Trump’s tariffs were calculated through a simple math formula

Fortune

President Trump on Wednesday announced a minimum 10% tariff for all U.S. trading partners. To calculate the tariffs, the White House used a formula that focused on trade deficits and total exports.

Transcript

00:00President Donald Trump's new tariffs have sparked a massive stock market sell-off.

00:04In one day, the S&P 500 dropped 4.8%, the Dow dipped 3%, and the Nasdaq Composite sank 6%.

00:11Trump announced sweeping additional tariffs Wednesday, ranging from a 10% blanket tariff

00:16to 50% on all trading partners that will take effect as early as April 5th.

00:21Canada and Mexico were exempt from the additional measures,

00:24but existing tariffs will still apply.

00:27Trump argues that these reciprocal tariffs will stop other countries

00:30from ripping off the United States.

00:32The administration said they used this formula to determine the tariff rate

00:37necessary to balance bilateral trade deficits between the U.S. and each of its trading partners.

00:42So, the trade deficit, divided by exports to the U.S. from that country, divided by 2.

00:47If the country has a trade surplus with the U.S. or the calculated tariff was less than 10%,

00:52the 10% flat rate was applied.

00:54The formula has attracted criticism for ignoring nuance,

00:57and some of the poorest countries on the list are hit the hardest,

01:00with 50% on Lesotho, 48% on Laos, and 47% on Madagascar.

01:06The tariffs will remain until Trump determines that the threat posed by the trade deficit

01:11and underlying non-reciprocal treatment is satisfied, resolved, or mitigated.

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