How US Calculated Reciprocal Tariffs, How Rates Were Determined For Each Country | Explained

But how exactly were these tariffs — taxes on imports – were calculated?

How Tariffs Were Calculated

The US Trade Representative (USTR) published an overview of the calculations on its site with a math formula it used to calculate each country’s reciprocal tariff.

Here’s how that formula breaks down:

So, the simple maths is — Take the trade deficit for the US in goods with a particular country, divide that by the total goods imports from that country and then divide that number by two.

A trade deficit occurs when a country buys (imports) more physical products from other countries than it sells (exports) to them.

For example, the US exported $143.5 billion in goods to China and received $438.9 billion in goods from China in 2024. After calculating the formula, its change in tariff import rate would be -67.3% and its listed value on the chart Trump held was 67%.

Similarly, when it applied to the EU, the White House’s formula resulted in a 20% tariff.

According to Reuters, economists say the formula can be reduced to a simple quotient of goods trade deficit over goods trade exports. The report describes the tariffs as confusing to trade partners and unfair to poorer nations that cannot afford to import US goods.

For example, Reuters reports that the European Union faces a punitive tariff of 20% — four times the 5% that the World Trade Organization reports as the EU’s average tariff rate.

The USTR memo states: “To conceptualise reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed. While models of international trade generally assume that trade will balance itself over time, the US has run persistent current account deficits for five decades, indicating that the core premise of most trade models is incorrect."

What Are The Economists Saying?

Thomas Sampson of the London School of Economics told the BBC: “The formula is reverse engineered to rationalise charging tariffs on countries with which the US has a trade deficit. There is no economic rationale for doing this and it will cost the global economy dearly."

A top trade analyst has said the Trump administration’s calculations that led to the tariffs are “not standard economics" and in many cases impose rates far higher than those that the targeted countries apply to US goods, reported news agency the Associated Press.

Julia Spies, chief of trade and market intelligence at the International Trade Center, told the Associated Press uncertainties remain about the exact way the US Trade Representative’s office and other US officials came up with the tariffs.

She said the figures presented by Trump roughly match the US trade balance — or imbalance — with a specific country, divided by imports from that country, “and that, divided by two, gives us the reciprocal tariff" imposed by the US.

Countries Hit Hardest By Trump Tariffs

Many major US trading partners have been hit hard by Trump’s reciprocal tariffs.

China is levied with a 34% tariff, which is additional to the existing 20% duties on all Chinese imports to the US, while the European Union gets 20%.

China and the EU accounted for around a quarter of US total imports in 2024 and are in the top three suppliers of US imports along with Mexico, according to US Census Bureau data.

Many Southeast Asian countries such as Vietnam, Laos and Cambodia will see unprecedented tariff rates of 46% to 49%. Americans rely on these countries for consumer goods, machinery and electrical goods and textiles.

Mexico and Canada are exempted from the list. But the existing 25% tariff on their exports to the US that don’t comply with the United States-Mexico-Canada Agreement remains in place, except for Canadian energy and potash, which is taxed at 10%.

The additional country-specific reciprocal tariffs also will not add on to product-specific tariffs that have been announced on steel, aluminum and autos.