Visualizing the quirks of US Liberation Day tariff methodology

The White House said these tariffs were related to amounts other countries imposed on the US, including non-tariff barriers and sales taxes, but the numbers didn't match.

Instead, these tariffs appear to have been calculated by taking the merchandise trade balance of a given trading partner, divided by how much the US imports from that nation. (The merchandise trade balance might have been selected instead of the overall trade balance, i.e., including services, where the US often has a trade surplus.)

CEIC's calculations in this chart use the rolling 12-month trade balance and rolling 12-month imports to the US from a given trading partner. The US "reciprocal tariffs" amount to half of the purported tariffs imposed (with a minimum of 10%).

For countries that have a trade deficit with the US - i.e., the US sells them more goods than they export to Americans; this group includes the UK, Brazil and Australia - Trump's methodology appears to set an arbitrary 10% tariff; this appears to also apply to trading partners with a lower-than-10% trade deficit-to-import ratio.

As our chart using these calculations shows, the ASEAN "connector economies" top the list, particularly Vietnam and Cambodia. Much of the negative market reaction that followed was focused on apparel stocks like Nike, which had moved production to Vietnam and set off an export boom.

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