What are reciprocal tariffs, and why does Trump want

A core element of the protectionist trade policies President Trump is scheduled to announce on Wednesday — a planned import tax blitz he has referred to as "Liberation Day" — are so-called reciprocal tariffs. Mr. Trump has touted such levies as a way to level the playing field with other countries that impose higher tariffs on U.

S. imports, as well as to boost domestic manufacturers. But some economists say that tit-for-tat tariffs with key trading partners could be hard to structure, while also roiling global commerce and driving up costs for U.



S. consumers and businesses . Here's what to know about reciprocal tariffs.

What are reciprocal tariffs? Truly reciprocal tariffs would impose the same tax on U.S. imports that other countries charge on American exports on a product by product basis.

For example, if a country imposed a 6% levy on American-made shoes, Mr. Trump would tax that nation's footwear at the same rate. Currently, the U.

S. and its trading partners charge each other different levies on the same products. Germany, for instance, puts higher tariffs on vehicles made in the U.

S. than what Washington, D.C.

, charges on German vehicle imports. "Reciprocal means that if a country has higher tariffs than we do on certain products, we would raise it to that level," Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a left-leaning public policy think tank, told CBS MoneyWatch. That would be administratively complex given the tens of thousands of codes that determine the tariff rates on a variety of products.

"Setting up reciprocal tariffs across every product category with every trade partner would be completely infeasible with our administrative capacity," Jacquez said. Are reciprocal tariffs the same as country-based tariffs? Rather than impose perfectly reciprocal tariffs, the White House could instead announce country-specific tariff rates calibrated to the their trade imbalance with the U.S.

"They will probably come up with a blended rate that is not reciprocal by product, but is reciprocal by saying their tariffs are 10% higher than ours on average, so we'll be imposing 10% tariff across-the-board on all goods," said Jacquez, who formerly worked as an economic policy analyst in the Biden administration. That approach could result in the U.S.

taxing other nations' products at vastly different rate than they do ours. "It will hit a lot of products very differently in a proximate way, because it would be balanced by country but not by import or export," Jacquez said. "That is where complications will arise, and you could see a scenario in which countries retaliate against us.

" Who are the "Dirty 15"? Trump administration officials have singled out a group of nations they dubbed the "Dirty 15," a reference to the 15% of countries expected to be hit hardest by the new reciprocal tariffs given their trade surplus with the U.S. Those nations account for "a huge amount of our trading volume," U.

S. Treasury Secretary Scott Bessent told Fox News' Maria Bartiromo on March 18, without naming the trade partners. National Economic Council Director Kevin Hassett also told Fox News that the White House is targeting 10 to 15 nations with the biggest trade surplus with the U.

S. Like Bessent, he also refrained from naming those nations. In 2024, the largest U.

S. trade deficits around the globe — meaning countries from which the U.S.

imports more than it exports — was with the following nations, according to federal data : China ($295.4 billion) European Union ($235.6 billion) Mexico ($171.

8 billion) Vietnam ($123.5 billion) Ireland ($86.7 billion) Germany ($84.

8 billion) Taiwan ($73.9 billion) Japan ($68.5 billion) South Korea ($66 billion) Canada ($63.

3 billion) India ($45.7 billion) Thailand ($45.6 billion) Italy ($44 billion) Switzerland ($38.

5 billion) Malaysia ($24.8 billion) Indonesia ($17.9 billion) France ($16.

4 billion) Austria ($13.1 billion) Sweden ($9.8 billion) Are reciprocal prices likely to drive up consumer prices? Experts say reciprocal tariffs would mean added costs for U.

S. businesses, which in turn would likely raise consumer prices in order to protect their profit margins. "Tariffs are a tax on a business bringing a product into the country.

When they receive it at a port of entry, whether it be an airport or seaport, they have to pay the duty to have it admitted into the country," Chris Barrett, a professor at Cornell SC Johnson School of Business, told CBS MoneyWatch. "You've just added a cost on for the business, and those costs get passed on, at least to some degree, to consumers." How much prices could rise remains unclear.

Meanwhile, prices could fall if Mr. Trump later lowers or removes reciprocal tariffs following trade negotiations. But when there is no good substitute for a particular good, consumer costs are likely to rise more sharply.

"The more price insensitive they are, the more likely they are to shoulder the burden of the tax," Barrett said. Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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