Trump's Sweeping Tariffs Fail Basic Test of Careful Analysis

Rates have been calculated using a simple formula for a metric unrelated to tariffs

- Pragya Srivastava & Tanay Sukumar

After days of uncertainty and speculation, US President Donald Trump announced his promised reciprocal trade tariffs on nearly all countries on Thursday. However, the numbers he used to decide how badly countries should be punished fail a basic smell test. There is little connection between what countries actually impose on US imports and what Trump has accused them of imposing.

The rates have been calculated using a simple formula for a very different metric unrelated to tariff rates, rather than a careful analysis of the complex nature of tariffs, trade and non-trade barriers and currency movements.

The US has derived the tariff rates imposed by other countries by dividing the value of the trade deficit by the value of imports from that country, according to the website of the US Trade Representative. For example, the US' trade deficit with India in 2024 was worth $45.66 billion, and the country imported goods worth $87.42 billion, which brings that number to 0.52, or 52% 'tariff rate' as calculated by the Trump administration.

The 'reciprocal' tariff then is half of that, or 27%, on Indian goods.

Before the US gave official clarity on the matter, the theory was first floated by James Surowiecki, a financial writer, on X (previously Twitter).