An eye for an eye. President Donald Trump on Thursday announced the start of a process to impose reciprocal tariffs on US trading partners around the world, which could go into effect as soon as April. Trump tasked top economic officials to design a plan for the United States to match higher tariffs imposed by other countries on US goods, along with nontariff barriers and taxes such as value-added taxes. We asked our trade experts to analyze what this order means and what comes next.
Click to jump to an expert analysis:
Josh Lipsky: Trump just put the world on notice
Dan Mullaney: This could be a game-changer for how the US imposes tariffs
Barbara Matthews: Reciprocal tariffs will hit Europe the hardest
Mark Linscott: India could be the first test case for negotiations under this plan
Trump just put the world on notice
Today’s action is not mere negotiating posture—this is the Trump administration putting nearly every country on notice. If you wanted to do widespread reciprocal tariffs across the world, you would ask the Office of the US Trade Representative and the Department of Commerce to come up with a list of recommendations and you would invoke all legal authorities at your disposal, including the International Emergency Economic Powers Act, to justify the action on national security grounds. That’s exactly what they’ve done today.
So none of this should be dismissed as merely another Trump “wait and see” announcement. Will every country that tariffs the United States face reciprocal tariffs in April? No—several will find ways to delay, exempt, or negotiate. For example, it will be worth watching what Indian Prime Minister Narendra Modi brings to the table today as he visits the White House. But my bet is that many countries will not be so fortunate. Instead, they will face real and meaningful tariffs this spring, just as the world’s finance ministers gather in Washington for the International Monetary Fund-World Bank spring meetings. It’s the first time many of them will meet the Trump team, including Treasury Secretary Scott Bessent, and it is going to make for a very fraught first meeting.
—Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center and a former adviser to the International Monetary Fund.
This could be a game-changer for how the US imposes tariffs
Depending on exactly how it is implemented, the “Fair and Reciprocal Plan” could be a game-changer in terms of how the United States imposes general tariffs. Under the current most-favored-nation approach under the World Trade Organization (WTO), members have negotiated tariff rates among more than 160 countries that they apply without discrimination to other WTO members. This plan could mark a change to an approach where general tariffs are imposed and negotiated country by country on a bilateral reciprocal basis. It appears to upend how tariffs have been negotiated and imposed since the General Agreement on Tariffs and Trade came into existence. The most-favored-nation approach was designed to encourage a reduction in global tariffs; it’s fair to conclude that that has not happened since the initial negotiations, so some frustration is perhaps understandable. In some cases, the reduction in tariffs triggered other non-tariff barriers to trade, so the desire to calculate tariff equivalents of those barriers is perhaps also understandable.
The prospect of reciprocal tariffs can also be viewed as the ultimate bargaining tool, essentially saying: “Lower your tariffs to our current levels (and eliminate other barriers that may be identified and turned into tariff equivalents) and face no consequences.” The larger problem for WTO-focused members is that any reductions in tariffs would have to apply to all WTO members. So the European Union (EU) might be happy to lower its 10 percent tariff on autos to the United States’ 2.5 percent rate, given that the United States poses no threat to the EU’s auto business. But that rate would also apply to South Korea, Japan, and China, which do pose a real threat.
—L. Daniel Mullaney is a nonresident senior fellow with the Atlantic Council’s Europe Center and GeoEconomics Center. He previously served as assistant US trade representative for Europe and the Middle East.
Reciprocal tariffs will hit Europe the hardest
European economies will be the most adversely impacted by the reciprocal tariff action. Within twenty-four hours, the Trump administration has articulated a broad-based pivot away from Europe, both with respect to NATO and with respect to trade. The US government has made clear its intention to revive the pre-World War II, pre-Bretton Woods trade paradigm, in which tariff policies are set reciprocally, without multilateral engagement.
The global consequences will extend well past economics and trade. The great success of the EU project is that Europe is no longer a junior partner to the United States on the global stage. The great question for 2025 is whether European and US leaders can find a way to redefine their special, strategic relationship for mutual benefit. The great risk for 2025 is that, instead, European and US strategic interests diverge over trade, climate, and other policy priorities.
Divergence is not impossible. The transatlantic trade relationship is uneven. Imbalances do exist, particularly as Europeans impose higher import tariffs on US goods than the United States does on imports from Europe. Imbalances will grow once the EU’s Carbon Border Adjustment Mechanism is fully implemented and once Europe achieves its strategic goal of eliminating reliance on liquefied natural gas imports. The United States may view these imbalances as creating a bargaining opportunity to redefine the transatlantic relationship, particularly given the great power competition underway with China alongside Russia’s war against Ukraine.
Ironically, the good news is that the bilateral transatlantic trade relationship is not governed by a free trade agreement, so no treaties are being abrogated by the tariff action with respect to the EU. This leaves room for strategic engagement on both sides. Nevertheless, the economic impact in Europe may be considerable. Europe’s economies face considerable challenges: lackluster growth, increasing energy transition costs, and economic difficulties resulting from the war in Ukraine. Disruption in the transatlantic supply chain will create additional pressures and tensions at a delicate moment for Europe.
—Barbara C. Matthews is a nonresident senior fellow with the Atlantic Council. She is also CEO and founder of BCMstrategy, Inc and a former US Treasury attaché to the European Union.
India could be the first test case for negotiations under this plan
The president’s announcement today of a “Fair and Reciprocal Trade Plan” appears to be a blueprint for a monumental restructuring of the international trading system. It appears that it will initiate a process that could lead to new bespoke tariff schedules for some of the major trading partners of the United States, namely those that are viewed as the worst offenders in having high tariffs and running large trade surpluses with the United States.
That said, no new reciprocal tariffs will be imposed immediately, and the process, led by the Office of the US Trade Representative (USTR) and the Department of Commerce, could take some time to run its course before final decisions are made on raising tariffs. What is clear is that this process will involve a comprehensive examination of all forms of trade restrictions applied by select countries, including the European Union, India, and Brazil, which were specifically called out in the White House fact sheet. USTR and the Department of Commerce will have to assess differential tariffs, all forms of non-tariff barriers, and discriminatory tax regimes—and quantify them so that new tariffs can be calculated on a country-by-country and product-by-product basis. That will be a huge undertaking.
What is only hinted at in the presidential memorandum and fact sheet is the possibility of negotiating new trade agreements with these countries to reduce their tariffs and other trade barriers. In fact, with the announcement coming on the day of Prime Minister Narendra Modi’s visit to Washington, India could be the first test case for negotiations that might mitigate the imposition of new tariffs. So we should all buckle up for what will be a wild ride as this plan is put into place.
—Mark Linscott is a nonresident senior fellow with the Atlantic Council’s South Asia Center. He was the assistant US trade representative for South and Central Asian Affairs from 2016 to 2018, and assistant US trade representative for the WTO and Multilateral Affairs from 2012 to 2016.
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Image: US President Donald Trump holds an executive order about tariffs increase, flanked by US Commerce Secretary Howard Lutnick, in the Oval Office of the White House in Washington, DC, on February 13, 2025. REUTERS/Kevin Lamarque.