What to expect from Trump's big tariff announcement

The whole world is waiting for what trade measures US president Donald Trump is expected to announce from the White House at 9pm (Irish time) on 2 April.

There have been months of threats, tariffs have been introduced and then delayed, 200% measures have been mooted and governments around the world have promised retaliation against any new measures.

The main problem ahead of the announcement is that, fundamentally, nobody knows anything for certain.

President Trump and his acolytes have talked up the size and effectiveness of tariffs since he took office two months ago. The president has said that the measures to be announced will be “reciprocal” and are meant to level the playing field for US exporters.

He has also said that he intends to free the country from reliance on foreign goods.

When calculating how large a reciprocal tariff needs to be, the US administration has previously suggested that it would include value-added tax imposed by foreign governments into account. The tariffs are expected to be placed on nearly all countries which trade with the US.

Blanket tafiff

White House trade adviser Peter Navarro said at the weekend that tariffs would raise $600bn (€556bn) annually, which implies an average level of 20% across all US imports.

It is unclear whether a blanket tariff across the board of that size is what will be announced or if tariffs will be different for different products and countries.

Trump’s press secretary said that the president was not contemplating excepting any country entirely from the new trade measures.

Previously announced - and then delayed - tariffs on Canada and Mexico could be re-imposed and cars and car components are also likely to be targeted. A 20% duty on imports from China and 25% on steel and aluminium imports have been in place since last month.

The threat of 200% tariffs on drink imports from the EU seems to have been forgotten about.

Response

Whatever comes from the announcement, it seems clear that the main countries which trade with the US are up for a fight.

Canada - an early target of Trump’s trade measures - has already responded with tariffs on imports from the US. China also responded to the imposition of increased duties on its exports to the US with tariffs targeting US exports of agricultural products to that country.

The European Union has warned that “all options are on the table” when it comes to the bloc’s response. European Commission president Ursula von der Leyen said that while the EU is open to negotiations with the US, it will approach any talks “from a position of strength”.

In recent days, there have also been more signs of co-ordination among other states when it comes to their response to Trump.

Talks between China, Japan and South Korea suggested that those nations - all major exporters to the US - could increase trade between each other and agreed on countermeasures against Trump’s tariffs.

Other countries such as the UK and Argentina are still holding out hopes of being able to get past the tariffs through bilateral talks with the White House.

Once again, it is only when countries know what the president is going to do that they will be able to start talking about the size and scope of countermeasures.

Ireland

While it does not seem that Ireland will be targeted with specific high tariffs, the country’s reliance on exports to the US - particularly in the pharma and tech sectors - means that changes there could lead to drops in employment in those sectors, as well as a hit to growth and corporation tax revenues.

For the farming sector, as previously outlined in the Irish Farmers Journal, the main areas that would be hit are dairy and drinks.

The country has faced extra tariffs from the US during the first Trump administration, but did recover well from them.

If there are fresh measures introduced which end up being in place for longer, they certainly would be a headwind for prices paid to farmers supplying those sectors.

Updated on Wednesday 2 April to amend time of announcement in first paragraph.