Now that President Donald Trump has paused higher tariffs on most countries until July 8, officials have time to recalculate the proposed tariff rates to ensure they do not exceed the stated goal of reciprocity. Although President Trump claimed the tariffs announced April 2 and paused April 9 are reciprocal based on a calculation of trade barriers, the formula used actually only measures trade deficits.
“For those that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers, and other forms of cheating. And because we are being very kind . . . we will charge them approximately half of what they are and have been charging us,” stated President Trump in his April 2 tariff announcement. While administration officials from the National Economic Council, the Commerce Department, the Council of Economic Advisers, and the Office of the U.S. Trade Representative gathered information on these barriers and produced a variety of formulas to account for them, according to news reports, President Trump instead selected a formula based simply on each country’s 2024 trade deficit in goods and the value of its exports to the United States.
The formula, deduced by several expert observers and confirmed by the White House, is country-by-country U.S. goods exports in 2024 minus U.S. goods imports in 2024, divided by U.S. goods imports from each country in 2024. (The list excludes Belarus, Burkina Faso, Canada, Cuba, Mexico, North Korea, Palau, Russia, Somalia, and Vatican City.) The formula includes figures for how much of the tariff is expected to pass through to consumer prices (0.25, or 25%) and how much tariff increases affect import quantities demanded (4.00) that cancel each other out when multiplied together. Trade in services is ignored as is data from years other than 2024, and even countries with which the U.S. has a goods trade surplus are labeled as having a 10% tariff on goods from the United States. The resulting figure is presented for each country as “tariffs charged to the U.S.A. including currency manipulation and trade barriers,” and the U.S. “discounted reciprocal tariff” calculated as half that figure or 10%, whichever is higher, with one exception (Afghanistan, which is presented as 49% and the countering U.S. rate at 10%).
New U.S. Tariffs on Imports from Countries with Free Trade Agreements with the U.S.
Country | Date of Free Trade Agreement | U.S. Tariff Announced April 2 |
Australia | 2005 | 10% |
Bahrain | 2006 | 10% |
Canada | 1994 (NAFTA), 2020 (USMCA) | none |
Chile | 2004 | 10% |
Colombia | 2012 | 10% |
Costa Rica | 2006 (CAFTA) | 10% |
Dominican Republic | 2006 (CAFTA) | 10% |
El Salvador | 2006 (CAFTA) | 10% |
Guatemala | 2006 (CAFTA) | 10% |
Honduras | 2006 (CAFTA) | 10% |
Israel | 1985 | 17% |
Jordan | 2001 | 20% |
Mexico | 1994 (NAFTA), 2020 (USMCA) | none |
Morocco | 2009 | 10% |
Nicaragua | 2006 (CAFTA) | 18% |
Oman | 2006 | 10% |
Panama | 2012 | 10% |
Peru | 2009 | 10% |
Singapore | 2004 | 10% |
South Korea | 2012 | 25% |
As the chart above indicates, imports from 17 of the 19 countries with free trade agreements with the U.S. are hit with tariffs in the April 2 announcement. Even Oren Cass, an economist defending the Trump Administration action, acknowledges that the policy is based not on reciprocity but on aggregate trade imbalances, apparently reflecting the “Critical Trade Theory” school that any trade imbalance between two countries is evidence of unfair trade practices notwithstanding financial flows, triangular trade, or actual trade barriers.
If instead we were only charging other countries what they charge us, this formula would not be the one used. The formula used calculates something entirely different than tariff rates and non-trade barriers. Indeed, it was quickly noted that countries that charge zero or low tariffs on the United States were reported as if they were imposing very high tariffs on goods from the U.S., such as Singapore (0% tariff but claimed at 10%), South Korea (0.79% tariff on U.S. goods but claimed at 50%), and Australia (0% tariff on U.S. goods and a U.S. trade surplus, but claimed at 10%. Many countries with notoriously high tariffs and trade barriers such as Brazil, the Central African Republic, and Tanzania, were listed as having low tariffs. All eight countries with the world’s highest tariffs (Bermuda, Cayman Islands, Belize, Gambia, Djibouti, Bahamas, Central African Republic, and Chad) qualify for the minimum 10% rate under the formula and a rate below their trade-weighted tariff rates, a strange result if the goal is to measure or achieve reciprocity. Poor countries who sell much to the United States but can afford to buy little in return (such as Madagascar, the source of much of the world’s vanilla), are said to have high tariff rates.
