Source: The White House; Compiled by: Golden Finance
Memorandum on Reciprocal Trade and Reciprocal Tariffs
To: The Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the U.S. Trade Representative, the Assistant to the President for Economic Policy, the Senior Advisor to the President for Trade and Manufacturing
Section 1 Background
The United States is one of the most open economies in the world, with among the lowest average weighted tariff rates. The United States imposes fewer barriers to imports than any other major world economy, including those with similar political and economic systems. For years, the United States has been treated unfairly by its trading partners, both friends and foes. This lack of reciprocity is one of the sources of our country’s large and persistent annual trade deficit in goods—closed foreign markets lead to fewer U.S. exports, while open domestic markets lead to more imports.
Our workers and industries bear the brunt of unfair practices and are denied access to foreign markets. As stated in the January 20, 2025 Presidential Memorandum (America First Trade Policy Memorandum), this situation is unsustainable. The United States’ trade deficit threatens our economic and national security, hollows out our industrial base, reduces our overall national competitiveness, and makes our nation dependent on other countries to meet our critical security needs. By making trade more reciprocal and balanced, we can reduce our trade deficit; grow the American economy; and improve trade relationships with our trading partners to benefit American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.
SECTION 2. POLICY
It is the policy of the United States to reduce the large, persistent merchandise trade deficit we run each year and to address other unfair and imbalanced aspects of trade with our foreign trading partners. To pursue this policy, I am introducing the Fair Reciprocity Initiative (the Initiative). Under this plan, my Administration will aggressively address nonreciprocal trade arrangements with our trading partners by determining the equivalence of reciprocal tariffs with each foreign trading partner. This approach will be comprehensive, reviewing the United States’ nonreciprocal trade relationships with all of its trading partners, including: (a) tariffs imposed on U.S. products; (b) unfair, discriminatory, or extraterritorial taxes, including value added taxes, imposed by our trading partners on U.S. businesses, workers, and consumers; and (c) Costs to U.S. businesses, workers, and consumers resulting from nontariff barriers or measures and unfair or harmful acts, policies, or practices, including subsidies, and onerous regulatory requirements imposed on U.S. businesses operating in other countries;
(d) policies and practices that cause exchange rates to deviate from their market values to the detriment of the American people; that depress wages; and other mercantilist policies that make U.S. businesses and workers less competitive; and
(e) any other practice that the U.S. Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Commerce, and the Senior Advisor to the President on Trade and Manufacturing, determines imposes any unfair restrictions on market access or creates any structural barrier to fair competition with the U.S. market economy.
The plan should take into account the costs of the application of measures that are detrimental to the United States, regardless of how they are called and whether written or unwritten, in order to ensure overall fairness and balance throughout the international trading system.
Section 3. Action
(a) Following the submission of the designated agency report pursuant to the America First Trade Policy Memorandum, the Secretary of Commerce and the United States Trade Representative, in consultation with the Secretary of the Treasury, the Secretary of Homeland Security, the Assistant to the President for Economic Policy, the Senior Advisor to the President for Trade and Manufacturing, and such other heads of executive departments and agencies as the Secretary of Commerce and the United States Trade Representative determine to be relevant, shall take all necessary actions, consistent with their respective legal authorities, to investigate the injury to the United States caused by any nonreciprocal trading arrangements adopted by any trading partner. After completing such necessary actions, they shall submit to me a report detailing the remedial measures proposed to establish a reciprocal trading relationship with each trading partner.
(b) Not later than 180 days after the date of this memorandum, the Director of the Office of Management and Budget shall assess all fiscal effects on the Federal Government and the impact on the public of any information collection request and submit a written assessment to the President.
SECTION 4. DEFINITIONS
For the purposes of this Memorandum:
(a) “Value Added Tax” means a consumption tax levied on the value added to goods or services at all stages of the supply chain.
(b) “Non-tariff Barrier” or “Measure” means any government measure or policy or non-monetary barrier that restricts, prevents, or impedes international trade in goods, including import policies, sanitary and phytosanitary measures, technical barriers to trade, government procurement, export subsidies, lack of intellectual property protection, digital trade barriers, and government-tolerated anti-competitive behavior by state-owned or private enterprises.
