Key Takeaways
President Trump announced his reciprocal tariffs, which range from 10% to as high as 50%, to counter tariffs and other trade barriers erected against goods from the United States.
The levies include a baseline minimum 10% tariff, with additional levies for individual countries based primarily upon trade imbalances.
Energy is largely excluded because most Canadian and Mexican trade is subject to the USMCA.
Tariffs are especially heavy for China, reflecting the massive trade deficit the United States has developed with that nation, which was brought to the fore during COVID when the public discovered that much of U.S. medical equipment was manufactured there.
The baseline tariff begins April 6, and the additional levies start April 9.
President Trump announced reciprocal tariffs that total 10, 20, and even 50%, depending on the country — higher than many expected — to counter trade barriers other countries have placed on the United States. The tariffs include a 10% baseline minimum tariff and an additional 34% levy on goods from China and 20% on those from the European Union. Both are vowing retaliation if negotiations fail. Japan, which has pledged to invest heavily in the United States, faces a 24% tariff rate. Japan has refrained from striking back at U.S. tariffs, most likely because its inflation-strained economy limits its options. Trump declared a national economic emergency to levy the tariffs. The 10% baseline rate will be collected starting Saturday, and the higher rates will be collected beginning April 9.
The chart below shows the tariffs on some of America’s biggest trading partners, excluding Canada and Mexico, whose tariffs went into effect earlier. For those two countries, US-Mexico-Canada Agreement (USMCA) compliant goods will continue to see no tariff, non-USMCA compliant goods a 25% tariff, and non-USMCA compliant energy and potash a 10% tariff. The new tariffs are in addition to past levies, such as those President Trump placed on China, making its tariff now over 50%. China’s tariffs reflect the massive trade deficit the United States has developed with that nation, which was brought to the fore during COVID when the public discovered much of U.S. medical equipment was manufactured there. The reciprocal tariffs exempt some goods, including most energy products, pharmaceuticals, and other commodities that President Trump had already tariffed, particularly cars, steel, and aluminum. Trump has also imposed tariffs on countries that import oil from Venezuela, and he plans separate import taxes on pharmaceutical drugs, lumber, copper, and computer chips.
The president’s higher rates are being placed on foreign countries that sell more goods to the United States than they buy, which hits small countries extremely hard as it would be almost impossible for a smaller and poorer nation not to run a trade surplus with the United States given the size of the U.S. consumer market compared to theirs. The administration calculated the tariff rates to raise revenues equal in size to the trade imbalances with those nations and then halved that rate. The tariff calculation equates to the nation’s trade deficit with the United States divided by the nation’s exports to the United States divided in half. According to the White House, tariffs and other trade imbalances led to a $1.2 trillion imbalance last year. Olu Sonola, head of U.S. economic research at Fitch Ratings, said the average tariff rate charged by the United States would increase to roughly 22% from 2.5% in 2024, which could put many countries into a recession.
Furthermore, President Trump removed the tariff exemptions on imports from China worth $800 or less, and plans to do the same to other nations once the federal government certifies that it has the staffing and resources in place. China said it would take countermeasures that could include more tariffs, restrictions on U.S. investment in China, or export controls on rare earth minerals. European officials said they are willing to limit U.S. tech companies’ access to markets in response and have even discussed limiting American banks’ access to certain E.U. markets.
Impact on Minerals
While the continuation of the USMCA exemption for Canadian and Mexican oil likely made the impact of tariffs on U.S. energy minimal, the same may not be true for metals and minerals. According to the U.S. Geological Survey (USGS), U.S. imports made up more than half of U.S. consumption for 46 nonfuel mineral commodities last year. For 15 of those materials, including those crucial to the defense and technology industries, such as gallium, graphite, and certain rare earth elements, the United States is 100% reliant on imports.
China is the lead producer of 30 of the 44 products the USGS labels as “critical minerals.” The levies place 15% tariffs on Norway, a leading import source for cobalt needed for electric vehicle batteries and other applications. The United States is 76% reliant upon imports for cobalt. The levies place 10% tariffs on products from Jamaica — the country’s top source of bauxite for aluminum production — and on Chile, a primary source of lithium imports to the United States.
President Trump’s tariff announcement makes exceptions for a few products, including copper and precious metal bullion. The tariffs are also supposed to exclude “other certain minerals that are not available in the United States,” but those minerals were not specified. Mining is constrained by resource location and availability and is subject to long lead times from discovery to production, which limits options. Minerals play a crucial role in various supply chains. The United States has limited options for sourcing materials domestically, partially due to environmental groups’ almost universal opposition to mining in the United States. This opposition was behind President Biden’s decisions to foreclose mining in many areas in the United States during his term.
Conclusion
President Trump imposed a new baseline 10% U.S. tariff on goods from all countries and higher reciprocal tariff rates for nations with high barriers to U.S. imports. Most energy was excluded from the reciprocal tariffs since President Trump had already placed a 10% tariff on non-USMCA energy imported from Canada, from which the United States gets most of its oil imports. Metals and minerals used in defense applications, electric vehicles, and computers are not excluded — minerals that the United States largely imports due to limited domestic mining capacity. The reciprocal tariffs, however, are supposed to exclude certain minerals unavailable in the United States.
