Trump Widens Trade Fight with ‘Reciprocal Tariff’ Threat

By Shawn Donnan (Bloomberg) —

President Donald Trump is embarking on what may be his most disruptive action yet for the global economy by broadening his grievances to how other countries choose to tax and regulate.

Trump on Thursday ordered top economic officials to calculate new US tariffs based on the total tariffs and tax, regulatory, currency and any other barriers that US exports face. The new “reciprocal” duties would be calculated country by country. They will be laid out in a series of reports due by April 1 that officials said would first examine the economies with which the US has the largest trade deficits.

“The numbers are going to be very fair but staggering. They’re going to be large,” Trump told reporters in the Oval Office as he signed a memorandum ordering up the new tariffs.

The move, which Trump said would replace his campaign plan for a universal tariff on imports, immediately puts the European Union and countries including China, India, Mexico and Vietnam in the potential firing line, based on US trade data.

European Commission President Ursula von der Leyen on Friday called Trump’s plan a “step in the wrong direction” and an act of self-harm. By raising tariffs, the US “is taxing its own citizens, raising costs for business, stifling growth and fueling inflation,” she said.

Reaction was swift from other major US trading partners. During a joint conference with Indian Prime Minister Narendra Modi on Thursday, Trump said the two countries would start trade negotiations. Indian officials Friday said they’re looking to boost oil and gas imports from the US — a vow that countries from Japan to Vietnam have already made.

Asian Exporters

In Tokyo on Friday, Japan also said it’s reaching out to Washington to start discussions. Taiwanese President Lai Ching-te pledged to boost military spending in a sign of further cooperation with the US against China. South Korea— which along with Japan was singled out by a White House official on a call with reporters — released a statement highlighting the low effective tariff rate on US goods.

Trump’s plan would, if implemented, mark a departure from how the US has approached tariffs for almost a century and deal a major blow to global trading rules now based on countries granting each other what are known as “most favored nation” tariffs unless they sign special…