Donald Trump Announces Reciprocal Tariffs: Major Shift in U.S. Trade Policy

The New Era of U.S. Trade Strategy

In a significant move that could reshape the global trade system, U.S. President Donald Trump announced a sweeping policy of “Global Reciprocal Tariffs” at an event in the White House. He emphasized that these tariffs are designed to level the playing field with countries that impose high trade duties and non-tariff barriers on U.S. goods.

Trump labeled April 2 as “Liberation Day” for America—marking the day the country began to assert stronger control over its trade relationships.

Why Reciprocal Tariffs?

According to Trump, the U.S. has been treated unfairly by both allies and rivals for decades. He noted that many of America’s “friends” in global trade have been worse than adversaries, citing high tariffs and other barriers that hurt U.S. exporters.

Trump’s Key Remarks:

“We are finally putting America first.”

“Trade deficits are not just an economic problem—they’re a national emergency.”

“It’s not full reciprocal, it’s kind reciprocal.”

“Countries like India charge us 52%, and we’ve been charging almost nothing for decades.”

What the Tariff Policy Includes

Trump introduced a 10% baseline tariff on all imported goods, effective from April 5, and higher duties for select countries that have large trade surpluses with the U.S. or impose high tariffs on American products.

The United States plans to calculate its tariff rates at approximately 50% of what other countries charge the U.S., citing it as a “kind” approach rather than enforcing fully matched rates.

India and Major Economies Affected

India was one of the key countries mentioned during the announcement. Trump said that India imposes a 52% tariff on U.S. goods and adds multiple non-tariff barriers. The U.S. will now impose a 26% tariff on Indian imports as a “discounted reciprocal rate.”

The Trump administration claims that removing India’s trade barriers could boost U.S. exports by over $5.3 billion annually.

US Tariff Threat Could Cost India $31 Billion in Exports: Emkay Research

According to Emkay Research, if the United States imposes a 25% tariff in response to Indian duties, it could result in India losing around $31 billion in export revenue to the US.

Indian exporters in key sectors like jewellery, refined petroleum, and textiles are expected to be the most affected by the new reciprocal tariffs announced by US President Donald Trump. These tariffs aim to match the import duties that other countries, including India, place on American goods. According to Emkay Global, even a 10% tariff could lead to a sharp decline in India’s refined petroleum exports to the US, with losses estimated at $2.4 billion. Apparel, iron and steel, and other textile products are also likely to see a significant drop.

The gems and jewellery sector could take an especially hard hit due to its heavy reliance on the US market, which accounts for around 30% of its exports. India’s higher import duties—20% on gold jewellery and 5% on polished diamonds—stand in sharp contrast to the much lower US rates. These differences in tariffs make Indian products less competitive in the American market and could lead to a steep fall in export revenues from these sectors.

Currently, India’s key exports to the US include electronics, gems and jewellery, pharmaceutical products, machinery (including nuclear equipment), and refined petroleum. Together, these five categories made up 53% of India’s total exports to the US during FY24.

Pharma Stocks May Rebound as U.S. Exempts Drug Imports from Tariffs

According to a White House factsheet, all pharmaceutical imports to the U.S. will be exempt from reciprocal tariffs. The document stated that certain items, including copper, pharmaceuticals, semiconductors, and lumber products, will not face these duties.

Experts have pointed out that most of India’s pharmaceutical exports to the U.S. are generic drugs. Imposing tariffs on these could have made medicines more expensive for American consumers. That’s why analysts had already expected that this sector would likely be spared from the new trade rules.

After facing heavy selling and growing investor concerns, the Nifty Pharma index might now see a recovery, according to brokerage firm CLSA. In the last six months, the index dropped by nearly 10% as the overall market went through a correction phase.

Tariff Highlights: Key Countries and U.S. Rates

Here is a selection of new U.S. reciprocal tariff rates on major countries and regions:

Global Reactions to the Announcement

Canada’s Response

Canadian Prime Minister Mark Carney condemned the tariffs, promising to introduce countermeasures. “It’s essential to act with force,” he said before a cabinet meeting.

Australia’s Stand

Australian Prime Minister Anthony Albanese stated, “This is not the act of a friend,” and expressed disappointment, though he ruled out immediate reciprocal tariffs on the U.S.

