• The formula used to calculate the new group of definitions of President Donald Trump On Wednesday, the announcement is based on the division of the trade deficit of the United States with a specific country divided by its total exports to the United States, and a memorandum from the US Trade Representative Office approved that this methodology used because it was “very complicated, if not impossible” to calculate the full issue of US trade policies for each country.

The Trump administration was implemented Several mutual definitions At countries around the world on Wednesday, in an attempt to respond to what she said it was unfair commercial practices that hurt American companies and the economy as a whole.

To calculate the definitions that he decided to impose on Countries Throughout the world, the White House used a formula that focused on commercial deficit and total export. The formula did not include an assessment of the customs tariff rates of specific products in individual countries, or taking into account other commercial barriers that were not tariffs.

Instead, the mutual tariff rate applied to each country was: their trade deficit divided into exports to the United States, divided into two.

If the country has a trade surplus with the United States, or the number resulting from the above formula is less than 10 %, then a fixed rate of 10 % is applied.

For example. This number is rounded to 0.2, which leads to a 20 % tariff rate.

“The blind application of such a simple formula luck In an email.

Journalist James Sorwiki indicated for the first time that this is the formula that the White House used Trump in X post Posted slightly more than two hours after the announcement of the customs tariff.

When it was reached for the comment, a White House spokesman pointed out luck to statement From the American Trade Actor Office explains the formula.

This is the formula I used. He also admitted the difficulty of calculating mutual tariff rates based on a detailed analysis of the commercial barriers of each country.

“While computing individually the effects of the commercial deficit of tens of thousands of customs tariffs, organizational and tax policies and other policies in each country are complex, if not impossible, its effects can be combined by calculating the level of customs tariffs in line with the leadership of the bilateral trade deficit to zero”, the statement of reading the Trade Representation Office.

“The mutual definitions appear to be fully dependent on the volume of bilateral trade deficit in the goods in 2024. He said luck previously.

Using this methodology to calculate the definitions that will be imposed on other countries, it risk the need to hit it at higher rates than those currently they have for American goods. The countries subject to the highest tariff rates were those that have the largest commercial deficit with the United States, and not necessarily those that have most commercial barriers. For example, Taiwan, a major American commercial partner, is now facing 32 % of customs tariffs on all goods. However, the trade deficit in the United States with Taiwan is partly due to the large number of semiconductors and advanced technologies that it sells to the United States in a statement Absolute On Thursday, Taiwan officials said that it is mainly punished to sell products that American companies want to buy.

“The supply chain in Taiwan turned into Taiwan and increased demand in the United States on information and communications products in Taiwan, which reflects the huge contribution to Taiwan to the American economy and national security.”

(Semi -conductors are excluded from the new Trump tariff.)

Papalardo said that this measure is also a backward appearance and does not take into account any preventive efforts that some countries may make to balance trade with the United States. “The account represents one snapshot in time.”

For example, it was Vietnam I promised For more cut any customs duties on American goods and buy more of them in an attempt to avoid any height in customs tariffs. Instead, a country of Southeast Asia, a manufacturing center, got a 45 % tariff. The United States is the largest export market in Vietnam, and this size will paralyze its ability to sell goods in the country.

The comprehensive formula that does not take into account the details of the commercial policy of each country – which is often a series of complex interlocking regulations that include very detailed rules for each sector of the economy – disturbs global trade by enhancing the flow of critical goods only through their commercial partners. Instead, they create road barriers for other countries to enter the United States, which is the largest economy in the world.

“There are strong basic and economic reasons for importing some commodities from outside the United States,” said Papalardo. “This formula completely ignores this concept. These reasons include the availability of natural resources, the cost of production and skills gaps among other things. In other words, some countries are more suitable for the production of some commodities than others, but all goods are dealt with in the comprehensive application of this approach.”

These new policies will raise the average US tariff in all areas by almost 10 %, which may tend to the global economy towards stagnation, according to a research memorandum of Fitch classifications.

“The US tariff rate on all imports is now about 22 % of 2.5 % in 2024. This rate was last seen in 1910,” Fitch wrote in her report. “This is a changing games, not only for the American economy but for the global economy. Many countries are likely to end up.

The implementation of a trade policy based on customs tariffs instead of free trade agreements was a great promise in the campaign that Trump offered during the elections last year. Trump has long looked at the role of the United States as a net importer as evidence of the weakness that represents the unwillingness of other countries to buy American products. Most economists consider it a job for the fact that the United States is the richest country in the world, and therefore they can buy more goods than its commercial partners, which leads to a trade deficit.

Markets It did not interact positively To announce the definitions. S&P 500 fell 4 % on Thursday, Dao Jones fell 3.5 %, and Nasdak The compound decreased 5.3 %. It was somewhat expected for the duration of the stock market, given that most economists considered that the entry of the United States into a bad global trade war for the economy. However, the reality of the situation He hits Investors hard.

“The previously announced measures increased the tariff rate in the United States to 11 %, which is the highest level since the 1940s,” said Sima Shah, head of the Global Strategy at the main investment company. “Yesterday’s announcement raised the tariff rate further to about 24 %, which is the highest since 1908, and was more aggressive than the broad market.”

During his speech in the White House garden on Wednesday, Trump said it was “cute” by hitting countries only with half of the definitions it is believed to impose on the United States, because customs tariff rates are based only on the account of the US trade deficit with a specific country and does not include other commercial barriers, so that the rate of stereotypes does not represent a significant increase in foreign goods. One will definitely be Effects on effects For the United States, as the rest of the world is average.

Expectations [are] These definitions will harm the American economy more than the rest of the world, “according to the capital economy note published on Thursday.

This story was originally shown on Fortune.com

https://fortune.com/img-assets/wp-content/uploads/2025/04/GettyImages-2208188174-e1743693631758.jpg?resize=1200,600
2025-04-03 18:36:00