Wed Feb 12 07:55:07 UTC 2025: ## Trump Threatens New Tariff War, Targeting India and EU

**Washington D.C.** – President Trump has threatened to unleash a new wave of tariffs on Tuesday or Wednesday, vowing “reciprocal” levies against countries he deems unfair trading partners. This move could significantly escalate existing trade tensions, particularly with emerging markets and the European Union.

Trump’s plan involves matching tariffs imposed by other nations on US goods. While the US currently has a relatively low average tariff rate of 2.7 percent, higher rates on specific goods like apparel, sugar, and pickup trucks could see substantial increases. The administration’s approach remains unclear: it might focus on matching average tariff rates across all products or adopt a product-by-product approach, leading to significant complexities.

Emerging market economies, such as India and Thailand, which impose higher average tariffs on US goods, are likely to be heavily impacted. The administration has previously criticized India’s trade practices, with National Economic Council Director Kevin Hassett highlighting India’s high import tariffs. However, experts caution that high tariffs are sometimes a necessity for poorer nations with limited resources for other trade barriers. Countries with free trade agreements with the US, like Mexico, Canada, and Korea, are expected to be largely unaffected if a country-based approach is used.

A more aggressive approach could see the US also targeting non-tariff barriers, such as the European Union’s value-added taxes (VATs). This could result in a substantial increase in average effective tariff rates, potentially by an additional 10 percentage points.

Experts warn that Trump’s strategy, while intended as a negotiating tactic, could create significant uncertainty and harm businesses. The unpredictable nature of these tariffs, coupled with potential retaliation, will weigh heavily on both American and foreign firms. While the US aims for a fairer trade system, the implementation of reciprocal tariffs could necessitate tariff reductions on US goods from numerous countries to achieve true reciprocity. The overall impact remains uncertain, but the announcement is likely to cause further instability in global trade.

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