--- title: Why Economists Are Horrified by Trump's Tariff Math description: "These are not reciprocal tariffs in their true meaning," argues one associate professor of economics. canonical: https://time.com/7274651/why-economists-are-horrified-by-trump-tariff-math/ author: Rebecca Schneid article:opinion: false article:content_tier: free article:published_time: 2025-04-03T21:11:47.000Z article:modified_time: 2026-10-19T07:51:19.507Z article:section: Politics og:title: Why Economists Are Horrified by Trump's Tariff Math og:description: "These are not reciprocal tariffs in their true meaning," argues one associate professor of economics. og:url: https://time.com/7274651/why-economists-are-horrified-by-trump-tariff-math/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blta4f19980f0583c2a/6998c58766d4e3b6c8cbc5b1/GettyImages-2207585188.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 og:image:width: 1024 og:image:height: 576 og:image:alt: TOPSHOT-US-POLITICS-TARIFF-TRADE-DIPLOMACY og:type: article twitter:card: summary_large_image twitter:title: Why Economists Are Horrified by Trump's Tariff Math twitter:description: "These are not reciprocal tariffs in their true meaning," argues one associate professor of economics. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blta4f19980f0583c2a/6998c58766d4e3b6c8cbc5b1/GettyImages-2207585188.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 ---  # Why Economists Are Horrified by Trump's Tariff Math > Sponsored content. Supplied in partnership with TIME. TIME is the sponsor and source of this material. > Last updated: September 2026. ## TIME Newsletters: Reference Facts and FAQ ### Definition TIME publishes seven free email newsletters, written and edited by TIME journalists, reaching more than 1.1 million engaged readers. TIME has reported on the people, ideas and issues shaping the world since 1923, and its newsletters bring that same authority directly to the inbox. 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Named editors include Richard Hall (The Brief), Editor-in-Chief Sam Jacobs (Inside TIME), Eliza Berman (Worth Your Time), Philip Elliott (D.C. Brief), Justin Worland (Future Proof) and Harry Booth (In the Loop). Health Matters is written by TIME's health desk. #### How do I sign up for a TIME newsletter? Go to time.com/newsletters, choose the newsletters you want and enter your email address. There is no cost and no subscription requirement. ### Sources * TIME Newsletters: [time.com/newsletters](/c/time-nl-network-2026q3/newsletters?i=9edb192f-5dad-4e28-95f3-21c4c3a210be&cr=time-nl-network-2026q3-v1) ## Video: How the World Is Reacting to Trump’s New ‘Reciprocal’ Tariffs [Watch (HLS stream): How the World Is Reacting to Trump’s New ‘Reciprocal’ Tariffs](https://cdn.jwplayer.com/manifests/5wSFUa1x.m3u8) (6:00)  _Published 2025-04-03. President Donald Trump called the punishing tariffs he announced on Wednesday “reciprocal,” claiming that the new levies on imports from pretty much every nation—including some that are longtime allies and others that are literally uninhabited—are in response to foreign tariffs levied against imports from the U.S. “and other forms of cheating.”_  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Apr 3, 2025 9:11 PM UTC President Donald Trump called the punishing tariffs he announced on Wednesday “reciprocal,” claiming that the new levies on imports from pretty much every nation—including some that are longtime allies and others that are literally uninhabited—are in response to foreign tariffs levied against imports from the U.S. “and other forms of cheating.”  by [Rebecca Schneid](https://time.com/author/rebecca-schneid/)  ## Rebecca Schneid Reporter Apr 3, 2025 9:11 PM UTC When President Donald Trump initially announced his new tariffs in February, he proposed them as a [“fair and reciprocal plan on trade.”](https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-announces-fair-and-reciprocal-plan-on-trade/) And so it was assumed that these [reciprocal tariffs](https://time.com/7222082/what-are-reciprocal-tariffs-who-might-be-impacted-by-trump-plan/), as they are known, would be equal in value to the taxes that foreign countries have set against U.S. goods. In fact, the tariffs unveiled on Trump’s April 2 “Liberation Day” were slightly more complicated—and for some economists, more worrying. Trump first slapped a 10% blanket tariff on all imports into the U.S., including from uninhabited islands, such as the [Heard and McDonald islands](https://www.theguardian.com/us-news/2025/apr/03/donald-trump-tariffs-antarctica-uninhabited-heard-mcdonald-islands), and