US President Trump announces “Fair and Reciprocal Plan” on trade

THE “FAIR AND RECIPROCAL PLAN”: Today, President Donald J. Trump signed a Presidential Memorandum ordering the development of a comprehensive plan for restoring fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

• The “Fair and Reciprocal Plan” will seek to correct longstanding imbalances in international trade and ensure fairness across the board.
• Gone are the days of America being taken advantage of: this plan will put the American worker first, improve our competitiveness in every area of industry, reduce our trade deficit, and bolster our economic and national security.

AMERICA WILL NO LONGER TOLERATE UNFAIR TRADE PRACTICES: The United States is one of the most open economies in the world, yet our trading partners keep their markets closed to our exports. This lack of reciprocity is unfair and contributes to our large and persistent annual trade deficit.

• There are endless examples where our trading partners do not give the United States reciprocal treatment.
  • The U.S. tariff on ethanol is a mere 2.5%. Yet Brazil charges the U.S. ethanol exports a tariff of 18%. As a result, in 2024, the U.S. imported over $200 million in ethanol from Brazil while the U.S. exported only $52 million in ethanol to Brazil.
  • The U.S. average applied Most Favored Nation (MFN) tariff on agricultural goods is 5%. But India’s average applied MFN tariff is 39%. India also charges a 100% tariff on U.S. motorcycles, while we only charge a 2.4% tariff on Indian motorcycles.
  • The European Union can export all the shellfish it wants to America. But the EU bans shellfish exports from 48 of our states, despite committing in 2020 to expedite approvals for shellfish exports. As a result, in 2023, the U.S. imported $274 million in shellfish from the EU but exported only $38 million.
  • The EU also imposes a 10% tariff on imported cars. Yet the U.S. only imposes a 2.5% tariff.
  • A 2019 report found that across 132 countries and more than 600,000 product lines, United States exporters face higher tariffs more than two-thirds of the time.

• This lack of reciprocity is one source of America’s large and persistent annual trade deficit in goods: closed markets abroad reduce U.S. exports and open markets at home result in significant imports, both of which undercut American competitiveness.
  • The United States has run a trade deficit of goods every year since 1975. In 2024, our trade deficit in goods exceeded $1 trillion.
  • Thanks to the proliferation of non-reciprocal barriers in just the last few years, the U.S. now runs a trade deficit in agriculture, worth around $40 billion in 2024.
• Though America has no such thing, and only America should be allowed to tax American firms, trading partners hand American companies a bill for something called a digital service tax.
  • Canada and France use these taxes to each collect over $500 million per year from American companies.
  • Overall, these non-reciprocal taxes cost America’s firms over $2 billion per year.
  • Reciprocal tariffs will bring back fairness and prosperity to the distorted international trade system and stop Americans from being taken advantage of.

THE ART OF THE INTERNATIONAL DEAL: President Trump continues to deliver on his mandate given to him by the American People to put America First when it comes to trade.

• As President Trump said in the Presidential Memorandum on American First Trade Policy on his first day in office, trade policy is a critical component of our economic security and national security.

• In his first term, President Trump successfully ended the outdated and unfair NAFTA, replacing it with the historic USMCA to deliver one of the largest wins for American workers.
• When our national security was threatened by a global oversupply of steel and aluminum, President Trump took swift action to protect America’s national security by implementing tariffs on imports of these goods.
• In response to China’s intellectual property theft, forced technology transfer, and other unreasonable behavior, President Trump acted with conviction to impose tariffs on imports from China, using that leverage to reach a historic bilateral economic agreement.

Just last week, President Trump leveraged tariffs to force Canada and Mexico to make long-overdue changes at our northern and southern borders, ensuring the safety and security of American citizens.

Source – US White House

MEMORANDUM FOR THE SECRETARY OF THE TREASURY

THE SECRETARY OF COMMERCE

THE SECRETARY OF HOMELAND SECURITY

THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET

THE UNITED STATES TRADE REPRESENTATIVE

THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY

THE SENIOR COUNSELOR TO THE PRESIDENT FOR TRADE AND MANUFACTURING

SUBJECT: Reciprocal Trade and Tariffs

Section 1.  Background.  The United States has one of the most open economies and has among the lowest average weighted tariff rates in the world.  The United States imposes fewer barriers to imports than other major world economies, including those with similar political and economic systems.  For many years, the United States has been treated unfairly by trading partners, both friend and foe.  This lack of reciprocity is one source of our country’s large and persistent annual trade deficit in goods — closed markets abroad reduce United States exports and open markets at home result in significant imports.

