US President Trump says he will make an announcement next week on reciprocal trade on many countries

• Tariffs are an option to address deficit.


• Auto tariffs always on the table.

Analysis details (17:18)

Note, Reuters earlier reported via sources that US President Trump told Republican lawmakers he plans to issue reciprocal tariffs as early as Friday.

The report was extremely vague in which tariffs will be imposed. 

• China recently imposed tariffs on the US, which focused on energy, agricultural machinery, pick up trucks and big cars. It also announced a probe into Google (GOOGL), Nvidia (NVDA) and Intel (INTC). Meanwhile, PVH Corp (PVH) and Illumina (ILMN) were added to an unreliable entity list. It also announced export controls on rare metals.


• However, reciprocal tariffs would mean a matching to any tariffs imposed on the US, that are currently different. For example, analysts highlight the EU currently tariffs US vehicle imports at 10%, while US tariffs EU vehicle imports at 2.5%, so in theory, US may raise vehicle tariff to 10%, to match the EU tariff.


• In recent commentary, President Trump said he would go "reciprocal tariffs on everybody" and that the EU is a VAT on the US. Therefore, it may be in response to any nation that US President Trump believes is being unfair to the US. Highlighting this, Hassett earlier said that "our trading partners have tariffs 2/3x times higher than our tariffs, so if we were reciprocal, they could go down or we could go up."
  


• Forex Live highlights that in the earlier WH Economic Adviser Hassett interview on Bloomberg, Hassett said that in 2023, US firms paid USD 370bln abroad in value-added and income taxes, whereas multinational firms operating in the US paid just USD 57bln. “That’s not reciprocal. That’s something fundamentally different,”.


• Hassett added that “What President Trump wants us to do is to come up with a really smart program that includes trade policy, tariffs and revisions to the tax code, and he wants us to make it work so America is on a level playing field again.”

More recently, FT reported that the EU is to offer to lower tariffs on US cars as an olive branch aims to shield Europe's ailing car industry from Trump's trade measures. 

07 Feb 2025 - 17:16- EquitiesImportant- Source: Newswires