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“Reciprocal” Tariffs: More Sleight Of Hand By Trump Administration

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Introduction

Trump announced aggressive, far-reaching “reciprocal” tariffs last Wednesday which are mostly about half of what the Trump administration said each country has charged the U.S. For example, the poster said China charges a tariff of 67% and that the U.S. will implement a 34% reciprocal tariff in response.

A chart of new tariffs that was displayed by President Donald Trump during his trade announcement April 2, 2025, and posted on social media.
A chart of new tariffs that was displayed by President Donald Trump during his trade announcement April 2, 2025, and posted on social media.
Courtesy: U.S. President Donald Trump via Truth Social

How did the U.S. arrive at its tariff figures?

From the above it would appear that the U.S. divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries as opposed to actually calculating tariff rates + non-tariff barriers, as they say they did but such methodology doesn’t necessarily align with the conventional approach for calculating tariffs and implies the U.S. would have looked at only the trade deficit in goods and ignored trade in services.

What tariffs do countries actually impose on the U.S.?

However, a report from the Cato Institute said the trade-weighted average tariff rates in most countries are much lower than the Trump administration has used leaving many economists and U.S. trade partners to question how the White House calculated its rates. Source
Tariffs vs Trump
The Cato Institute said the 2023 trade-weighted average tariff rate from China was 3%, not the 67% the administration said it was. The administration said the European Union charges the U.S. a tariff of 39%, but the Cato report said the EU’s 2023 trade-weighted average tariff rate was 2.7%. In another example, the administration said India imposes a 52% tariff on the U.S., but Cato found that India’s 2023 trade-weighted average tariff rate was 12%.

Conclusion

 

 

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