US President Donald Trump announces his reciprocal tariff plans at the Oval Office, sitting next to Commerce Secretary nominee Howard Lutnick, February 13, 2025. (Photo: Reuters)

The policy mandates that the US impose tariffs on any country that taxes American goods - no more, no less.

“There could be some short-term disturbances, but in the long term it’s going to make our country a fortune. I think that’s what’s gonna happen and I think our country’s going to be flooded with jobs,” Trump said at a White House press conference.

The new tariffs will vary by country, based on various factors, but mainly the tariff rates each country imposes on American products. For example, if a country places a 20% tariff on US goods, the US may impose a matching 20% tariff on imports from that country.

Trump’s directive has launched investigations into foreign tariffs on American goods, leading to potential retaliatory measures. The US administration is focusing on China, Japan, South Korea, and the European Union as key targets.

“Our studies should be complete by April 1, so we’ll hand the president the opportunity to start on April 2 if he wants. I think we’ll be ready to go on April 1. And we’ll hand it to the President and he’ll make a decision,” said Howard Lutnick, Trump’s nominee for US Commerce Secretary.

“But remember, if they drop their tariffs, prices for Americans are coming down, our production is going up, and the costs are going down. That’s a two-way street and that's why it’s called reciprocal.”

According to Lutnick, even value-added taxes (VAT) will be reviewed, as the Trump administration considers them a form of “discriminatory tax.”

This move by President Trump has heightened concerns of a possible global trade war and increased fears that inflation will rise in the US.