Definition

Reciprocal tariffs refer to a trade policy where a country imposes equal or equivalent tariffs on imports from a trading partner in response to the tariffs that country has placed on its exports. This concept is often used in trade negotiations to ensure fairness and balance in international trade.

Reciprocal tariffs refer to a trade policy where a country imposes equal or equivalent tariffs on imports from a trading partner in response to the tariffs that country has placed on its exports. This concept is often used in trade negotiations to ensure fairness and balance in international trade.

1. Tit-for-Tat Approach - If Country A imposes a tariff on Country B, then Country B retaliates with a similar tariff on goods from Country A.
2. Trade Balance Strategy  - Used to counteract protectionist policies of trading partners.
3. Encourages Fair Trade - Aims to prevent one-sided trade advantages.
4. Common in Trade Wars - Often seen in global disputes, e.g., S.-China Trade War (2018-2020).

U.S. vs. China (2018-2020) - The U.S. imposed tariffs on Chinese goods; China responded with equal tariffs on U.S. imports.
EU vs. U.S. (Steel & Aluminium Tariffs) - The U.S. imposed tariffs on European steel and aluminium; the EU retaliated with tariffs on American goods like whiskey and motorcycles.
India vs. U.S. (Agricultural Goods) - The U.S. raised tariffs on Indian steel; India responded with tariffs on U.S. almonds and apples.

Ensures fair trade practices.
Protects domestic industries from unfair foreign competition.
Can be used as leverage in trade negotiations.

Can escalate into full trade wars.
Increases prices for consumers.
May disrupt global supply chains