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Emily Hallas


NextImg:Trump tariff formula far harsher than other metrics that measure foreign tariff rates

The tariff rates President Donald Trump has claimed are being charged against the United States have come under heavy scrutiny and go further than other globally accepted tariff rates, including the Most-Favored-Nation (MFN) rate. 

On April 2, Trump announced that he would implement a 10% tariff globally and an additional tariff on dozens of countries, which would be calculated by charging them “half” of what they charged the U.S.

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“So the tariffs will be not a full reciprocal. I could have done that, I guess, but it would have been tough for a lot of countries who didn’t want to do that,” Trump said.

He instituted a 46% tariff on Vietnam, 34% on China, 26% on India, 20% on the European Union, and 17% on Israel, claiming they charged 90%, 67%, 54%, 39%, and 33%, respectively.

However, other countries’ formal tariffs on the U.S. are actually far less than the levies the president has placed on them, according to CNN’s analysis of MFN tariffs. MFN tariffs apply to imports from over 160 countries belonging to the World Trade Organization.

For instance, Vietnam imposes a formal tariff of only 9.4% on other nations, China a 7.5% rate, India a 17% rate, the EU a 5% rate, and Israel a 3.6% rate. 

The White House has argued that the so-called “reciprocal” tariffs embody a response to other countries’ general economic policy toward the U.S. In addition to formal tariffs placed on the U.S., foreign countries have enacted unfair regulatory practices, engaged in currency manipulation, and set other forms of allegedly unfair tax policy that have put the U.S. at a steep trade deficit and competitive disadvantage, per Trump and his policy team. 

When the president announced the tariffs last Wednesday, he said they responded to
“tariffs, non-monetary barriers, and other forms of cheating.”

“Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners,” a statement issued by the White House to explain the formula used to enact the “Liberation Day” tariffs reads. “This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing. Tariffs work through direct reductions of imports.”

Mike O’Rourke, the chief marketing strategist at Jones Trading, said that there “does not appear to have been any tariffs used in the calculation of the [president’s] rate.” 

“The Trump administration is specifically targeting nations with large trade surpluses with the United States relative to their exports to the United States,” he said in a note to investors. 

White House Senior Counselor for Trade and Manufacturing Peter Navarro has also suggested that the U.S.’s “Liberation Day” tariffs respond to trade deficits with other countries and not actual tariffs. 

During a Sunday interview on Fox News’s Sunday Morning Futures, Navarro described Vietnam as the “poster child for nontariff cheating,” and said that even if the country were to remove all its tariffs, the U.S. would still face a steep trade deficit. 

“Vietnam is essentially a colony of communist China. China uses Vietnam to trans-ship to evade the tariffs. How does that work? Vietnam sells us $15 for every $1 we sell them. And about $5 of that is just Chinese product that comes into Vietnam, they slap a made-in-Vietnam label on it, and send it here to evade the tariffs,” he said. 

TRUMP SIGNALS SWEEPING TARIFFS HERE TO STAY AS FUTURES MARKET PLUNGES

“If you simply lowered our tariffs and they lowered their tariffs the zero, we’d still run about $120 billion trade deficit with Vietnam,” Navarro continued, arguing that Vietnam utilizes unfair trade practices such as currency manipulation and rebranding Chinese exports as its own products before shipping these to the U.S.

The universal 10% tariffs went into effect on April 5, while the larger tariffs on individual countries will take effect on Wednesday, April 9.