“Today is the big day: mutual rates!”. With these words, entrusted to his social network Truth, Donald Trump He announced the presentation of the “Fair and Mutual Plan”. As explained yesterday by the same president in the oval studio of the White House, the plan aims to balance the country by country the tax rates applied on imports, with the aim of eliminating the commercial imbalances of the United States. Translated: if to export an American machine to Germany, the manufacturer has to pay a 10% fee, Trump’s plan provides that the German producer will also have to pay a 10% fee (instead of the current 2.5) if he wants to export in America, fair and mutual, In fact. “It is right for everyone. No other country can complain ”, it was the president’s final comment.
This new plan will also affect European exports. Let’s start from a data: the EU, on average, applies to American products which matters a duty of 4.7%, the United States, however, of 4%. For some products, the difference can be much greater, as in the aforementioned case of cars, or as in the case of medicines and fertilizers. Another problem for Europe concerns VAT. The value added tax that Brussels wants to apply to any imported asset does not go down to the American president: “We will consider the countries that use the VAT system, which is much more punitive than a rate, as similar to the imposition of a duty” . In the studio plan to the White House, the value added tax will therefore be held to determine the final mutual rate to be applied.
Trump’s duties are serious, not simple protectionist measures. Canada and Mexico well understood it, for which the American market represents 75 and 77% of total exports respectively (data from 2022). After the announcement of the imposition of duties of 25%, they suddenly agreed to all the conditions imposed by Trump to suspend the rates until March: sending 10 thousand border soldiers to combat illegal immigration and narrow on the traffic of Fenanyl (the Most widespread opiate drug in the States). Trump’s duties are also a geopolitical tool.
But let’s go back to the fair and mutual plan. Trump claims that “for many years, the United States have been unjustly treated, both by the opponents and from the allies”. For decades, the US now have been the country with the highest commercial deficit, in 2023 products have been imported for a value of 3 trillions, while the value of those exported was 1.86 trillions. By applying mutual rates, Trump also aims to reduce the commercial deficit of the United States, encouraging the exports of American products and raw materials and by entitling companies of foreign countries (especially European) to move production to America, taking advantage of the low energy costs and the subsidized taxation. Politics also reiterated yesterday, during the meeting with the Indian Prime Minister Narendra modeswhen Trump stressed that India could avoid new rates if Indian companies increased (or move) production in the United States. “If you build here, you have no duties of any kind. And I think this is what will happen. I think our country will be flooded with jobs“, The American President has closed.
