manipulation by trading partners.

It also announced the creation of an External Revenue Service (ERS) to collect tariffs, duties, and other foreign-related revenues.

“The secretary of commerce, in consultation with the secretary of the Treasury and the United States trade representative, shall investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits,” the memorandum read.

For now, Trump has targeted only Mexico and Canada with high tariffs, announcing plans to impose a 25 per cent tariff on imports from these neighbouring countries starting February 1.

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While India has not yet been singled out, New Delhi is closely watching US policy announcements. Trump has frequently criticised India's trade surplus with the US, referring to it as a “tariff king”. Commerce and Industry Minister Piyush Goyal is scheduled to meet industry leaders and exporters on January 30 to discuss US tariff measures and how to mitigate potential disruptions.

“We expect the US to impose tariffs on China,” an SBI research report noted. “For India, past experience suggests that the country has broadened its export markets and exports towards value-added (products), and thus even if tariffs are imposed in a limited manner, India might be impacted but not significantly in the long run.”

Ajai Sahai, director-general and CEO of the Federation of Indian Export Organisations (FIEO), commented on the potential for broad-based US tariff hikes. If the US imposes additional tariffs across the board to generate revenue and provide greater protection, “it will be based on the principle of most-favoured nation, which means that every country will be subjected to the (same) tariff. So that may not be an issue,” he said, adding that there remains little clarity on whether India will be specifically targeted.

Notably, Trump did not announce imposition of higher tariffs on China, despite having mentioned his plans for a 10 per cent tariff hike over a month ago. The memorandum indicates that the US will review its Economic and Trade Agreement with China and consider imposing tariffs or other measures based on the review’s findings.

Ajay Srivastava, former trade official and founder of the Delhi-based think tank Global Trade Research Initiative (GTRI), said that the US “lost the trade war with China (2017-23)” despite previous tariff measures, as imports were rerouted through duty-free channels like Mexico and Vietnam.

Separately, Trump reiterated his warning to the 10-member BRICS bloc, threatening a 100 per cent tariff if the group seeks to replace the US dollar in global trade. “If the BRICS nations want to do that, that’s okay, but we are going to put at least 100 tariff on the business that they do with the United States,” he told reporters.