In a move that could reshape U.S. trade policy, President Donald Trump announced on Thursday, February 13, a sweeping investigation aimed at assessing and potentially imposing reciprocal tariffs on foreign nations that maintain higher import duties on American goods. The initiative, which the administration describes as a step toward tariff equivalency, is designed to address longstanding trade imbalances and ensure that U.S. exports are not disadvantaged in global markets.

The investigation, which will be conducted by the Department of Commerce and the U.S. Trade Representative (USTR) in coordination with the Treasury and Homeland Security departments, will scrutinize countries that levy disproportionately high tariffs on American products. While no immediate tariff hikes have been announced, the White House has signaled that trading partners will have an opportunity to adjust their trade policies before any new measures take effect.

According to White House officials, the United States maintains one of the lowest average duty rates in the world, typically between 2% and 2.5%. In contrast, some nations impose significantly higher tariffs on U.S. goods. India, for instance, applies duties exceeding 10% on many American exports, while other countries, including China and members of the European Union, have complex tariff structures that often put U.S. businesses at a competitive disadvantage.

The probe will evaluate the extent to which these tariffs create an uneven playing field and explore whether reciprocal tariffs—designed to match or counterbalance foreign levies—could help level the trade landscape.

A presidential memorandum released on Thursday outlines the key areas of focus for the review, which will begin after April 1, following the submission of several trade-related reports. The investigation will consider:

  • Tariff barriers: Examining the extent and impact of foreign duties on U.S. exports.
  • Non-tariff barriers: Assessing regulatory hurdles, foreign subsidies, and protectionist policies that make it difficult for American businesses to compete.
  • Unfair taxation: Investigating the effects of value-added taxes (VAT) and other indirect taxes that disproportionately affect U.S. firms.
  • Currency manipulation: Reviewing exchange rate policies that may artificially lower the value of foreign currencies, making U.S. exports more expensive.
  • Wage suppression and labor policies: Analyzing how labor cost interventions in certain countries impact the competitiveness of American industries.
  • Market access restrictions: Identifying structural impediments that hinder fair competition for U.S. companies in overseas markets.

This initiative aligns with the administration’s broader “America First” trade strategy, which has already led to significant policy shifts, including the renegotiation of trade agreements like the U.S.-Mexico-Canada Agreement (USMCA) and the imposition of tariffs on Chinese goods during the U.S.-China trade war.

While the administration has positioned this move as a step toward fairness, some economists and trade experts caution that unilateral tariff increases could provoke retaliation from U.S. trading partners, potentially escalating into broader trade disputes. Others argue that addressing trade imbalances through reciprocal tariffs could incentivize foreign nations to lower their own duties, leading to more equitable global trade conditions.

As the investigation proceeds, global markets and foreign governments will be closely watching for any policy shifts that could impact trade flows and economic relations between the U.S. and its key partners. With no definitive timeline for the review’s conclusion, the coming months are expected to bring further negotiations and policy discussions that could redefine America’s approach to trade and tariffs.

Source: NCBFAA/Sandler, Travis & Rosenberg, P.A