This calculation, used as the basis of the tariff rates announced by the President, needs review in several respects.
First, bilateral trade aggregates in goods are not a meaningful way to estimate tariffs, as the examples above show, and do not include factors cited by the Administration (currency manipulation, digital services taxes, tariff rates) as justification for the policy.
Second, including services, which the U.S. has a trade surplus in, would have reduced many of the estimated tariff rates (Switzerland, for instance, would fall from 31% to the base level of 10%). Although the Administration’s trade goals are often focused on insourcing manufacturing of goods, the U.S.’s competitive edge in many types of services comports well with other Administration aims of putting America First. Financial services including payment networks, air transport, and computing are just three of the strategically important items among the $1.1 trillion of U.S. services exported last year.
Third, using only 2024 data misses any variations in time; the New York Times recalculated the rates using an average from 2020 to 2024 and found several countries change considerably.
Fourth, goods not subject to tariff should be excluded from the calculation where it has outsized impact; for example, Iraq’s stated percentage is high due to its oil exports outstripping U.S. imports which means non-oil exports to the U.S. will pay high tariffs, but Iraq oil is exempt from U.S. tariffs. Metals and minerals are already exempted from the April 2 tariffs, and all manufacturing inputs may be worth exempting from import tariffs entirely.
Fifth, as scholars at the American Enterprise Institute explain, the formula’s elasticity factor estimating effect on consumer prices (0.25) should be closer to 1 (0.945), reducing all the resulting tariff rates by about 75%. The highest tariff under this corrected figure would be under 14%.
Sixth, the use of a 10% minimum for all countries, including those with which the U.S. enjoys a trade surplus, conflicts with the Administration’s stated goal of mutual zero trade barriers. 107 countries and territories would face a zero tariff if the minimum was not used, including Australia, Brazil, Chile, Colombia, Saudi Arabia, Singapore, the United Arab Emirates, and the United Kingdom. If instead some minimum percentage were to be justified because of non-tariff barriers from these countries, again, the proper method for calculating this would be to identify each of those barriers on a country-by-country basis; reciprocal tariffs should be no higher than this amount.
The announced rates are simply not reciprocal for the vast majority of the 185 listed countries and territories. For only four countries does the U.S. announced tariff rate match the tariffs imposed by that country on U.S. imports: Cape Verde (10% in both cases), Egypt (10% in both cases), Samoa (10% in both cases), and Sao Tome (10% in both cases). The U.S. runs trade surpluses with all four countries. For 27 other countries, the announced U.S. rate is higher than those countries’ tariff rates, and the U.S. runs trade surpluses with 20 of them: Antigua and Barbuda, Bahamas, Barbados, Belize, Benin, Bermuda, Cameroon, Cayman Islands, Central African Republic, Chad, Congo, Republic of the, Djibouti, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana, Grenada, Guinea, Guinea-Bissau, Iran, Maldives, Nepal, Rwanda, Sierra Leone, Solomon Islands, and Togo. For the 154 other countries and territories, the announced U.S. tariff exceeds, sometimes greatly, the other countries’ tariff rate.
Correcting for the factors mentioned above—elasticity, trade in services, exempt goods, multi-year data, and the 10% floor—would yield dramatically different tariff results. The following table depicts the variation that results from adjusting for two of those factors: a higher elasticity and no 10% floor.
