From TD Economics
The U.S. administration announced broad reciprocal tariffs, targeting all trading partners, and not just the countries that run large trade surpluses with the U.S. The tariffs will be implemented under the International Emergency Economic Powers Act (IEEPA) of 1977.
Using IIEPA authority, the U.S. will impose a 10% tariff on all countries, effective April 5th, 2025. However, the administration also imposed higher tariff rates on countries with the largest trade deficits, which takes effect April 9th.
Based on the announcement, we estimate that the U.S. effective tariff rate will jump to over 20%, the highest level since the 1940’s and a larger increase than what occurred under the Smoot-Hawley legislation during the early 1930s.
Canada is exempt from reciprocal tariffs and the baseline 10% rate, as prior tariff announcements remain in effect. This leaves the effective tariff on Canada at around 10%, close to what we assumed in our March quarterly forecast. This rate is likely to come down as more companies adjust to qualify their goods as USMCA compliant. Given the scarring on consumers and businesses, our forecast for a pullback in economic growth alongside higher inflation remains intact.
Relative to our baseline assumptions, the tariff rates for non-USMCA countries are a step higher. For the E.U. the 20% rate announced today is in line with what we had assumed. However, this is not true for all others. China will be more heavily hit than our baseline assumption of 30%. Likewise, on other trading partners, we had assumed a blanket 5% rate which is now a minimum of 10%, with many countries higher like Taiwan, South Korea and Vietnam at 32%, 25% and 46%, respectively.
Source: https://economics.td.com/ca-trump-reciprocal-tariffs-2025
