Trade war escalated! Trump announces plans to implement reciprocal tariffs.

U.S. President Trump said he will announce reciprocal tariff policies on Thursday, fulfilling his previous threat to impose import tariffs on countries that impose higher tariffs on American goods. This move marks a further escalation of the trade war between Trump and his economic partners. Trump announced this decision on his Truth Social platform, but did not disclose specific details, structure, or effective date of the tariffs. He wrote, "The past three weeks have been great, maybe the best ever, but today is the main event: reciprocal tariffs!!! Let's make America great again!!!" After the news was announced, the decline of the U.S. dollar narrowed. Currencies of economies with trade tensions with the United States reacted immediately, with the euro's gains falling back, and the Mexican peso lagging behind other major currencies on the trading day. Meanwhile, safe-haven currencies such as the Swiss franc and the Japanese yen continued to rise, outperforming other currencies. The White House did not immediately respond to requests for comment on further details of Trump's plans. White House Press Secretary Caroline Levitt had previously said that Trump planned to announce the tariff plan before his meeting with Indian Prime Minister Modi on Thursday. Although Trump did not provide a specific announcement time, the White House said he plans to sign an executive order at 1 pm Washington time, earlier than when the Indian leader arrives at the White House. Trump sees the reciprocal tariff plan as a key part of his efforts to raise overall U.S. tariffs. He said the plan will apply to countries with average tariffs higher than the United States, and the United States will increase its own tariffs to match them. "It's very simple: if they tax us, we tax them," he told reporters last Sunday, confirming his plan to announce it this week. Negotiation Strategy The White House has not disclosed the details of the plan, including the basis for calculating tariff rates, and whether other trade barriers or taxes will be considered. The White House has not made it clear whether a single average tax rate will be selected for each country, or distinctions will be made by industry or product. It is not clear if the plan will allow for exceptions. The White House has not indicated when the tariffs will take effect. Analysts believe that a longer preparation time will lead to speculation that these tariffs will be used as bargaining chips or starting points in negotiations with world leaders. Trump's actions may also initiate a longer administrative process to set reciprocal tariffs, by directing federal agencies to evaluate and develop new matching tariffs for individual countries or products. Trump had previously proposed some ways for countries to bypass his specific tariffs. Although he said the steel and aluminum tariffs would not have exceptions, he agreed to "consider" flexibility with Australia after speaking with Prime Minister Abeber Nese. Trump mentioned Australia's overall trade surplus and their purchase of American-manufactured planes. Given India's high tariffs, Trump's choice to announce the plan on the same day as receiving Indian Prime Minister Modi may have ulterior motives. Modi has taken steps to appease Trump. In recent weeks, India has significantly reduced tariffs on goods ranging from motorcycles to luxury cars, agreed to accept a large number of undocumented immigrants, and pushed to increase purchases of American energy. Trump had previously announced tariffs on China, Canada, and Mexico, but then suspended the imposition of tariffs on these two countries due to their commitments to stricter border measures. He also announced a 25% tariff on steel and aluminum, which will take effect next month.