On April 2, 2025, President Donald Trump announced a series of tariffs, including a baseline 10% tariff on nearly all imports and higher "reciprocal" tariffs on specific countries.
The Office of the United States Trade Representative explained that these tariffs were calculated "as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners."
Financial journalist James Surowiecki analyzed this methodology and expressed skepticism. He explained: "Just figured out where these fake tariff rates come from. They didn't actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us."
Surowiecki provided an example: "So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is."
He further noted: "This tweet is correct, but it's actually worse than I thought: in calculating the tariff rate, Trump's people only used the trade deficit in goods. So even though we run a trade surplus in services with the world, those exports don't count as far as Trump is concerned."
Deputy White House Press Secretary Kush Desai responded to these critiques, stating (via BusinessToday): "No we literally calculated tariff and non tariff barriers."
The implementation of these tariffs has led to significant reactions in global markets. The FTSE 100 experienced its sharpest one-day decline since August, dropping 1.5%, while U.S. indices like the Nasdaq fell by up to 4.5%, erasing trillions in global market capitalization.
Economists and global leaders have expressed concerns that these measures could trigger a trade war and potentially lead to a recession. The World Trade Organization has voiced deep concern, and countries such as the European Union, the United Kingdom, and China have outlined possible retaliatory actions.
As the tariffs are set to take effect on April 5, 2025, the global economic community remains watchful of the potential ramifications of this trade policy.