On Thursday’s broadcast of Bloomberg’s “Balance of Power,” Commerce Secretary Howard Lutnick said that the message from the agreement between the United States and U.K. is that the 10% base tariff rate isn’t for negotiation and “reciprocal tariffs, if you think about it, [are] how open is your economy to our exports? How fair is it to our exports? What kind of trade deficit do you do? And that sets that line. So, 10% is the bottom line for that.”
Co-host Kailey Leinz asked, “As we consider the deals that have yet to be made with other trading partners, is the message this one sends to them that sectoral tariffs are up for negotiation, but that 10% base rate is not?”
Lutnick answered, “Right. So, reciprocal tariffs, if you think about it, [are] how open is your economy to our exports? How fair is it to our exports? What kind of trade deficit do you do? And that sets that line. So, 10% is the bottom line for that. But, as the president said, many of those will be higher. Of course, you could bring them down by opening your government, opening your economy to U.S. exports. And then the sectoral tariffs, that’s where you can be super smart if you’re opening your market to us. And that’s what the U.K. did. The U.K. said, I’m going to let you export into the U.K. $5 billion more of services — that’s great — for American exports. And we’ll pay you $6 billion in tariffs, but help us out on cars. And steel and aluminum, they were never our problem. They nationalized their steel industry, they don’t really have much of a steel industry, they agreed to come on and do it with us. So, they’re going to put the same kind of tariffs, the same kind of quotas, keep out the bad guys, and let’s build our steel and aluminum industries inside our walled countries together. And these are sort of the key parts of being super smart, being super rigorous, and trying to figure out the right answer, how to do trade deals that no one’s ever done before.”
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