Jahangir Aziz explains why Trump’s trade strategy is broader than tariffs

Jahangir Aziz, Head of Emerging Market Economics Research at JP Morgan, believes the markets may be underestimating the scope of the US administration’s trade policy, which extends beyond simple tariff adjustments.

The idea of “reciprocal tariffs” under Trump is not just about matching import duties but also about addressing a broader set of trade imbalances, including regulatory policies, industrial policies, and tax structures.

“The way in which it is being interpreted in the press… I don’t think is exactly the way in which the Trump administration sees reciprocal tariffs,” Aziz said.

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He pointed out that factors like Value Added Tax (VAT) differences could widen the cost gap even further, impacting many more industries than those directly tied to tariff changes.

Aziz also dismissed the notion that the delay in announcing tariffs signaled a setback, explaining that the timeline remains in line with Trump’s executive order.

“The due date was April 1, and nothing stops them from announcing things in between,” he said, adding that markets should not assume the issue is fading away.

Instead, he warned that the scope of trade measures could expand beyond what was seen in the 2018-19 tariff wars.

In 2018-19, trade measures mainly focused on China and some Asian countries like Malaysia and Vietnam. However, this time, the first set of tariffs targeted the United States-Mexico-Canada Agreement (USMCA) countries and involved reciprocal tariffs.