Trump has announced that the United States will tax foreign goods at the same rate other nations apply to American products, known as reciprocal tariffs

President Donald Trump on Thursday unveiled his plan to raise U.S. tariffs to match the tax rates that other countries impose on imports, setting the stage for potential trade conflicts with both allies and rivals. The goal, according to Trump, is to eliminate trade imbalances and promote “fairness” in global trade.

“I’ve decided that for fairness, we’ll impose a reciprocal tariff,” Trump announced at the Oval Office signing ceremony. “It’s fair to all. No other country can complain.”

The administration argues that the new tariffs will level the playing field for U.S. manufacturers, although experts warn that American consumers and businesses may ultimately bear the cost through higher prices.

The move is a high-stakes gamble for Trump, who risks stoking inflation and slowing economic growth if the tariffs backfire. The plan’s tariff increases will be tailored to each country, with the dual purpose of equalizing tax burdens and encouraging new trade talks. However, these countries could retaliate by imposing their own tariffs on U.S. exports, adding uncertainty for businesses and consumers alike.

Although the U.S. maintains relatively low average tariffs, Scott Lincicome, a trade expert at the libertarian Cato Institute, criticized Trump’s plan as misguided.

“It will inevitably lead to higher tariffs and higher taxes on American consumers and manufacturers,” Lincicome said. “This reflects a fundamental misunderstanding of how the global economy works.”

Trump’s plan targets value-added taxes (VAT)—similar to sales taxes in the European Union—as part of what the administration views as trade barriers. Tariff rates, industrial subsidies, regulations, and currency valuation will also factor into the administration’s calculations for reciprocal tariffs.

A senior White House official, speaking on condition of anonymity, said expected tariff revenues would help offset the projected $1.9 trillion budget deficit. The official added that reviews for implementing the tariffs could be completed within weeks or months.

The proposed tax hikes on imports and exports could be substantial compared to the smaller tariffs imposed during Trump’s first term. Last year, trade in goods between the U.S. and Europe totaled nearly $1.3 trillion, with the U.S. importing $267 billion more than it exported, according to Census Bureau data.