Table: White House Claimed and Imposed Tariff Rates, Corrected for Elasticity with No 10% Floor
(italics=countries with which the U.S. has a goods trade surplus)
Country | Claimed Tariff Rate per White House Formula | U.S. Tariff Rate, as Announced | U.S. Tariff Rate per Formula with Elasticity Corrected and No 10% Floor | Actual Tariff Rate Imposed by Country, World Bank, Weighted |
China | 67% | 34% | 9% | 2% |
European Union | 39% | 20% | 5% | 1% |
Vietnam | 90% | 46% | 12% | 1% |
Taiwan | 64% | 32% | 8% | No data |
Japan | 46% | 24% | 6% | 2% |
India | 52% | 26% | 7% | 6% |
Korea, South | 50% | 25% | 7% | 5% |
Thailand | 72% | 36% | 10% | 3% |
Switzerland | 61% | 31% | 8% | 1% |
Indonesia | 64% | 32% | 8% | 2% |
Malaysia | 47% | 24% | 6% | 4% |
Cambodia | 97% | 49% | 13% | 5% |
United Kingdom | 10% | 10% | -2% | 1% |
South Africa | 60% | 30% | 8% | 4% |
Brazil | 10% | 10% | -2% | 8% |
Bangladesh | 74% | 37% | 10% | 11% |
Singapore | 10% | 10% | -1% | 0% |
Israel | 33% | 17% | 4% | 3% |
Philippines | 34% | 17% | 5% | 2% |
Chile | 10% | 10% | -1% | 0% |
Australia | 10% | 10% | -14% | 1% |
Pakistan | 58% | 29% | 8% | 9% |
Turkey | 10% | 10% | 1% | 3% |
Sri Lanka | 88% | 44% | 12% | 4% |
Colombia | 10% | 10% | -1% | 3% |
Peru | 10% | 10% | -3% | 1% |
Nicaragua | 36% | 18% | 5% | 2% |
Norway | 30% | 15% | 4% | 3% |
Costa Rica | 17% | 10% | 2% | 1% |
Jordan | 40% | 20% | 5% | 4% |
Dominican Republic | 10% | 10% | -10% | 4% |
United Arab Emirates | 10% | 10% | -35% | 0% |
New Zealand | 20% | 10% | 3% | 1% |
Argentina | 10% | 10% | -4% | 7% |
Ecuador | 12% | 10% | 2% | 5% |
Guatemala | 10% | 10% | -12% | 2% |
Honduras | 10% | 10% | -4% | 3% |
Madagascar | 93% | 47% | 12% | 8% |
Burma (Myanmar) | 88% | 44% | 12% | 1% |
Tunisia | 55% | 28% | 7% | 9% |
Kazakhstan | 54% | 27% | 7% | 2% |
Serbia | 74% | 37% | 10% | 2% |
Egypt | 10% | 10% | -18% | 10% |
Saudi Arabia | 10% | 10% | 0% | 4% |
El Salvador | 10% | 10% | -13% | 2% |
Cote d'Ivoire | 41% | 21% | 5% | 8% |
Laos | 95% | 48% | 13% | 1% |
Botswana | 74% | 37% | 10% | 1% |
Trinidad and Tobago | 12% | 10% | 2% | 9% |
Morocco | 10% | 10% | -23% | 4% |
Papua New Guinea | 15% | 10% | 2% | 4% |
Malawi | 34% | 17% | 5% | 6% |
Liberia | 10% | 10% | -27% | 7% |
British Virgin Islands | 10% | 10% | -55% | No data |
Afghanistan | 49% | 10% | 7% | 0% |
Zimbabwe | 35% | 18% | 5% | 11% |
Benin | 10% | 10% | -46% | 11% |
Barbados | 10% | 10% | -197% | 12% |
Monaco | 10% | 10% | -32% | No data |
Syria | 81% | 41% | 11% | 9% |
Uzbekistan | 10% | 10% | -105% | 3% |
Congo, Republic of the | 10% | 10% | 3% | 12% |
Djibouti | 10% | 10% | -35% | 18% |
French Polynesia | 10% | 10% | -34% | 6% |
Cayman Islands | 10% | 10% | -331% | 20% |
Kosovo | 10% | 10% | -6% | No data |
