Key Takeaways:

• Trump is preparing to use the Trade Act of 1930's Section 338 to impose reciprocal tariffs.
• New tariffs could match or exceed rates imposed by other countries, particularly impacting imports from Thailand and India.
• The initiative aims to address perceived discrimination against U.S. commerce in global trade.
• Economists warn this could disrupt existing international trade agreements and raise tensions globally.
• The tariffs are expected to take effect "almost immediately" after the order's signing.

WASHINGTON — President Donald Trump is poised to activate a century-old trade law to implement reciprocal tariffs designed to align U.S. import taxes with those of other countries. The law in question, Section 338 of the Trade Act of 1930, allows the president to impose duties of up to 50% on imports from nations that practice discriminatory trade against U.S. commerce. This strategy has been flagged by trade experts who believe it could result in swift changes to U.S. tariffs.

According to statements from Trump, the new tariff rates would take effect "almost immediately," potentially impacting countries with significantly higher tariffs than the U.S. — notably Thailand and India, both of which have averages above 11% compared to the U.S. rate of 2.2%, as outlined by Reuters. The European Union’s automobile tariff, which stands at 10% compared to the U.S. rate of 2.5%, has been highlighted by Trump as a particular area of concern.

Trade experts, including Dan Cannistra from Crowell & Moring, speculate that the U.S. will challenge nations like the EU by asserting that they provide preferential treatment to specific countries while imposing higher tariffs on U.S. goods, stating, "They’re giving Korea zero percent on cars, you’re giving 10% to the U.S. You’re discriminating against us."

Unlike other legislative tools that require lengthy investigations and public commentary, the use of Section 338 could allow Trump to act unilaterally within 30 days, expediting the tariff imposition process significantly. Former Commerce Department official Nazak Nikakhtar has indicated that although this law was examined by Trump’s trade team in previous years, they opted for alternative methods initially. "The conclusion was that it was a valid law. Congress could have repealed it, but it didn’t," she explained.

This approach parallels the historical context of the Trade Act of 1930, which is often linked to the steep tariffs that contributed to worsening the Great Depression. There exists concern that potentially unilateral tariff actions by the U.S. could undermine the global trading system established post-World War II, which is founded on the principles of Most Favored Nation (MFN) agreements.

John Veroneau, a former deputy U.S. trade representative, commented on the implications of such a move, asserting that it "would be an earthquake in Geneva" if the U.S. were to pursue tariffs unilaterally, jeopardizing established trade relations. Source: Bangkok Post.

As the economic landscape continues to evolve and trade negotiations are underway globally, the potential revival of Section 338 remains a significant development that could alter the dynamics of U.S. international trade policy.

For more information, view the full article on Channel News Asia.