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

Key Concepts:

• Tariffs: Taxes imposed on imported or exported goods.
• Trade Deficit: The amount by which a country's imports exceed its exports.
• Reciprocal Tariffs: Tariffs imposed by one country in response to tariffs imposed by another country.
• USTR (Office of the US Trade Representative): The US government agency responsible for developing and coordinating US international trade, commodity, and direct investment policy.

Trump Administration's Tariff Announcement and Market Reaction

President Trump's announcement of sweeping tariffs caused global financial markets to decline and raised concerns internationally. The White House released charts detailing tariff rates that other countries allegedly impose on the US. The administration stated that the new tariffs would be, in most cases, half of what the White House claims each country has "charged" the US.

Methodology Behind the White House's Tariff Figures

CNBC could not independently verify the administration's data on these duties. Market observers attempted to reverse engineer the formula used by the White House to calculate the tariff rates. The apparent methodology involved dividing the trade deficit by the imports from a given country to arrive at the tariff rates. This approach differs from the conventional method of calculating tariffs and seemingly only considered the trade deficit in goods, ignoring trade in services.

Examples of Tariff Calculation

• China: The US claims China charges a tariff of 67%. In 2024, the US had a deficit of $295.4 billion with China, while imported goods were worth $438.9 billion. Dividing the deficit by the import value ($295.4 billion / $438.9 billion) results in 67%.
• Vietnam: The same calculation method appears to have been applied to Vietnam.
• Trade Surplus Regions: The US appeared to have applied a 10% tariff for regions where it's running a trade surplus.

USTR's Explanation

The Office of the US Trade Representative (USTR) outlined its approach on its website, which appeared similar to the reverse-engineered formula. A screenshot of the USTR web page shows the formula used in greater detail.

Conclusion

The Trump administration's tariff announcement and the methodology used to calculate the tariff rates have been met with scrutiny. The approach of dividing the trade deficit by import value, as opposed to conventional tariff calculation methods, has raised questions about the accuracy and justification of the announced tariff rates. The USTR's explanation provides some clarity, but the unconventional methodology remains a point of discussion.