In midâ2025, former President Donald Trump launched a sweeping new trade policy centered on soâcalled âreciprocal tariffs.â The strategy hinged on imposing U.S. import duties that mirror the barriers trading partners impose on American exports. Starting with a baseline 10%, the tariffs escalated to as high as 41% depending on the countryâs trade practices toward the U.S.The Times of India+12Politico+12Reuters+12Known as âLiberation Dayâ tariffs for the April 2 rollout, the initiative promised to reverse decades of trade deficits by punishing nations with perceived unfair trade treatment of U.S. goods. From early February directives to formal executive orders, Trumpâs team claimed a national economic emergency justified action under the International Emergency Economic Powers Act (IEEPA) as well as statutes in the Trade Act of 1974The Guardian+5Wikipedia+5Wikipedia+5.
Trump inaugurated his reciprocal tariff scheme by declaring a 10% baseline tariff on imports from all trading partners. On top of that, countryâspecific rates launchedâsuch as a 34% surcharge on Chinese goods, stacking onto existing 20% Sectionâ301 tariffs for a cumulative 54% burdenTrade Compliance Resource Hub+2Wikipedia+2Business Insider+2. Countries including India, EU, Taiwan, Vietnam, Cambodia, and Sri Lanka faced similar steep levies.
Adjustments followed as negotiations progressed. By late May to June, certain countries like the EU reached deals to reduce their assigned ratesâfrom proposed 50% down to 15â20%, though some were later reset to 30% before settling around midârange ratesInvestopedia+4Business Insider+4apnews.com+4.
Trump signed a fresh executive order formally modifying reciprocal rates effective August 7. This time over 69 countries were affected, including India (25%), Taiwan (20%), South Africa (30%), Switzerland (39%), Myanmar and Laos (40%), Syria (41%), and Canada (up from 25% to 35%)Reuters+3Politico+3The Times of India+3.The U.S. also granted a 90âday reprieve to Mexico, although tariffs on autos and metals remained under Section 232 authoritytaxfoundation.org+2Reuters+2finance.yahoo.com+2.
Tariffs set at 25% hit engineering goods hard. Indiaâs Engineering Export Promotion Council estimated exports to the U.S. could drop by 30%, roughly losing USDâŻ12âŻbillion in FYâŻ2026 unless companies diversify into Latin America, Africa, and Southeast AsiaThe Times of India+1economictimes.indiatimes.com+1.
Manufacturers dependent on global inputsâfrom semiconductors to auto partsâhave started recalibrating sourcing strategies. Some sectors passed cost increases onto consumers, others absorbed pressures via thin margins, risking longâterm competitivenessWikipedia.
Economists warn the tariffs contribute to a fragmented global trade environment lacking transparency. Absence of clear thresholds for tariffs and shifting countryâspecific rates foster uncertainty, discouraging longâterm investment and international collaborationReuterswashingtonpost.com.
Investors have rotated away from globally exposed equities, favoring defensive or domesticâfocused sectors that are less sensitive to international price volatilityReuters.
Analysts argue that the tariffsâwhile politically convenientâoffer minimal economic benefit. They expect slower growth, higher inflation, margin compression, and retaliatory trade measures. Further, critics highlight the opacity surrounding deal processes and full list disclosureswashingtonpost.com.
Trump defenders frame the tariffs as necessary leverage in renegotiations designed to benefit U.S. workersâasserting that market volatility is temporary and negotiable compromise will emerge over timeThe White Houseapnews.com.
Affected governments are in active negotiations with Washington to reduce rates in exchange for trade agreements or policy concessions. Mexico, for instance, received an initial reprieve; EU, Japan, and South Korea are working on deals that stabilized their reciprocal rates at lower levelsTrade Compliance Resource Hubtaxfoundation.orgThe White House.
| Category | Highlights |
|---|---|
| Scope | Tariffs of 10%â41% imposed on ~69 countries Reutersm.economictimes.comFrance 24 |
| Key Targets | India (25%), Taiwan (20%), South Africa (30%), Switzerland (39%), Canada (35%), Myanmar/Laos (40%) |
| Timeline | April 2 launch, adjustments through MayâJuly, broad rollâout by August 7 |
| Economic Effects | Consumer inflation (~1.8%), export drops, disrupted supply chains, consumer prices rising |
| Market Reaction | Global stock declines, investor shift to safer assets |
| Legal Challenges | Courts questioning IEEPA authority; injunctions issued |
| Negotiations | Ongoing bilateral deals with negotiation buffers |
Trumpâs âreciprocal tariffsâ represent a bold escalation in U.S. trade policyâintended to rebalance bilateral deficits through forceful leverage. But this hardâline stance comes at a cost: legal uncertainty, economic disruption, pressure on exporters, and inflationary fallout domestically.While some countries have succeeded in negotiating lower rates, many exportersâincluding Indiaâs engineering sector and Swiss luxury goodsâface immediate headwinds. U.S. consumers will likely shoulder more of the burden as companies absorb or pass on costs.This trade regime shift signals a tougher, less predictable era for global trade. Whether the strategy achieves its goalâpressuring trading partners to reduce their own barriers and secure favorable deals with the U.S.âremains to be seen. What is clear: it marks a dramatic departure from established norms, with widespread political, legal, and economic repercussions.