Donald Trump's reciprocal tariff plans yet to be finalised ahead of Rose Garden event

Donald Trump's reciprocal tariffs: US President Donald Trump’s discussions over his plans to impose reciprocal tariffs are coming down to the wire. The Trump administration team is said to be still finalizing the level and scope of new import taxes, which he is slated to unveil on Wednesday afternoon.

During Tuesday's meetings, Trump’s team hashed out their options ahead of a Rose Garden event scheduled to begin as US markets close at 4 pm on Wednesday. According to Bloomberg, the White House has not decided on its tariff plan. However, Trump said earlier that he had ‘settled’ on an approach.

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Several proposals are said to be under consideration, including a tiered tariff system with a set of flat rates for countries and a more customized reciprocal plan. Under the first option, countries would see their goods face levies at a 10 per cent or 20 per cent rate depending on their tariff and non-tariff barriers on US goods.

Rumours on Donald Trump's reciprocal tariffs

Whispers raced across Washington and Wall Street on Tuesday, with less than 24 hours to go until Trump’s announcement, as companies and lobbyists paid to influence the president’s agenda tried to find out the details. The Wall Street Journal reported that Trump aides were studying a more targeted option, while Fox News said that Trump was still considering a flat 20 per cent global tariff.

Amid the speculation, the White House stayed silent on the details of Trump’s plan ahead of the president’s formal announcement. Markets awaited details with trepidation in Asia and Europe on Wednesday. Stocks resumed their slide, Treasury yields held near one-month lows, and gold rose to a mark just short of its record. 

Central bankers in the US and elsewhere raised concerns about the outlook for economic growth, consumer sentiment, and inflation. Treasury Secretary Scott Bessent told lawmakers that the tariffs would be capped, reflecting the highest levels they will go, with countries then able to take steps to bring rates down, Representative Kevin Hern, an Oklahoma Republican, told CNBC. 

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Earlier on Tuesday, White House Press Secretary Karoline Leavitt said that the tariffs would take immediate effect but that US President Donald Trump was open to subsequent negotiation. “Certainly, President Trump is always up to take a phone call, always up for a good negotiation,” she said.

Trump’s White House complained this week about the trade practices of the EU, Japan, India, and Canada, for example. Another approach would see the US apply individualized reciprocal rates tailored to countries based on their existing levies and non-tariff barriers. This approach was publicly signalled for weeks, but some recent deliberations suggest it’s no longer the main focus.

There’s also been discussion of returning to Trump’s original proposal: a flat global tariff, which would apply evenly to trillions of dollars of imports. The Wall Street Journal reported that Trump was considering a more targeted plan that would apply a tariff of less than 20 per cent to a narrower section of countries.

Midday Tuesday, Leavitt said Trump was “with his trade and tariff team perfecting it to make sure this is a perfect deal for the American people and the American worker.” Regardless of the approach Trump settles on, the levies could apply widely, even to countries with which the US doesn’t have a trade imbalance, and are expected to amount to one of the biggest import taxes in US history.

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Negotiating Tactic

The reciprocal tariffs would also open a window for fresh negotiation with countries, many of which have already been talking to administration officials before the announcement. This means new trade deals could see rates continue to evolve over the coming weeks and months. Even so, new levies could apply swiftly, potentially affecting cargoes already en route to the US.

While the White House said tariffs would take effect immediately, they will most likely be imposed at 12:01 a.m. New York time on Thursday, when other levies on auto imports are due to kick in. The administration has delayed the implementation of some previously announced tariffs on Chinese, Mexican, and Canadian goods because of logistical concerns and similar issues that could arise.

According to Bloomberg, the frenzied internal process and 11th-hour crunch are common for Trump, who took a similar approach to auto tariffs announced last week. However, reports say they signal genuine internal debate over a matter external analysts warn could tip the country into a recession.

The uncertainty has shaken markets, prompted economists to cut their growth forecasts, and forced central bankers to factor in the potential inflationary impact of import costs. One of his most hawkish trade advisers, Peter Navarro, said that Trump wants to raise $700 billion annually in tariff revenue. On Monday, Trump said he had decided ‘a long time ago’ but didn’t reveal it.