Trump Avoids Implementing Reciprocal Tariffs—But They’re Not Off the Table

President Donald Trump signed executive orders Thursday ordering his administration to look into reciprocal tariffs, but didn’t go as far as imposing the taxes.

Under Trump’s order, agencies will provide details on how the U.S. could raise tariffs on foreign goods to match those imposed on U.S. exports. For example, if cars from the U.S. were taxed at a 5% rate when they were sent to the U.K., automobiles from the U.K. would be taxed at 5% as they come into the U.S. These tariffs could mirror tariffs on the U.S. by comparing taxes on items or instituting a flat rate for each country.

The tariffs are a key part of Trump’s broader trade strategy. The White House wants to infuse more income into the Federal Budget through tariffs and hopes to reduce the country’s trade deficit. The administration says the measures will generate more money and business activity in the U.S. that way.

The latest tariffs would “theoretically make it less likely that U.S. tariffs would rise substantially further,” Goldman Sachs’ Alec Phillips and Elsie Peng wrote Monday before the tariffs, which were broadly expected, were announced.

The Goldman analysts said the policy could also lead to some trading partners reducing tariffs on U.S. goods.

Most economists say broad tariffs will cost average Americans money and could endanger certain jobs. Such a dip in the economy could cause the Federal Reserve to keep its influential federal funds rate higher for longer.

Trump has already implemented a slew of other new taxes on imports. On Monday, Trump levied tariffs against steel and aluminum imports and roughly a week after the White House delayed broad tariffs on Canada and Mexico. The White House on Feb. 4 levied a broad 10% tariff on Chinese imports.