What we know about Trump’s reciprocal tariffs

WASHINGTON—President Trump’s team is working to impose as soon as this week reciprocal tariffs on nations that have slapped levies on U.S. exports, using executive action to bring to life a far-reaching proposal from his first term that never came to fruition.

Among Trump aides, Peter Navarro, the president’s senior counselor for trade and manufacturing, is a leading advocate for the reciprocal-tariff idea, according to people with knowledge of the situation. Navarro pushed the idea during Trump’s first term, advocating for lawmakers to sign on to a reciprocal-tariff bill put forth by then-Rep. Sean Duffy (R., Wis.), now Trump’s secretary of transportation.

While a similar bill was introduced in the House of Representatives last month, aides to Trump have said he and his team won’t wait for Congress to advance the idea. Instead, the president is poised to move forward with executive action, using the office’s authority to impose tariffs on nations he thinks treat the U.S. unfairly.

“Reciprocal trade. It’s the most fair thing in the world,” Navarro said on CNN on Tuesday. “If they’re cheating us, then that shouldn’t be allowed to happen.”

Navarro is “one of many” implementing the policy, a White House official said, adding that Trump has been pursuing reciprocal tariffs since his first term.

Trump recently said he would soon announce a plan to equalize duties with virtually all U.S. trading partners, telling reporters that the action would mean that if a country charges a certain tariff on the U.S., it will receive the same treatment for its exports to America.

Equalizing tariff rates with other nations would mean that a number of developing countries could be hit with higher tariffs, particularly India, Brazil, Vietnam, Argentina and many other Southeast Asian and African nations. Those nations have placed tariffs on U.S. exports to their countries on such items as agricultural commodities and automobiles. The order could go further to hit developed economies as well.

The plan could also go beyond simply matching other nations’ tariffs to take into account nontariff trade barriers, according to people close to the president. Those include taxes on American companies, such as value-added taxes, government subsidies for foreign companies in their home countries, or regulations that prevent U.S. companies from doing business in foreign countries.

That means nations such as Japan and members of the European Union could be on the hook for higher tariffs from the U.S. than the duties they impose on American goods. And it also means that nations such as China—which currently has a lower average tariff rate than the U.S. but a number of nontariff barriers—might face further tariffs on imports to the U.S.

“Subsidies and regulatory barriers are every bit as impactful as tariffs themselves,” said Sen. Bill Hagerty (R., Tenn.), a close Trump ally in the Senate who said he spoke to the president Friday about the reciprocal-tariff strategy.

Trump’s plans for reciprocal tariffs likely mean that his campaign pledge of 10% to 20% across-the-board tariff is off the table. Matching the tariffs and trade barriers of other nations means duties wouldn’t be the same for every nation, likely undercutting the idea of universal, across-the-board tariffs.

Trump last week said he was leaning more toward reciprocal action than a “flat fee” tariff—a line backed up by those close to him.

“I think it’s going to be country by country,” said Sen. Eric Schmitt (R., Mo.), a Trump ally who said he has spoken to the president recently about the tariff action. The reciprocal tariff will be a “negotiating tool,” he said, but will also be used for revenue to help offset the expected renewal of Trump’s tax cuts.

Navarro said on CNN: “What’s going to happen is we’re going to look at all of our trading partners, starting with the ones with which we run the biggest deficits, find out if they’re cheating the American people, and if they are we’re going to take measures to correct that wrong.” Navarro added that the secretaries of commerce and Treasury and the U.S. trade representative would evaluate tariffs and nontrade barriers of American trading partners.

Once they have that information, the administration could attempt to calculate how much U.S. trade is diverted by foreign trade barriers, and then devise a U.S. tariff rate to reflect that trade volume, some of the people familiar with the situation said.

The administration has considered Section 301 of the Trade Act of 1974, which allows for tariffs to address discrimination by foreign governments, according to people familiar with the situation. The administration is also thinking about invoking Section 338 of the Tariff Act of 1930, which hasn’t been used in decades but allows for tariffs of up to 50% on nations that discriminate, or “disadvantage,” U.S. companies.

The president could also deploy the International Emergency Economic Powers Act, the law Trump used to impose his recent 10% additional tariff on China, but which would require him to declare a national emergency and is the perhaps most likely to open him up to legal scrutiny.

The administration could also cobble together several legal authorities, depending on the nations targeted for tariffs.

No matter which legal route Trump chooses, trade experts said reciprocal tariffs would represent a further break from global trading rules and norms set up as part of the World Trade Organization, which Trump undermined in his first term by blocking appointments to its top dispute-settlement panel.

Reciprocal tariffs, according to some trade experts, would dilute the WTO concept of “most favored nation” status, a principle of the organization that requires member nations to guarantee equal tariff and regulatory treatment to other members. The action would be “gutting a huge part of why we set up WTO in the first place,” said Christine McDaniel, a former deputy assistant Treasury secretary during the George W. Bush administration.

Trump and his allies have long argued that China and other nations game WTO rules and cheat the U.S.

“The WTO hasn’t worked for a long time,” Hagerty said. He added that he hoped the reciprocal tariff action “will spark a global questioning by our trade partners for them to ask themselves if they have dealt fairly with the United States.”

Write to Gavin Bade at gavin.bade@wsj.com