In a sudden and significant policy reversal, just hours after new levies were imposed on approximately 60 of the United States trading partners, it was announced that a universally applied “lowered reciprocal tariff of 10%” as a measure to facilitate ongoing trade negotiations was authorized, reports BBC.
Policy Readjustments
The US government’s recent trade policy adjustments have generated significant global market activity. Originally, a 10% baseline tariff was implemented on all imports, with additional, higher tariffs planned for countries identified as engaging in what the US considered unfair trade practices. This included the European Union, Vietnam, South Africa, and others, facing tariffs ranging from 11% to over 100%.
Following the initial announcement, global markets experienced considerable fluctuations, with substantial losses recorded worldwide. Concerns arose regarding potential price increases for American consumers and the possibility of an economic slowdown.
Subsequently, the US government announced a suspension of the higher tariffs on goods from countries other than China. This policy adjustment coincided with a rise in US government debt interest rates. Officials maintained that the policy shift was not a direct response to global market volatility.
The adjustments to the tariff policy were described as necessary to address concerns. The US government indicated that a 90-day pause was implemented for countries that had not retaliated, while those that did retaliate, like China, faced increased tariffs. The US government expressed optimism about reaching a favorable trade agreement with China.
The ongoing trade discussions between the US and China, the world’s two largest economies, began with the announcement of new US tariffs. China responded with retaliatory tariffs, leading to further US tariff threats. The situation remains fluid, with both sides indicating a willingness to defend their trade positions.
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Source: BBC