Curacao | 10% | 10% | -328% | No data |
Vanuatu | 44% | 22% | 6% | 11% |
Rwanda | 10% | 10% | -6% | 12% |
Sierra Leone | 10% | 10% | -42% | 14% |
Mongolia | 10% | 10% | -181% | 5% |
San Marino | 10% | 10% | -29% | 1% |
Antigua and Barbuda | 10% | 10% | -306% | 13% |
Bermuda | 10% | 10% | -293% | 24% |
Eswatini (Swaziland) | 10% | 10% | -14% | 2% |
Marshall Islands | 10% | 10% | -69% | No data |
St Pierre and Miquelon | 99% | 50% | 13% | No data |
St Kitts and Nevis | 10% | 10% | -95% | 9% |
Turkmenistan | 10% | 10% | -61% | 3% |
Grenada | 10% | 10% | -142% | 11% |
Sudan | 10% | 10% | -44% | 0% |
Turks and Caicos Islands | 10% | 10% | -846% | No data |
Aruba | 10% | 10% | -883% | 0% |
Montenegro | 10% | 10% | -11% | 3% |
St Helena | 15% | 10% | 2% | No data |
Kyrgyzstan | 10% | 10% | -92% | 3% |
Yemen | 10% | 10% | -186% | 5% |
St Vincent and the Grenadines | 10% | 10% | -216% | 9% |
Niger | 10% | 10% | -56% | 8% |
St Lucia | 10% | 10% | -1971% | 9% |
Nauru | 59% | 30% | 8% | 14% |
Equatorial Guinea | 25% | 13% | 3% | 16% |
Iran | 10% | 10% | -180% | 12% |
Libya | 61% | 31% | 8% | 4% |
Samoa | 10% | 10% | -113% | 10% |
Guinea | 10% | 10% | -283% | 12% |
Timor-Leste | 10% | 10% | -29% | 3% |
Montserrat | 10% | 10% | -15% | No data |
Chad | 26% | 13% | 3% | 16% |
Mali | 10% | 10% | -111% | 8% |
Algeria | 59% | 30% | 8% | 10% |
Oman | 10% | 10% | -6% | 2% |
Uruguay | 10% | 10% | -5% | 5% |
Bahamas | 10% | 10% | -28% | 17% |
Lesotho | 99% | 50% | 13% | 3% |
Ukraine | 10% | 10% | -6% | 2% |
Bahrain | 10% | 10% | -5% | 2% |
Qatar | 10% | 10% | -14% | 4% |
Mauritius | 80% | 40% | 11% | 1% |
Fiji | 61% | 32% | 8% | 8% |
Iceland | 10% | 10% | 1% | 2% |
Kenya | 10% | 10% | -1% | 9% |
Liechtenstein | 73% | 37% | 10% | No data |
Guyana | 76% | 38% | 10% | 5% |
Haiti | 10% | 10% | -13% | 7% |
Bosnia and Herzegovina | 70% | 35% | 9% | 3% |
Nigeria | 27% | 14% | 4% | 12% |
Namibia | 42% | 21% | 6% | 1% |
Brunei | 47% | 24% | 6% | 0% |
Bolivia | 20% | 10% | 3% | 5% |
Panama | 10% | 10% | -241% | 6% |
Venezuela | 29% | 15% | 4% | 14% |
North Macedonia | 65% | 33% | 9% | 2% |
Ethiopia | 10% | 10% | -16% | 13% |
Ghana | 17% | 10% | 2% | 11% |
Moldova | 61% | 31% | 8% | 1% |
Angola | 63% | 32% | 8% | 0% |
Congo, Democratic Republic of the | 22% | 11% | -65% | 8% |
Jamaica | 10% | 10% | -84% | 9% |
Mozambique | 31% | 16% | 4% | 4% |
Paraguay | 10% | 10% | -104% | 4% |
Zambia | 33% | 17% | 4% | 5% |
Lebanon | 10% | 10% | -15% | 3% |
Tanzania | 10% | 10% | -24% | 9% |
Iraq | 78% | 39% | 10% | No data |
Georgia | 10% | 10% | -126% | 0% |
Senegal | 10% | 10% | -7% | 9% |
Azerbaijan | 10% | 10% | -8% | 6% |
Cameroon | 22% | 11% | 3% | 15% |
Uganda | 20% | 10% | 3% | 9% |
Albania | 10% | 10% | -1% | 0% |
Armenia | 10% | 10% | -4% | 4% |
Nepal | 10% | 10% | 0% | 12% |
