Within an hour of President Donald Trump’s announcement that he would impose a global tariff minimum of 10% and punish the “worst offenders” with an additional tariff margin based on the “reciprocal” tariff the offender in question levied on our exports, the unwashed masses realized the White House had quite literally made its “reciprocal” tariffs up. Trump bragged how “kind” he was for only charging 50% of the tariff levied by such offenders on our exports, but U.S. Trade Rep. Jamieson Greer explained exactly how Trump was calculating what that reciprocal tariff actually was and — spoiler alert — it had nothing to do with the actual tariff levied by the offending country.
“Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners,” writes Greer. “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.”
In effect, the “reciprocal” tariff charged by a given country is measured as our trade deficit with that country divided by our imports from them. As anyone with a high school understanding of economics can see, that does not actually reflect the tariff charged by another country but rather Peter Navarro’s fallacious and false delusion that imports detract from a nation’s GDP (they don’t), meaning that trade deficits in and of themselves are bad.
The accuracy of Trump’s so-called Liberation Day tariffs is further belied by his administration’s data. Below is a non-comprehensive list comparing what the White House previously conceded a country’s given average tariff actually is versus the Liberation Day tariff for a given country. This list should help you understand why the Dow Jones Industrial Average is down 3.5%, the Nasdaq down 4.8%, and the S&P 500 down 3.8% in the first hour after Thursday’s opening bell.
| COUNTRY | ACTUAL AVERAGE TARIFF LEVIED | WH SOURCE | LIBERATION DAY TARIFF CLAIMED |
| Taiwan | 6.34% | trade.gov | 64% |
| Japan | 4.3% | trade.gov | 46% |
| Thailand | 11.5% | trade.gov | 72% |
| Switzerland | 1.7% | trade.gov | 61% |
| Indonesia | 8.1% | trade.gov | 64% |
| South Africa | 7% | trade.gov | 60% |
| Bangladesh | 14% | trade.gov | 74% |
| Algeria | 18.9% | ustr.gov | 59% |
| Angola | 11% | ustr.gov | 63% |
| Bangladesh | 14.1% | ustr.gov | 74% |
| Brunei | 0.2% | ustr.gov | 47% |
| Cambodia | 10.2% | ustr.gov | 97% |
| Laos | 8.6% | ustr.gov | 95% |
| Tunisia | 19.5% | ustr.gov | 55% |
The study of quantifying effective average tariffs to include non-tariff barriers such as environmental restrictions and bans on genetically modified organisms is storied. International trade economists from the World Bank and the United Nations have spent years researching different econometric methods to quantify such qualitative restrictions best. One method, the Organization for Economic Cooperation and Development’s Services Trade Restrictiveness Index, compares the 38 member nations and Brazil, China, India, Indonesia, Kazakhstan, Malaysia, Peru, the Philippines, Singapore, South Africa, Thailand, Russia, and Vietnam. The STRI, a value between zero (the least restrictive) and one (the most restrictive), only evaluates non-tariff barriers to other nations’ market access. Still, it’s worth considering in tandem with the average tariffs levied. For example, the OECD average has an STRI of 0.19. The United States, with an STRI of 0.17, is slightly below average, but countries such as Costa Rica (STRI of 0.16) and Japan (the least restrictive of the bunch, with an STRI of 0.11) beat us. Russia has the second highest non-tariff barriers with an STRI of 0.38.
TRUMP BETS HIS PRESIDENCY ON TARIFFS
But even with Japan’s rock bottom actual tariff levied upon us (4.3%) and non-tariff barriers, per its STRI, Trump’s Liberation Day manifesto accuses it of charging us an effective average tariff of 46%! Meanwhile, Russia is somehow not even on a list that includes Antarctic islands with zero human population.
But the point of Liberation Day is not to punish other countries for levying disproportionate tariffs and restrictions on our exports. It’s to punish American consumers for preferring to purchase goods and services from other countries. It’s why the tariffs are a tax hike on Americans, not foreigners, and as a share of GDP, Trump’s tariffs are slated to constitute the single largest peacetime tax hike in history.