Donald Trump triggers prospect of global trade war over ‘reciprocal’ tariff plan – increasing risk of tensions and inflation
The US president has promised to target countries which charge tax on US imports by matching them with a reciprocal tariff.
Donald Trump has ordered his team to start calculating duties by early April – increasing fears of a global trade war that could also accelerate US inflation.
“On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less,” he posted on Truth Social.
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What is America’s trade position?
It is set to spark negotiations with dozens of countries aimed at lowering their tariffs and trade barriers. The US wants to shrink its goods trade deficit which topped $1.2trn (£954bn) last year.
A White House official said that countries with large US trade surpluses could be targeted first. The top five are China, Mexico, Vietnam, Ireland and Germany, according to the US Census Bureau.
Trump’s total trade war
Taken at face value Donald Trump’s embrace of reciprocal tariffs is a declaration of total trade war.
It would amount to perhaps the single biggest peacetime shock to global commerce.
In promising to levy import taxes on any nation that imposes tariffs or VAT on US exports, he is following through on a campaign promise.
The aim is to address a near trillion dollar trade deficit – the difference between the value of America’s exports and its imports – that he believes amounts to a tax on American jobs.
In response, he wants to deploy tariffs to simultaneously ease the US deficit and – in theory – price out imports in favour of domestic production.
His primary targets appear to be the major trading partners with whom the trading deficit is greatest.
It is a blow to the emerging view in Whitehall that Britain might wriggle through the chaos relatively unscathed.
Read more from Paul here.
UK government minister Pat McFadden told Sky News’ Politics Hub with Sophy Ridge that Britain will take a “wait and see” approach when it comes to the tariffs. He refused to say if the government would retaliate.
Trump latest: New tariffs signal ‘total trade war’
The UK could be hit with tariffs as high as 24% if Mr Trump follows through on his threats to treat VAT as a tariff, according to Paul Ashworth, chief North America economist at Capital Economics.
Although some estimates are lower, he thinks Britain would be the fourth hardest hit, following India (29%), Brazil (28%) and the EU (25%).
This is based on VAT rates combined with existing tariffs, but the Trump administration also intends to take into account regulations, government subsidies, digital services taxation policies and exchange rate policies.
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“Most people would consider VAT to be a non-discriminatory tax since it is also applied to domestically-produced goods making a level playing field,” said Mr Ashworth.
But the US still argues that VAT is a form of discriminatory tariff because America applies a much lower average sales tax at state level.
Narendra Modi and Donald Trump at the White House. Pic: AP
On Thursday, Mr Trump also held a meeting with Indian Prime Minister Narendra Modi, agreeing to join forces on artificial intelligence, semiconductors and strategic minerals.
During a news conference afterwards, Mr Trump said India has been “very strong on tariffs” and “it’s very hard to sell into India”, adding: “They’re going to be purchasing a lot of our oil and gas.”
India’s tariff rates are the highest, according to the World Trade Organisation, with a simple average 17% rate for all products compared to 3.3% for the US.
At least 36 people have been killed after a fire engulfed several buildings at a high-rise residential complex in Hong Kong.
Hong Kong leader John Lee said another 279 people were reported missing. He said 29 people remained in hospital.
About 900 people have been evacuated to temporary shelters after the blaze – Hong Kong’s deadliest fire in years – broke out at the Wang Fuk Court housing complex in the city’s Tai Po district.
Three men have since been arrested on suspicion of manslaughter, broadcaster RTHK reported.
Pics: AP
Meanwhile, fire chiefs said the high temperatures were making it challenging for crews to mount rescue operations.
Mr Lee said the fire was “coming under control” shortly after midnight.
The blaze was upgraded to a level 5 alarm, the highest level of severity, as night fell.
Pics: AP
The dead included one firefighter, officials said earlier.
A number of other firefighters were said to have been hurt while trying to tackle the flames as they ripped through the 31-storey towers.
Pic: Reuters
Pic: AP
Records show the Wang Fuk Court site consists of eight blocks, with almost 2,000 apartments housing around 4,800 residents, including many elderly people. It was built in the 1980s and has recently been undergoing a major renovation.
Pic: Reuters
Pic: Reuters
The fire, which broke out at 2.51pm local time, had spread on bamboo scaffolding and construction netting set up around the exterior of the complex.
It was not known how the fire started, but officials said it began on the external scaffolding of one of the buildings before spreading inside and to nearby buildings, likely aided by windy conditions.
Pic: Reuters
Pic: Reuters
Flames and smoke were still pouring out of many windows as night fell.
Chinese President Xi Jinping expressed condolences to the firefighter who died, and extended his sympathies to the families of the victims, according to state broadcaster CCTV. He also urged an “all-out” effort to minimise casualties and losses.
The UK’s foreign secretary described the fire as “truly devastating and deeply depressing”. Yvette Cooper said: “The UK sends heartfelt condolences to all the families affected and to the people of Hong Kong.”
Tai Po is in the northern part of Hong Kong, and close to the border with the mainland Chinese city of Shenzhen.
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Bamboo scaffolding is a common sight in Hong Kong at building construction and renovation projects.
However, the government said earlier this year it would start phasing it out for public projects because of safety concerns.
The blaze is the deadliest fire in Hong Kong since the deaths of 41 people in a commercial building in Kowloon in November 1996.
That fire was later found to have been caused by welding during internal renovations, with a public inquiry yielding sweeping updates to building standards and fire safety regulations in the city’s high-rise offices, shops and homes.
Two military personnel who were shot near the White House in Washington DC have died.
A suspect has been taken into custody and the area secured, police said.
The White House was placed into lockdown, while US President Donald Trump is away in Florida.
Washington DC shooting latest updates
Pics: AP
Mr Trump initially posted on his Truth Social platform to say the two National Guardsmen had been “critically wounded”, adding that the “animal” that shot them “is also severely wounded, but regardless, will pay a very steep price”.
But West Virginia’s governor said both victims were members of his state’s National Guard and had died from their injuries.
Patrick Morrisey added: “These brave West Virginians lost their lives in the service of their country. … Our entire state grieves with their families, their loved ones, and the Guard community. West Virginia will never forget their service or their sacrifice, and we will demand full accountability for this horrific act.”
Pic: AP
Police tape cordoned off the scene, while agents from the US Secret Service and Bureau of Alcohol, Tobacco, Firearms and Explosives were on the scene, as National Guard troops stood sentry nearby.
Emergency personnel cordon off an area near where National Guard soldiers were shot. Pics: AP
The Joint DC Task Force confirmed it was responding to an incident in the vicinity of the White House.
The DC Police Department posted on X: “Critical Incident: MPD is on the scene of a shooting at 17th and I Street, NW. Please avoid the area.”
In an update, the force said: “The scene is secured. One suspect is in custody.”
White House press secretary Karoline Leavitt said: “The White House is aware and actively monitoring this tragic situation.
“The president has been briefed.”
Mr Trump was at his resort in Palm Beach ahead of the Thanksgiving holiday, while US vice president JD Vance was in Kentucky.
Flights arriving at Ronald Reagan Washington National Airport were temporarily halted due to its proximity to the scene of the shooting, the US Federal Aviation Administration said.
Hundreds of National Guard members have been patrolling the nation’s capital after Mr Trump issued an emergency order in August, which federalised the local police force and sent in the guard from eight states and the District of Columbia.
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