The Trump administration’s reciprocal tariff plan unveiled represents a departure from established trade norms and could open new markets for U.S. agriculture, analysts say, but much depends on whether other countries are in a dealmaking mood.
President Donald Trump signed an executive order on Thursday directing the Department of Commerce and the Office of the U.S. Trade Representative to lead a study into non-reciprocal U.S. trade relationships and the potential use of “reciprocal” tariffs as a remedy. Such a tariff, he said during a press conference last week, would apply to countries with tariffs or non-tariff barriers that are higher than their exporters face when selling to the U.S.
Trump reiterated the concept in a post to Truth Social on Saturday, writing, "whatever Countries charge the United States of America, we will charge them - No more, no less."
If implemented as described, reciprocal tariffs would represent an overhaul of U.S. trade and could reshape the post-World War II global trading system, Wendy Cutler, a former U.S. trade negotiator and acting deputy USTR, told Agri-Pulse.
“The reciprocal tariff announcement is a game changer in trade policy,” Cutler said.
Since the signing of the General Agreement of Tariffs and Trade in 1947, the precursor of the World Trade Organization, the global trading system has been based on a “most favored nation” approach to implementing tariffs. Under such a system, countries apply the same tariff rate for an imported product for all trading partners – with only very few exceptions. A gallon of olive oil from the EU, for example, faces the same duties as one from Tunisia.
Trump’s approach, which Commerce Secretary nominee Howard Lutnick said could be ready to implement as soon as April, would see the U.S. apply different tariff rates to the same product, depending on its country of origin and their tariffs on U.S. exports.
“We're moving now to a reciprocal approach, and we will expect other countries to act, or we'll take actions against them,” Cutler, who is now vice president at the Asia Society Policy Institute, added.
The initiative could lead to new market openings for U.S. agriculture. But much will depend on how countries respond to the U.S. effort to reshape its trade policy principles and what the final tariff design looks like.
“There could be opportunities,” said Brian Kuehl, executive director of Farmers for Free Trade.
Trump has said that he would reduce the reciprocal tariffs applied to trading partners as countries cut their own duties and eliminate non-tariff trade barriers on U.S. exports. Accordingly, if a flurry of countries come to the negotiating table willing to adopt a reciprocal approach to trade policy and reduce tariffs for U.S. duties – or keep the MFN approach and reduce tariffs equally for all countries, including the U.S. – they could avoid higher duties on their own exports to the U.S.
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Japanese officials told reporters on Friday that they have been in touch with the Trump administration to sound out a possible deal. Japan has a weighted average tariff of more than 12% on its agricultural imports, far higher than the U.S.’ approximately 4%.
South Korea is also reviewing non-tariff barriers following Trump’s announcement, according to Reuters. During his visit to Washington, D.C. last week, India’s Prime Minister Narendra Modi agreed to launch talks with the U.S. on a trade pact between the two countries that would reduce tariffs and trade barriers, among other things.
“Presumably it will be a foray into negotiations with multiple countries,” Kuehl said. “Anytime you're in negotiations, there are certainly opportunities to improve your hand for agriculture.”
During a press conference announcing the reciprocal tariff investigation, Trump singled out the U.S. ag sector as one of the potential beneficiaries of the reciprocal tariffs. Cutler also anticipates that agriculture would feature prominently in any deals Trump makes and will be one of the key areas in which the administration pushes for market access concessions.
But Kuehl said he is concerned about the countries that might not rush to the negotiating table in the face of tariff threats.
“What makes us nervous is obviously places where we don't get deals, where we spin into a trade war and we have tariffs and retaliation and countries retrench, and we have fewer opportunities for exports,” Kuehl said.
European Commission President Ursula von der Leyen, for example, said on Friday that the European Union would respond to any “unjustified tariffs” with “proportional and clear countermeasures.”
Another concern, Kuehl said, is how the reciprocal tariffs would interact with existing free trade agreements. Trump’s previous tariff announcements hiking aluminum tariffs to 25%, eliminating tariff exemptions on U.S. steel imports and across-the-board tariffs on Mexico and Canada – which remain paused until next month – would disproportionately impact the U.S.’ North American neighbors, which are party to the U.S.-Mexico-Canada Agreement.
“When you talk about global reciprocal tariffs,” Kuehl said, the U.S. must be “very mindful” of its FTAs. “A rules-based system is absolutely essential for U.S. agriculture. If we can't depend [on other countries], and if other countries can't depend on us, the whole system will break down.”
Countries may, however, have more time than expected to cut deals. Multiple analysts told Agri-Pulse on Friday that they doubted whether the analysis required to impose reciprocal tariffs could be completed by April.
“I'm not sure how any of that detail work could be accurately accomplished by then,” Cutler said. The challenge, Cutler and others said, will be calculating equivalent tariff rates for a slew of non-tariff barriers, including foreign government subsidies.
It is “a daunting task,” Cutler said.
Neither Commerce nor USTR have politically appointed leaders in place, further complicating an already mammoth task. Lutnick is expected to be confirmed in a vote this week; Jamieson Greer, Trump’s pick to helm USTR has been approved by the Finance Committee and is awaiting a Senate floor vote.
Both organizations also lack political appointees at deputy levels.
The administration “will need to rely heavily on career staff for this work. And given the thorny relationship between this administration and career civil servants, that could create a wrinkle in all of this,” Cutler said.
As a result, the implementation of reciprocal tariffs, Cutler said, could be a longer-term project. The initial report submitted to the president, she suspects, could focus on only high-priority countries and sectors.
“We really need to watch how this unfolds over the next couple months,” Kuehl said.
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