- The formula used to count the new party tariffs Donald Trump The US trade deficit announced on Wednesday with a given country, divided into total exports to the US, a memo from the US trade representative acknowledged that it was a methodology that was too “difficult if it is not possible” to calculate the full degree of trade policy in the US.
Trump’s administration has implemented wide mutual tariffs On Wednesday, the country around the world, seeking to fight against what they say, were unfair trading practices that hurt US business and economy as a whole.
Calculate the tariffs he decided to impose countries Worldwide, the White House has used a formula focused on trading deficit and overall exports. The formula did not include estimates of tariff tariffs for certain products in individual countries, or given other trade barriers that were not tariffs.
Instead, the mutual tariff rate applied in each country was: their trade deficit, divided into US export, divided into two.
If there is a trade surplus from the US, or the number of the above formula was less than 10%, a single rate of 10%was applied.
For example, the United States in the European Union has a $ 235.6 billion deficit, exporting $ 605.8 billion based on the White House formula, $ 205.6, equal to $ 0.194. This number is rounded up to 0.2, leading to 20% tariff rate.
“Blind application of such a simple formula ignores so many nuances,” said Dominic Papalaard, the main strategist at Morningstar Wealth sorts, Wealth in an email.
James Suruka’s journalist first noted that this is a formula used by Trump’s White House X Message A little more than two hours after tariffs were announced.
When addressed to the comments, the White House press -secretary showed Wealth up to a statement From the US trading office, which explains the formula.
The US trade representative, who played an important role in Trump’s tariff policy, said it was the formula she used. He also acknowledged the complexity of calculating mutual tariffs based on detailed analysis of every country’s trade barriers.
“While individually calculating the effects of trade deficit tens of thousands of tariffs, regulatory, taxes and other politicians in each country are difficult, if not impossible, their combined impact can be carried out by calculating tariffs that correspond to bilateral trade deficits to zero,” the statement from the trade office.
“It seems that mutual tariffs are fully based on the size of a bilateral trade deficit in the goods in 2024. It is not obvious that everything else has changed,” Elms Debora, Head of Trade Policy Department at Think Tank The Hinrich Foundation detach Wealth before.
Using this methodology to calculate tariffs that will be imposed on other countries, risking them to hit the rates higher than the ones they now have for American goods. The countries subject to high tariff were those who have the largest trade deficit from the US, not necessarily those who have the most trading barriers. For example, Taiwan, a major American trading partner, now faces 32% of the tariffs for all goods. However, the trade deficit that the US has from Taiwan is partly owned liberated On Thursday, Taiwan officials said he was essentially fined for selling products that US companies want to buy.
“The transition chain of Taiwan’s Taiwan supply chain and the increase in demand to the US to Taiwan’s information and communication, which reflects Taiwan’s huge contribution to the US economy and national security,” Taiwan said.
(Semicules are off from new Trump tariffs.)
This measure also looks like and does not take into account any preventive efforts to make some countries to take a balance with the US “calculation is a single shot,” Papalard said.
For example, Vietnam was promise To further reduce any customs duties on US goods and buy more them, trying to stop any tariff hiking. Instead, the country of southeastern Asia, which is a production center, received a fruit from 45% tariffs. The US is the largest export market in Vietnam, and the tariff of this size will cripples its ability to sell goods in the country.
A blanket formula that does not take into account the specific trading policy of each country – which is often a number of complex, switched rules that include very detailed rules for each sector of economy – risks that are upset by global trade, restrain the flow of critical goods, can only access through its trading partners. Instead, they create checkpoints for other countries to enter the US, which is the largest economy in the world.
“There are good fundamental and economic reasons to import certain goods outside the United States,” Papalarda said. “This formula completely ignores this concept. These reasons include local availability of natural resources, production and space costs in skills among others.
These new politicians would increase the US tariff rate by almost 10%, which can tilt the world economy to the recession, the Fitch ratings said.
“The US tariff rate across the import is about 22% of 2.5% in 2024. This rate was last seen around 1910,” Fitch wrote in her report. “This is a change in games not only for the US economy but also for the world economy. Many countries are likely to be in recession. You can throw away most forecasts if this tariff rate remains for a long period of time.”
The implementation of a trading policy based on tariffs, and not on free trade contracts was the main promise of the campaign on which Trump ran during the elections last year. Trump has long regarded the role of the United States as a pure importer as a sign of weakness, which is unwillingly to buy American products. Most economists consider it a function that the US is the richest country in the world, and therefore can buy more goods than its trading partners, which leads to trade deficit.
Markets did not respond positively Prior to Trump’s announcement about tariffs. S&P 500 on Thursday fell by 4% Chain Jones slipped 3.5%and Nasdaq The composite decreased by 5.3%. The stock market rate was quite expected, given that most economists fell US joining the global trade warfare for the economy. However the reality of the situation strike Investors are difficult.
“Earlier, the announced measures increased the average tariffs in the US to 11%, the highest since the 1940s,” the main global investment firm of the Management Management wrote in an email. “Yesterday’s announcement raised the tariff rate to 24%, the highest since 1908, and was much more aggressive than the wide market was expected.”
During a speech in the White House pink garden on Wednesday, Trump said he was “good”, only striking the countries with half the tariffs he believes that they impose on the United States, however, since the tariff indicators are based only on the calculation of the US trade deficit and do not include other trade barriers. The one that will almost certainly be Effects with guidance For the US as the rest of the world avenge.
“Expectations (there is) that tariffs to the detriment of the US economy are more than the rest of the world,” the economy’s capital recorded on Thursday said.
Originally this story was presented on Fortune.com
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2025-04-03 18:36:00
Paolo Confino
