Trump team explored simplified plan for reciprocal tariffs

Trump administration officials are roiled in debate over how to implement the president’s pledge to equalise US tariffs with those charged by other nations.

US liquor and wine being removed from a store in Canada's Ontario Province. Picture: Liquor Control Board of Ontario / AFP

Trump administration officials are roiled in debate over how to implement the president’s pledge to equalise US tariffs with those charged by other nations, with aides scrambling to meet the president’s self-imposed deadline of April 2 to debut a plan.

Officials have recently weighed whether to simplify the complex task of devising new tariff rates for hundreds of US trading partners by instead sorting nations into one of three tariff tiers, according to people close to the policy discussions, who emphasised that the situation remains fluid and could evolve in the coming weeks. The proposal was later ruled out, said an administration official close to the talks, adding that Trump’s team is still trying to sort how to implement an individualised rate for each nation.

“Many plans have been discussed and when the president is ready to announce a plan the American people will hear from him directly,” White House press secretary Karoline Leavitt said.

Trump has repeatedly said reciprocal tariffs would mean “what they charge us, we charge them.” That would be a gargantuan task, leaving officials to customise tariff rates for hundreds of countries and territories that the US trades with around the world. The plan to match levies with other nations would come on top of his other tariff threats, such as 25 per cent on imports from Mexico and Canada for fentanyl trafficking, and certain sector-based duties such as on steel and aluminium imports.

The simplified three-tier tariff proposal — with low, medium and high rates — was discussed on Thursday at a meeting featuring the likes of chief of staff Susie Wiles, Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, deputy chief of staff for policy Stephen Miller, Office of Management and Budget Director Russ Vought, and Senior Counselor for Trade and Manufacturing Peter Navarro.

Officials discussed several proposals, including the three-tier approach. But on Friday when officials huddled on the plan again, the tiered proposal was ruled out, the administration official said, in favour of an individualised approach. How to determine that tariff rate is the subject of debate and discussion among the team now, the official said.

Vice President JD Vance has taken on a larger role in Trump’s trade agenda in recent weeks and helmed some policy discussions, people familiar with the matter said. There have been several lengthy meetings in recent weeks among top Trump aides, including an hours-long meeting at the Naval Observatory, the vice president’s official residence in Washington. The meetings have centred on how to create a comprehensive tariff policy that achieves Trump’s goals but has more flexibility.

One official involved in the discussions said reciprocal tariffs would move forward, and the goal is to figure out how the levies would work and how to withstand legal challenges.

The reciprocal tariff plan is expected to be introduced on April 2, along with additional 25 per cent duties on a handful of industries, such as autos, semiconductors and pharmaceuticals.

Officials are weighing how to move forward without overwhelming the US Trade Representative’s office, an agency of more than 200 people charged with devising the reciprocal tariff plan. The Wall Street Journal previously reported that imposing reciprocal tariffs unique to each trading partner’s duties and non-tariff barriers could take six months or more.

President Trump signing an executive order about tariffs increase, next to Commerce Secretary Howard Lutnick. Picture: Jim Watson/AFP

No matter what the administration settles on, officials expect they will take into account value-added taxes that many other nations charge on consumption within their boundaries.

In Mexico, for instance, the VAT is equivalent to a federal sales tax of 16 per cent, although a number of basic goods and services have exemptions or lower rates. Trump’s team has long viewed those taxes as discriminatory, because they are refunded to companies that export abroad, but still are paid by US firms selling into nations with a VAT.

Mexico and Canada last week, during talks with the US, had been trying to convince Trump officials that they deserve to be in the lowest tariff rung.

One priority for Mexico, according to a person familiar with the matter, is that the difference between its tariffs and those charged on other nations is enough so that Mexico remains an attractive nearshoring destination to manufacture and export goods to the US Mexican President Claudia Sheinbaum last week said her country would wait until April 2 and then decide whether to impose retaliation to Trump’s reciprocal tariffs.

Canadian officials say that they welcomed US efforts to compare countries’ trading relationships in a tiered system. But when Canadian cabinet officials, its ambassador to the US and the leader of the province of Ontario went to Washington, D.C., last week, officials told them that tariffs are virtually certain on April 2.

The Wall Street Journal