Sint Maarten | 10% | 10% | -85% | No data |
Falkland Islands | 82% | 41% | 11% | No data |
Gabon | 10% | 10% | 0% | 15% |
Kuwait | 10% | 10% | -6% | 3% |
Togo | 10% | 10% | -28% | 11% |
Suriname | 10% | 10% | -43% | 8% |
Belize | 10% | 10% | -83% | 18% |
Maldives | 10% | 10% | -244% | 11% |
Tajikistan | 10% | 10% | -149% | 2% |
Cabo Verde | 10% | 10% | -23% | 10% |
Burundi | 10% | 10% | -10% | 9% |
Guadeloupe | 10% | 10% | -1803% | No data |
Bhutan | 10% | 10% | -1% | 3% |
Martinique | 10% | 10% | -925% | No data |
Tongo | 10% | 10% | -79% | 7% |
Mauritania | 10% | 10% | -634% | 8% |
Dominica | 10% | 10% | -324% | 8% |
Micronesia | 10% | 10% | -260% | No data |
Gambia | 10% | 10% | -528% | 18% |
French Guiana | 10% | 10% | -197% | No data |
Christmas Island | 10% | 10% | -3% | No data |
Andorra | 10% | 10% | -6% | No data |
Central African Republic | 10% | 10% | -313% | 16% |
Solomon Islands | 10% | 10% | -116% | 14% |
Mayotte | 10% | 10% | 1% | No data |
Anguilla | 10% | 10% | -792% | No data |
Cocos (Keeling) Islands | 10% | 10% | -18% | No data |
Eritrea | 10% | 10% | -568% | 5% |
Cook Islands | 10% | 10% | -89% | No data |
South Sudan | 10% | 10% | -961% | No data |
Comoros | 10% | 10% | -21% | 4% |
Kiribati | 10% | 10% | -56% | No data |
Sao Tome and Principe | 10% | 10% | -10% | 10% |
Norfolk Island | 58% | 29% | 8% | No data |
Gibraltar | 10% | 10% | -19945% | No data |
Tuvalu | 10% | 10% | -20% | 2% |
British Indian Ocean Territory | 10% | 10% | -143% | No data |
Tokelau | 10% | 10% | -9% | No data |
Guinea-Bissau | 10% | 10% | -352% | 12% |
Svalbard and Jan Mayen | 10% | 10% | no trade activity | No data |
Heard and McDonald Islands | 10% | 10% | no trade activity | No data |
Reunion | 73% | 37% | 10% | No data |
Belarus* | 47%* | 24%* | 6% | 2% |
Burkina Faso* | 10%* | 10%* | -146% | 7% |
Canada* | 15%* | 8%* | 2% | 2% |
Cuba* | 10%* | 10%* | -1580% | 9% |
Korea, North* | 10%* | 10%* | -339% | No data |
Mexico* | 34%* | 17%* | 4% | 1% |
Palau* | 10%* | 10%* | -111% | 9% |
Russia* | 83%* | 42%* | 11% | 4% |
Seychelles* | 10%* | 10%* | -17% | 1% |
Somalia* | 10%* | 10%* | -248% | No data |
Vatican City* | 10%* | 10%* | -63% | No data |
*Not listed in April 2 announcement but results extrapolated using the same data.
If the Trump Administration’s objective is reform that supports free and fair exchanges of goods and services that will grow the American economy, the modified calculations presented here more accurately identify which nations have the worst protectionist stances against the United States. By including relevant factors such as trade in services, exempted goods, and realistic elasticity, the Administration can better achieve its goals of true reciprocity and fairness in global trade policy.