Earlier today, President Trump signed a memo directing the Department of Commerce (DOC) and US Trade Representative (USTR) to examine foreign tariff and non-tariff barriers, and develop recommendations to achieve reciprocal trade practices with respect to each foreign trading partner. There is no immediate tariff action implemented by the memo, instead it directs the agencies to conduct a review and provide President Trump with a report detailing the necessary remedies to achieve a reciprocal trade plan within 180 days of the memo publication (so, by 12 August). In a press conference with President Trump, Commerce Secretary nominee, Howard Lutnick, indicated a review is underway, and may be completed as soon as 1 April which is the date indicated under the America First Trade Policy memo.
Foreign trade practices to be examined as part of the review include:
US officials noted that countries which the US has the highest trade deficit could be examined first, such as China, Mexico, and the EU. In addition, Brazil, Canada, China, and India have also been singled out in the reciprocal trade memo as having trade policies which negatively impact US exports. On an annual basis, USTR publishes its National Trade Estimate Report (NTER), which outlines foreign tariff and non-tariff trade barriers impacting US exports. The NTER could be another starting point to target countries and trade policies which may be included as part of the reciprocal trade review.
News reports indicate that reciprocal tariff action, not accounting for negotiations with US trading partners that could delay or modify tariffs, may increase the effective tariff rate on US imports from 3% to 20%. However, at this stage, there is no tariff impact to the movement of PMMI members’ equipment, machinery or parts as a result of this announcement.
We will continue to monitor for additional information on reciprocal trade action, and separately, publication of the Federal Register Notice on scope of steel and aluminum products hit with the 25% Section 232 tariffs as well as any other possible trade/tariff actions by the Trump Administration and our trading partners.