Our workers and industries bear the brunt of unfair practices and limited access to foreign markets.  As noted in the Presidential Memorandum of January 20, 2025 (America First Trade Policy Memorandum), this situation is untenable.  The trade deficit of the United States threatens our economic and national security, has hollowed out our industrial base, has reduced our overall national competitiveness, and has made our Nation dependent on other countries to meet our key security needs.  By making trade more reciprocal and balanced, we can reduce the trade deficit; grow the United States economy; and improve our trade relationships with trading partners to the benefit of American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.

Sec. 2.  Policy.  It is the policy of the United States to reduce our large and persistent annual trade deficit in goods and to address other unfair and unbalanced aspects of our trade with foreign trading partners.  In pursuit of this policy, I will introduce the “Fair and Reciprocal Plan”(Plan).  Under the Plan, my Administration will work strenuously to counter non-reciprocal trading arrangements with trading partners by determining the equivalent of a reciprocal tariff with respect to each foreign trading partner.  This approach will be of comprehensive scope, examining non-reciprocal trade relationships with all United States trading partners, including any:

(a)  tariffs imposed on United States products;

(b)  unfair, discriminatory, or extraterritorial taxes imposed by our trading partners on United States businesses, workers, and consumers, including a value-added tax;

(c)  costs to United States businesses, workers, and consumers arising from nontariff barriers or measures and unfair or harmful acts, policies, or practices, including subsidies, and burdensome regulatory requirements on United States businesses operating in other countries;

(d)  policies and practices that cause exchange rates to deviate from their market value, to the detriment of Americans; wage suppression; and other mercantilist policies that make United States businesses and workers less competitive; and

(e)  any other practice that, in the judgment of the United States Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Commerce, and the Senior Counselor to the President for Trade and Manufacturing, imposes any unfair limitation on market access or any structural impediment to fair competition with the market economy of the United States.

The Plan shall ensure comprehensive fairness and balance across the international trading system by factoring in losses as a result of measures that disadvantage the United States as applied, regardless of what they are called or whether they are written or unwritten.

Sec. 3.  Taking Action.  (a)  After the submission of the specified agency reports due under the America First Trade Policy Memorandum, the Secretary of Commerce and the United States Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Homeland Security, the Assistant to the President for Economic Policy, the Senior Counselor to the President for Trade and Manufacturing, and the heads of such other executive departments and agencies as the Secretary of Commerce and the United States Trade Representative deem relevant, shall initiate, pursuant to their respective legal authorities, all necessary actions to investigate the harm to the United States from any non-reciprocal trade arrangements adopted by any trading partners.  Upon completion of such necessary actions, they shall submit to me a report detailing proposed remedies in pursuit of reciprocal trade relations with each trading partner.

(b)  Within 180 days of the date of this memorandum, the Director of the Office of Management and Budget shall assess all fiscal impacts on the Federal Government and the impacts of any information collection requests on the public, and shall deliver an assessment in writing to the President.

Sec. 4.  Definitions.  For the purposes of this memorandum:

(a)  “Value-added tax” means a type of consumption tax that is levied on the incremental increase in value of a good or service at each stage of the supply chain.

(b)  “Nontariff barrier” or “measure” means any government-imposed measure or policy or nonmonetary barrier that restricts, prevents, or impedes international trade in goods, including import policies, sanitary and phytosanitary measures, technical barriers to trade, government procurement, export subsidies, lack of intellectual property protection, digital trade barriers, and government-tolerated anticompetitive conduct of state-owned or private firms.

Sec. 5.  General Provisions.  (a)  Nothing in this memorandum shall be construed to impair or otherwise affect:

(i)   the authority granted by law to an executive department or agency, or the head thereof; or

(ii)  the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b)  This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d)  The United States Trade Representative is authorized and directed to publish this memorandum in the Federal Register.

Source – US White House