Why Trump imposed the definitions, and what next? All to know.

President Trump announced what could be one of the most exciting economic changes in Wednesday decades, when it replaced America’s long -term system of import taxes through a new tariff system of innovation.

The president said the definitions will reflect decades of unfair treatment by the rest of the world and lead to factories and jobs belonging to the United States.

“The markets will flourish” and “the country will flourish”, as global financial markets have suffered from the largest shine for years, “said Mr. Trump on Thursday. He added that other countries “have benefited from us for many years.”

Economists’ estimates were much more severe, as most of them expect that the comprehensive definitions of the president and the potential revenge will slow economic growth in the United States, raise the costs of consumers and make life difficult for companies that depend on international supply chains.

The president’s measure is both dependency and complex. Here is what you need to know.

What only does the president?

Mr. Trump has announced two major definition plans that apply to most of the world. One of the components is a 10 percent “baseline” tariff, which will be widely applied to almost all American imports, with the exception of products coming from Canada and Mexico.

The second procedure is what the president calls a “mutual” tariff. This tax will be applied to 57 countries that Mr. Trump says it has a high tariff and other unfair economic practices that have harmed American exporters. He said this is a mutual tariff because it will match the way other countries treat the United States.

But the tariff announced by Mr. Trump is not actually based on the tariffs of other countries or other economic barriers against American trade. The number is calculated based on the American trade deficit, a measure of the difference between what the United States sells to a country and what it buys from it.

The mutual definitions range from 1 percent to 40 percent and will be added to the primary line tariff by 10 percent.

The definitions will enter into 10 percent in effect on Saturday, and the rates of mutual treatment next Wednesday.

What countries were targeted by definitions?

The customs duties have placed a heavy burden on some of the largest commercial partners in America, including China, Japan, Germany, India, South Korea, Taiwan and Vietnam.

It is worth noting that Canada and Mexico have not been included. Mr. Trump struck these countries with a 25 percent tariff for many of their exports last month, although he also made an exception to the products qualified for the trade agreement signed in 2020, which is the United States, Mexico and Cananga agreement. The two countries are also subject to the definitions offered by Mr. Trump in the world on cars, steel and aluminum, and it seems that the administration has decided that the closest American neighbors do not need more customs tariffs.

But the new definitions will strike other allies with large fees. European goods will face a 20 percent tariff, Japanese goods will face 24 percent and South Korean products 26 percent.

Because of the way the customs tariff was calculated, the Asian countries that send the United States many exports but do not buy much in return will witness some of the highest prices.

Chinese exports face an additional tariff of 34 percent. This is in addition to a 20 percent tariff, Mr. Trump has advanced in recent months and other fees from his first term. As a result, some products from China will face a tariff of 79 percent.

Vietnam will face – as many companies have transferred its factories after Mr. Trump put a customs tariff on China in his first term – a 46 percent tariff on its exports, while taxes will be imposed on Cambodian exports by 49 percent.

Also, the White House did not apply definitions to Russia, North Korea, Cuba and Belarus, on the pretext that these countries are already subject to severe sanctions. But American imports from Russia were $ 3 billion last year; Small compared to many countries, but much larger than small countries like Lesoto and Falkland Islands, which Mr. Trump chose to reach a big tariff.

What is the goal of the president?

The president and its advisers say their goal is to make the painful definitions to the point that they are forcing companies to make their products in the United States. They argue that this will create more American jobs and raise wages.

“If you want to be the rate of tariffs to be zero, you are building your product here in America,” said Mr. Trump outside the White House on Wednesday.

One of the biggest questions is whether the president sees these definitions as a negotiating tactic, and will be ready to remove them in exchange for concessions from other countries.

The administration gave mixed signals on that front. The president seems unlikely to remove the 10 percent baseline tariff he released globally. If the administration is really looking for a trade deficit with other countries that must be canceled, it may be difficult, if not impossible.

But in the executive order he signed, the president said that if the countries cancel their unfair commercial practices, or the American trade deficit with them, the mutual tariff can be declined.

Howard Lootnick, Minister of Commerce, described the commercial barriers of other countries as “the monster that needs to be killed.”

“Our teams are talking to all the big commercial partners today,” Mr. Lootnick said on Thursday on Bloomberg TV. “It is time for them to do a deep research on how we deal with us badly and how to make it correct.”

How do you reach the numbers?

Mr. Trump said on Wednesday that the rate of tariffs of each country will be calculated based on “the joint rate of all customs tariffs, non -monetary barriers and other forms of fraud.” but Shine Their methodology revolves around something more clear: the gap between what America exports to a country and what it imports.

The White House comes out A complex formula formulaBut it boiled to a small percentage. Countries that send the United States more than goods than they buy have a “unbalanced” trade and will face a higher tariff.

This formula does not explain any relative feature, or the idea that countries are trading goods because some of them are better in making some products than others, and that countries can circulate to increase their benefits to the maximum. Instead, it seems that the administration’s view is that any bad commercial deficit, and the customs tariff will be applied until it is eliminated.

How do definitions work?

With the implementation of the next week, the definitions will immediately increase the cost of importers who have brought goods to the country. Usually, these importers are American companies.

For example, if Walmart brings $ 10 shoes from Vietnam – which faces a 46 percent tariff – Walmart will condemn $ 4.60 in an additional tariff for the US government.

It is less clearly what happens after that. Walmart can try to impose the cost on the manufacturer of Vietnamese shoes, by telling it that Walmart will pay the product less. Walmart can cut their profit margins and absorb the cost of customs tariffs. Or, it can raise the price you sell in its stores, to make up for the cost.

Economists found that when Mr. Trump put a customs tariff on China in his first term, most of this cost was transferred to consumers. But economic studies have found that the tariff on steel was a little different. About half of these costs have been transferred to customers.

Estimates differ, but given the size of the new definitions of Mr. Trump, American families can see thousands of dollars in additional costs annually. It was found an estimate released by Yale Budget Lab, a research group, that the American families will pay an additional amount of $ 2100 due to the April 2 announcement, as the poorest families pay a greater share of their income.

The high definitions that the Trump administration applies to many Asian countries means that the price of many consumer elements will increase, including shoes, clothes and electronics.

The government will obtain more revenues from the definitions promised by the Trump administration to direct tax discounts. The value of definitions for all goods imported by the United States last year was $ 78 billion. With the announcement of the new tariffs on Wednesday, the number will rise to more than $ 1 trillion, according to an analysis conducted by a commercial partnership around the world, a research company based in Washington.

What happens after that with the economy?

The declaration of the tariff sparked global collapse in stock markets, indicating that investors see it greatly harmful to listed companies.

It was not yet clear whether the other countries were to split. But if they impose their own tariffs on American products, it is possible that the exporters may harm us and may raise escalating commercial wars.

Soon many analysts have reduced their expectations for economic growth, saying that the customs tariff will increase the prices of consumers and corporate costs, slow demand and economic activity.

Nancy Lazar, the world’s chief economist at Piper Sandler, estimated that the American economy may contract 1 percent in the second quarter. She had previously expected a flat quarter. “It is an immediate blow to the economy,” she said.

In a note on Thursday, economists at Footch Transitions said that the definitions had greatly raised the risk of stagnation in the United States. He said that the definitions will lead to the high prices of consumers that will pressure real wages and weigh to spending on consumers.

The definitions will also lead to a decrease in corporate profits, which, along with uncertainty in politics, will be based on business investments in the United States. In general, the effect “is likely to exceed the benefits that American companies may gain from increasing protection against foreign competition.”

Lazaro Jamio and Colbey Smith The reports contributed.