The Trump administration is planning to announce a single, country-specific tariff rate for each of its trading partners on April 2, then give the countries an opportunity to avoid the levies by lowering their own tariffs or addressing other American grievances, U.S. Treasury Secretary Scott Bessent said Tuesday.
U.S. President Donald Trump has promised to place “reciprocal” tariffs on all other countries next month, as part of a suite of protectionist measures aimed at remaking the international trading system.
To date, it’s been unclear how the reciprocal tariffs would work – whether the U.S. would raise tariffs country-by-country and product-by-product or adopt a simpler method for imposing the duties.
Mr. Bessent’s comments Tuesday suggest the administration is leaning toward applying a single, tailored tariff rate for each country – and that it’s open to negotiation.
“What’s going to happen on April 2, each country will receive a number that we believe represents their tariffs. So for some countries, it could be quite low, for some countries it could be quite high,” Mr. Bessent said in an interview on Fox News.
He said the number will take into account both the tariffs other countries put on U.S. goods and other measures the administration believes disadvantage U.S. companies.
“We are going to go to them and say, ‘Look, here’s where we think the tariff levels are, non-tariff barriers, currency manipulation, unfair funding, labour suppression, and if you will stop this, we will not put up the tariff wall.’”
It is not clear how the U.S will calculate this country-specific tariff rate, nor how it will interact with other tariffs Mr. Trump has either announced or threatened to impose since returning to the White House in January.
Mr. Trump has imposed a 25-per-cent tariff on steel and aluminum. He has also put a 25-per-cent tariff on imports from Canada and Mexico – with a 10-per-cent levy for energy, critical minerals and potash – although this was paused for products that comply with the continental free trade agreement until April. He has also threatened tariffs against Canada’s auto, lumber and dairy industries but has not spelled out what these would look like.
It is also unclear whether Mr. Bessent is speaking with the full backing of Mr. Trump. On a number of occasions in recent months, Mr. Bessent and other top lieutenants, such as Commerce Secretary Howard Lutnick, have made comments about the administration’s tariff plans to the media that have proven inaccurate, as the President pursues an erratic trade agenda.
With a few exceptions, Canadian tariffs on U.S. goods are very low, with most products entering the country duty-free under the United States-Mexico-Canada Agreement, the continental free trade pact, or at most-favoured nation rates offered to all trading partners.
Trevor Tombe, an economics professor at the University of Calgary, said via e-mail that the “overwhelming majority of U.S. exports to Canada enter tariff free.” Looking at World Bank data, he calculated that the average effective tariff on all imports from the U.S. in 2023 was 2.07 per cent, while the average effective tariff on Canadian goods entering the U.S. was 2.4 per cent.
Claire Fan, a senior economist at Royal Bank of Canada, noted that customs duties collected as a percentage of goods imports was only about 1.3 per cent in December, 2024.
In other words, any “reciprocal” tariff would be low if the U.S. focused on tariff rates alone. However, the administration has said it will also look at non-tariff barriers and has specifically mentioned Canada’s supply-managed dairy sector, digital services tax and value-added taxes such as the goods and services tax (GST).
Mr. Trump seems particularly incensed by other countries’ value-added taxes, and analysts think this will form a large part of the reciprocal tariff plan the administration will unveil in April. In Canada, the GST is 5 per cent, while provincial sales taxes range from zero to about 10 per cent.
Ms. Fan said it makes little sense to see value-added taxes as equivalent to tariffs. “It really doesn’t matter if what you’re consuming is imported or produced locally or domestically, it’s charged at the same rate, so it’s not discriminatory against imported products,” she said in an interview.
What reciprocal tariff rate the Trump administration will finally put on Canada remains highly uncertain, as it’s unclear what calculations it’s using, said Joy Nott, trade and customs partner with KPMG in Canada, in an e-mail.
“We know that Canada is in the crosshairs because we have a value-added tax with our GST, a digital services tax and well-known non-tariff trade irritants, such as our supply management of dairy and softwood lumber,” Ms. Nott said.
She added that the GST is low compared with the value-added taxes of other countries. “Among our G7 partners, the U.K. and France’s VAT rate is 20 per cent, Germany’s is 19 per cent and Japan is 10 per cent. Italy is the highest at 22 per cent. Canada’s reciprocal tariff rate will depend on many factors, including the extent to which VAT taxes are a key measure in this calculation,” she said.