France stance

French government spokeswoman said France, along with Europe, will respond to Trump’s tariffs. A first response is expected by mid-April, followed by another later in the month. She added that digital services could be targeted in return, stating France is ready for a trade war and criticized Trump for acting like the “master of the world” with an imperialist attitude.

China’s Response

China urged the United States to cancel its unfair tariffs and handle trade disputes through equal and respectful talks. The Ministry of Commerce said these U.S. tariffs harm the rights of others and cause serious issues. China strongly opposed the measures and warned it will take firm action to protect its own interests.

Former Commerce Secretary Carlos Gutierrez said today on CNBC that he expects today’s U.S. tariffs will not be in place in a month or two.

U.S. to End Duty-Free Imports Under $800 from China and Hong Kong Starting May 2

White House announced that starting May 2, items worth less than $800 from China and Hong Kong will no longer be allowed into the U.S. without paying import taxes. This change will affect online shopping platforms like Temu and Shein, which have been sending low-cost products straight from Chinese factories to American buyers using this tax exemption.

Market Impact:

U.S. stock futures took a sharp hit after former President Donald Trump announced a broad set of new tariffs, starting at 10% and going even higher for some countries. The announcement sparked fears of a global trade war, which could worsen the already fragile state of the American economy.

Futures linked to the Dow Jones Industrial Average fell by 780 points, a drop of 1.8%. S&P 500 futures slipped by 2.78%, while Nasdaq-100 futures saw a larger decline of 3.4%, reflecting concerns from investors about the impact of higher tariffs on global trade and tech companies.

Japan’s Nikkei stock index dropped to its lowest level in eight months on Thursday after U.S. President Donald Trump announced a wide range of new tariffs, including a 24% tax on goods from Japan.

The Nikkei fell by as much as 5% early in the day, hitting 33,729.50 – a level not seen since August 7. By 1:30 a.m. (GMT) it had recovered slightly but was still down by 3.20%.

Oil prices reacted quickly to the announcement:

Brent crude fell by 2.6% to $73 per barrel.

WTI crude dropped by 2.7% to $69.8 per barrel.

JPMorgan Warns: Full Tariff Rollout Could Trigger Global Recession

Analysts at JPMorgan are keeping a close watch on how Donald Trump’s proposed tariffs will actually be put into action. For now, they haven’t updated their economic forecasts — they’re waiting to see the full details first.

However, they’ve issued a strong warning: if the full set of Trump’s trade tariffs is implemented, it could hit the economy hard. JPMorgan calls it a major shock to the global economy — one that hasn’t yet been factored into current predictions.

The bank notes that this shock could be even worse than expected. That’s because it could damage investor and business confidence, and other countries might strike back by raising their own tariffs in response. This kind of global trade fight, JPMorgan says, could push both the U.S. and world economies into a recession.

Japan Faces Shock 24% US Tariff Despite $1 Trillion Investment Promise

United States has announced a 24% tariff on Japanese goods, surprising many with a rate higher than expected. This new tariff will begin next week, just ahead of the already planned 25% duty on all imported cars. Japan’s Trade Minister, Yoji Muto, expressed deep concern over the move and said Tokyo will keep urging Washington to exempt Japan from these heavy trade measures. Japan plans to study the full impact on its economy and take necessary steps to protect its interests.

Despite Japan’s earlier promise to invest $1 trillion in the US and its decision not to retaliate against earlier auto tariffs, it is now facing a harsher rate than even the European Union, which is set to be charged 20%. Analysts at Nomura Research Institute warned that the new tariffs could lower Japan’s annual economic growth by nearly 0.6%. The baseline 10% tariff on all nations takes effect this weekend, while the new Japan-specific tariffs start from April 9.

Conclusion: A Bold Step Amid Uncertainty

Trump’s announcement marks a new chapter in U.S. trade policy. While the move is hailed by some as a long-overdue defense of American industries, it also risks igniting trade wars with key partners.

The White House clarified that these tariffs will remain in place until unfair trade practices are resolved or mitigated. With a $46 billion trade deficit with India alone, the U.S. hopes this aggressive stance will compel countries to rethink their trade approach.

Whether this policy strengthens U.S. exports or disrupts global trade flows remains to be seen.