Posted on 04/03/2025 7:06:12 PM PDT by Miami Rebel
One of the surprises out of Wednesday's big tariffs announcement was that the Trump administration used a surprisingly simplistic approach to calculating these much-hyped reciprocal tariffs.
Why it matters: This was not a finely tuned set of import taxes calibrated to exert pressure on trading partners to adjust specific policies with which the U.S. has grievances.
Rather, it was some simple arithmetic, based on overall trade data, that became the justification for the most sweeping U.S. duties in generations — a trade-weighted 22.5% tariff, per the Yale Budget Lab, up from around 2.4% last year. It implies fewer off-ramps for countries that seek tariff relief, and thus less potential for de-escalation. If tariffs are applied without regard to the details of each country's economic policies and circumstances, what is there to negotiate? State of play: Wednesday, some social media sleuths figured out, and the administration confirmed, that there was a simple formula behind the reason, say, Vietnam was slapped with a 46% tariff while Norway faces 15%.
The formula is to divide the U.S. trade deficit with each country by that country's exports to the U.S. The final reciprocal tariff was then divided by 2, with a minimum of 10% (which applies even to those countries with which the U.S. has a trade surplus). "While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero," per the U.S. Trade Representative's explainer. Between the lines: This logic implies that any country with which the United States experiences a trade deficit, regardless of the reason, is in some way a bad actor and requires tariffs as payback.
But even if you believe that it's not good for the U.S. to run large, persistent overall trade deficits (which can contribute to financial imbalances and under-investment in key industries), it doesn't imply that there needs to be balanced trade with every individual country. Depending on U.S. consumer demand for a given country's exports, whether it seeks to buy U.S. financial assets, and myriad other factors, even in a world where there is balanced U.S. trade, some countries would be expected to run surpluses and others deficits. Moreover, the 10% minimum tariff — even on countries with which the U.S. runs a surplus — implies that tariffs of more than 4x their previous levels are a new minimum that will apply to the rest of the world, no matter how a given country tries to respond to U.S. concerns. What they're saying: Tobin Marcus and Chutong Zhu of Wolfe Research write in a new note that "since these 'reciprocal' numbers are driven not by actual tariffs but by the simple fact of trade deficits, they will be very challenging to negotiate away, and policy changes may do nothing to alleviate them."
The bottom line: The calculation method used for this round of tariffs implies they won't be negotiated away quickly or easily.
I’ve done the math and it doesn’t mean what you think it does.
You’re conflating tariffs with trade imbalance...
The White House’s OWN formula does NOT reference other countries’ tariffs.
Perhaps "poor countries" slapping tariffs on US goods is part of the reason why they are poor.
Frankly, I couldn’t care less about other nations.
Why are you so consumed with other nations?
I guess that’s the problem with imposing a one-size-fits-all formula.
Please explain to me how tariffing Lesotho diamonds makes America great.
Because we use their goods.
I provided the example of Lesotho. They have no tariffs, but they also have no money. How is tariffing their diamonds by 50% benefiting our economy?
but a place like Lesotho would be poor regardless of how much tariffs they put on anyone, since the beginning of time.
I'm just saying low tariffs for poor countries would not affect us much at all, but it would be a stimulus to them to grow. That is all.
Well, obviously I do not know details of every tariff, their countries, or the individual situations involved.
I am assuming (and we all know what assuming does) that this admin knows what its doing. I'm guessing that this is a negotiation ploy on our part. Negotiating for what, I don't know. But that's how Trump works. Everything is negotiable.
Given that line of reasoning, wouldn't that also apply to the US? Would slapping tariffs on foreign goods make us poorer?
Given that line of reasoning, wouldn't that also apply to the US? Would slapping tariffs on foreign goods make us poorer?
No. Both sides of unbalanced trade hurts both countries.
Protectionist tariffs hurt consumers. Wide open/no tariffs hurt the workers.
Balanced trade makes all countries prosper.
That's generally speaking. There are other factors.
After that I literally skimmed dozens of sources that say the same thing, with no one disputing it. So if you think differently I would love to have your source!
I agree with you what you first said. It's what I see on Trump's chart.
...Your post is the second source I've had say that is not the case at all, and it looks like that is true.
Did you change your POV and agree with the article? Am I reading that right?
If that's not the case, there are plenty of Trump-friendly news outlets that should be pushing back and correcting the record, but I see no evidence of anyone doing that, leaving me with the conclusion that the articles are correct. And that leave me with the conclusion that the Trump tariff charts are mislabeled and misleading. But why?
And how are some countries supposed to address this? If a country doesn't actually have tariffs on the US but has a trade deficit because we are gluttonous consumers and they are a developing country, they can't cut tariffs to please Trump. Instead Trump just chokes off our supply of raw materials or raises their prices on US producers, without accomplishing anything in return. I can't figure this out, and people saying "just trust Trump" is getting old fast.
I see two things.
First, tariffs are reciprocal with a 50% discount.
Second, there's a 10% minimum tariff of 10%.
Where's the confusion?
It’s ridiculous that there are now far too many people who are SO easily influenced by the FEAR PORN, of every stripe, and are incapable of critical thinking.
WHAT "POOR" COUNTRIES?
So "poor countries" export goods to us, do they, and have outrageous tariffs on OUR exports to them, which supposedly their populace can NOT afford to buy?
Obviously, you have less than NO idea what you're talking about, do NOT understand this topic at all, so should refrain from commenting on it and other such topics!
Try reading the comments here, go do research, IF you are really interested in a topic, and for the love of GOD, stop virtue signaling!
The confusion is that the column labeled “tariffs charged to the US” is complete nonsense. That’s not what it is at all. I’m going to post a thread in a minute to a link that finally explains what is going on from a non-TDS perspective. Why the Trump team mislabeled that chart so thoroughly and gave the rest of the world something to complain about is beyond me, though.
You're going to have to document that and document it to a level of your numbers not being "complete nonsense".
He did
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