Looming Reciprocal Tariffs Spark Negotiations

In about two weeks, on April 2nd, President Trump’s reciprocal tariffs are set to hit.

The Trump Administration is looking at each country and implementing tariffs to match duties and tariffs those countries have on U.S. goods that are higher than the U.S. has on imported goods from them.

President Trump has already implemented tariffs early here in his new term, but April 2nd should be the largest synchronized tariff implementation yet from the Trump Administration, and possibly the largest tariff event in U.S. history to this point. Its biggest competition for that distinction would probably be the Tariff of 1828, designed to help young U.S. manufacturing against long-established, cheaper foreign producers of goods.

Increasing the costs of foreign goods by as much as 50% (Britannica), the tariff was popular in the North and in Western States, where manufacturing benefited. For slave and plantation owners in the South, who saw costs of goods they imported rise and a negative impact on the export of their cotton, the Tariff of 1828 was so unpopular, they called it “The Tariff of Abominations.” Interestingly, when Andrew Jackson, a founder of the Democratic Party and slave owner from the South himself, was elected president, he didn’t get rid of the tariff as many expected because it generated high revenue that he could put toward the national debt.

Revenue generation and paying down the U.S. debt are also among President Trump’s goals with the current tariffs, as well as supporting domestic over foreign manufacturing. However, there should also be various goals he wants to negotiate for with other countries too.

And negotiations are starting to take place.

While some countries are retaliating with tariff hikes of their own, some countries are reacting to President Trump’s implemented and looming tariffs by making offers to avoid or decrease new tariffs from the U.S. Even with the retaliatory tariffs, there’s a form of negotiation happening. After Ontario’s Premier brought a 25% tariff on electricity it exports to the U.S. to retaliate against Trump’s steel and aluminum tariff, President Trump threatened much larger tariff hikes, and the electricity tariff was quickly removed. The EU and Brussels made tariff announcements on U.S. whiskey, so Trump threatened a 200% on European wine and spirits to get them to back down on the whiskey tariff.

However, escalating tariffs and threats are far from the only negotiations we’re seeing. Some are much more diplomatic. Here are a few tariff negotiation storylines happening right now:

EU Delays Retaliatory Tariffs for Talks

The European Union is probably the most recent place to make headlines for its response to President Trump’s tariffs.

The EU had announced it would implement retaliatory, but now will delay those tariffs in favor of negotiations. John Bacon and Francesca Chambers report in a USA Today article:

The European Union will delay retaliatory measures against U.S. tariffs until mid-April to allow time for talks aimed at a “mutually agreeable resolution” to the emerging trade war, the EU trade commissioner said Thursday.

…

“I am convinced that continued engagement and a positive approach is the best way forward,” [European Commissioner for Trade and Economic Security and Interinstitutional Relations and Transparency Maroš Šefčovič] said at an international trade meeting in Brussels. But he added that the EU “will react firmly and proportionally if we are hit by unjustified measures.”

What the EU considers unjustified vs. what the U.S. considers unjustified are likely two different things. And that’s where talks will have to come in to play.

The EU’s planned or threatened retaliatory tariffs would include previously suspended ones as well as brand new tariffs.

Rome Wants a Deal

Italy’s Prime Minister, Giorgia Meloni, believes countries choosing negotiation over back and forth, escalating tariff hikes are more prudent. Guy Birchall reports in the Epoch Times:

“I believe that it is not wise to fall into the temptation of reprisals that become a vicious cycle in which everyone loses,” she said. “I am convinced that we must continue working concretely and pragmatically to find common ground and avoid a trade war that would benefit no one, neither the United States nor Europe.”

The EU has stated that it would impose counter-tariffs on 26 billion euros ($28 billion) worth of U.S. goods from next month. Meloni questioned the wisdom behind this move and said Rome wanted a negotiated deal with Washington.

Australia Wants to Offer Trade Trump Can’t Refuse

A week ago, Australia announced it wouldn’t reciprocate or retaliate in response to President Trump’s across-the-board 25% tariff hike on Aluminum and Steel. One of the biggest points to the tariff hike was removing exemptions from countries on a 25% steel tariff that already existed. According to the Trump Administration, these exemptions created loopholes countries like China could utilize as go-betweens for dumping steel into the U.S. market. So it was surprising when President Trump had said he would consider an exemption for Australia. That he decided against it wasn’t surprising.

Currently, Australia is in talks with the U.S., looking for something it can offer for tariff exemptions. So far, it doesn’t know what America will want for the exemption. Australia tried offering a critical minerals deal to the U.S., but that deal was rejected. Australian Associated Press member SBS News reports:

In an interview with Sky News on Sunday, Don Farrell said he had spoken with US Commerce Secretary Howard Lutnick on Friday.

The trade minister said it was not “a pessimistic conversation”, but Lutnick had “gave no assurances about what might happen in the next round of negotiations”.

AdvertisementFarrell said he has another talk scheduled with US trade representative Jamieson Greer on Tuesday.

“What we need to do is find out what it is that the Americans want in terms of the relationship between Australia and the United States, and then make President Trump an offer he can’t refuse,” Farrell told Sky News.

Conclusion

These few are far from all the examples of negotiations and back-and-forths over tariffs between the United States and other countries. Some countries are reportedly offering lowering duties and tariffs on U.S. goods to avoid reciprocal tariffs, while Mexico went with another strategy: offering to match America’s tariffs on Chinese goods.

Over the next few weeks, as we’re in the lead-up to and immediate aftermath of reciprocal tariffs, there should see a great deal of negotiations and attempted negotiations over tariffs. There could even be more negotiating than escalating counter and retaliatory tariffs. However, the latter are likely to make more headlines.

Would tariffs resulting in more negotiations and offers from other countries of things President Trump wants to see from them mean his tariffs are successful? I don’t know. In one sense, it certainly seems like the answer is yes. However, the economic shifts and overall positive vs. negative effects of the tariffs is something that will have to be analyzed in the long term in retrospect. In the meantime, plenty are predicting doom and gloom from the tariffs while others point to a much healthier economy for the United States down the road with more manufacturing, more jobs, and wealth here.

We’ll have to wait and see who’s right. But for right now, shippers are having to calculate new costs and possibly consider adjusting their supply chains by moving their sourcing to other countries, regions, or domestic manufacturing. Here at Universal Cargo, we’ll be keeping a close eye on the whats and wheres of tariffs, which will be a topic that likely dominates this blog in the upcoming weeks and months.