US Reciprocal Tax

Yesterday Trump has announced a reciprocal tax to the countries and almost all the countries which tax on the US product get around 50% reciprocal tax. For example, some of the US items in India are charged with 52%,so US are taxing Indian products with 26%.

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It feels like almost all the countries comes under the reciprocal tax. Now there might be a pressure on the developing countries like India, Brazil because then some of the exported products become expensive and it reduced the profits margin. And similarly the US will gain with the taxes. But the problem is US is a great market for other countries, but the product with US gives can be available from other countries.

I like Trumps approach though, if someone is taxing us then we should also tax them. The other option is to reduce the tax so that your reciprocal tax get reduced. But whetever is the case the products from the US gets reduced. And that's why the sell-off is increasing in the US. The US market is going down today and it was down by more than 3%.

Though countries are not happy with the reciprocal taxes but I feel eventually it will become the norm. If a country is taxing you, you will also tax those countries. All teh products from US in all the countries are heavily taxed and because of that the sales is less. But at the same time, if the tax is reduced the similar products from that country will be removed. So every country have to decide what they should do, should lower the tax on the US products or ok with the reciprocal taxes from the US government.

Posted Using INLEO