SECTION 5 GENERAL
(a) Nothing in this memorandum shall be construed to diminish or otherwise affect:
(i) the powers conferred by law on executive departments or agencies or on their heads; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable by any party at law or in equity against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The United States Trade Representative is authorized and directed to publish this memorandum in the Federal Register.
Fact sheet:
“Fair and Reciprocity Program”:
On February 13, 2025, President Trump signed a Presidential Memorandum ordering the development of a comprehensive plan to restore fairness to America’s trade relationships and combat non-reciprocal trade arrangements.
The “Fair and Reciprocity Program” will seek to correct long-standing international trade imbalances and ensure fairness across the board.
The days of America being taken advantage of are gone: This plan will put American workers first, increase our competitiveness in every industrial sector, reduce our trade deficit, and strengthen our economic and national security.
The United States will no longer tolerate unfair trade practices:
The United States has one of the most open economies in the world, but our trading partners close their markets to our exports. This non-reciprocity is unfair and results in large and persistent trade deficits every year.
There are countless examples of our trading partners not giving the United States reciprocal treatment.
The U.S. tariff on ethanol is only 2.5%. Brazil imposes an 18% tariff on U.S. ethanol exports. As a result, in 2024, the United States imports more than $200 million of ethanol from Brazil, while the United States exports only $52 million of ethanol to Brazil.
The average U.S. MFN tariff on agricultural products is 5%, while India’s average MFN tariff is 39%. India also imposes a 100% tariff on U.S. motorcycles, while we only impose a 2.4% tariff on Indian motorcycles.
The European Union can export all the shellfish it wants to the United States. But the EU prohibits shellfish exports from 48 U.S. states, despite the U.S. promise in 2020 to speed up shellfish export approvals. As a result, in 2023, the United States imported $274 million worth of shellfish from the EU, but exported only $38 million.
The EU also imposes a 10% tariff on imported cars, while the United States only imposes a 2.5% tariff.
A 2019 report found that U.S. exporters faced higher tariffs more than two-thirds of the time in 132 countries and on more than 600,000 product lines.
This lack of reciprocity is one reason the United States continues to run large merchandise trade deficits every year: closed overseas markets reduce U.S. exports, while open domestic markets lead to large U.S. imports, both of which undermine U.S. competitiveness.
The United States has run a merchandise trade deficit every year since 1975. In 2024, our merchandise trade deficit exceeded $1 trillion.
Due to the proliferation of non-reciprocal barriers over the past few years, the United States currently runs a trade deficit in agriculture, a deficit that will reach about $40 billion by 2024.
Trading partners bill U.S. companies for so-called digital services taxes, even though the United States has no such taxes and only the United States should be allowed to tax U.S. companies.
Canada and France use these taxes to collect more than $500 million from U.S. companies each year.
Overall, these non-reciprocal taxes cost U.S. businesses more than $2 billion per year.
Reciprocal tariffs would restore fairness and prosperity to a distorted international trading system and prevent Americans from being taken advantage of.
The Art of the International Deal:
President Trump continues to fulfill the mission entrusted to him by the American people to put America First on trade.
As President Trump stated in his America First Trade Policy Memorandum on his first day in office, trade policy is a critical component of our economic security and national security.
During President Trump’s first term, he successfully ended the outdated and unfair NAFTA and replaced it with the historic United States-Mexico-Canada Agreement, delivering one of the greatest wins for American workers.
When our national security was threatened by a global oversupply of steel and aluminum, President Trump moved quickly to protect America’s national security by imposing tariffs on imports of these goods.
In response to China’s unconscionable practices such as intellectual property theft and forced technology transfer, President Trump took decisive action to impose tariffs and used this advantage to reach a historic bilateral economic agreement.
Just last week, President Trump used tariffs to force Canada and Mexico to make long overdue changes at our northern and southern borders to keep American citizens safe.
Alex
Catherine
Anais
Kikyo
Joy
Weatherly