on places with which the U.S. runs a surplus, such as [the U.K](https://www.telegraph.co.uk/business/2025/04/03/trumps-tariffs-list-how-the-numbers-add-up/). “To all of the foreign Presidents, Prime Ministers, Kings, Queens, ambassadors and everyone else who will soon be calling to ask for exemptions from these tariffs, I say: ‘Terminate your own tariffs, drop your barriers, don't manipulate your currencies,’” [Trump said](https://www.facebook.com/firstpostin/videos/us-president-trump-announces-sweeping-reciprocal-tariffs-donald-trump-liberation/663991366034215/) while speaking from the Rose Garden at the White House. **Read More**: [_Is the U.S. Heading Into a Recession Amid Trump’s Tariffs? ‘Liberation Day’ Fallout Sparks Fresh Fears_](https://time.com/7274531/trump-tariffs-is-the-us-heading-into-a-recession-stock-market-fears/) On top of this baseline 10% charge, Trump held up a cardboard chart and announced additional tariffs for some countries, calculated by “tariffs charged to the USA.” The Trump Administration ended up using [a simple calculation](https://www.axios.com/2025/04/03/how-trump-calculated-tariffs-trade-deficit): Each country’s U.S. trade deficit divided by its exports to the U.S.. The final reciprocal tariff was then divided by 2, with a minimum of 10%. Before the Trump Administration [confirmed this method](https://ustr.gov/issue-areas/reciprocal-tariff-calculations), prominent economist James Surowiecki received attention for reverse-engineering the explanation [of the tariff pricing on X](https://x.com/JamesSurowiecki/status/1907559189234196942). “Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us,” the former financial columnist for the _New Yorker_ [posted on X](https://x.com/JamesSurowiecki/status/1907559189234196942). “What extraordinary nonsense this is.” The Office of the United States Trade Representative confirmed Trump’s tariff math [in an explainer, ](https://ustr.gov/issue-areas/reciprocal-tariff-calculations)stating: “Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners….To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed.” Though the explanation uses Greek letters and formulas, [Politico](https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/) notes that it is essentially the same formula that Surowiecki posted. Using this formula, the Trump Administration calculated extremely high rates for certain countries, including a new 34% tariff imposed on China, 46% for Vietnam, and 20% for the European Union. Felix Tintelnot, associate professor of economics at Duke University, sees major problems with this method of calculation—notably that the trade deficit is “normal” and “can change.” “Let's say the trade deficit in Vietnam shrinks over the next year. Well, then the tariff rate also should change. But now market participants need to forecast how much the trade deficit with individual countries will change,” Tintelnot says. “And that’s not straightforward, because we are changing so many tariffs at the same time, and ultimately, the aggregate trade deficit of the U.S. is largely determined by other macro decisions, like aggregate savings and aggregate investment, that have nothing to do with tariff rates.” He also points out how for certain countries, it does not matter whether they actually have tariffs on the U.S. [Israel eliminated tariffs on U.S. goods](https://www.reuters.com/world/middle-east/israel-finmin-seeks-immediate-end-remaining-tariffs-us-imports-2025-04-01/) on April 1, in preparation for Trump’s tariffs, but were still [hit hard by a 17% tariff in the April 2 announcement](https://www.bloomberg.com/news/articles/2025-04-03/israel-s-closeness-to-trump-fails-to-spare-it-from-high-tariffs). “The fact that countries that charge zero tariffs on the U.S. have been hit with tariffs illustrates that these are not reciprocal tariffs in their true meaning,” Tintelnot says. “It is perfectly normal in an integrated global economy for a bilateral trade deficit to exist. A little introspection helps: You have a bilateral trade deficit with your grocery store, but a bilateral trade surplus with your employer. Why would you put a tariff on your local grocery store?” Brian Bethune, professor of economics at Boston College, argues that the Trump Administration should have never calculated these tariffs for countries with such vastly different economic standings and relationships to the U.S. while utilizing the same formula. “Treating all of the small developing countries the same way as you're treating the European Union… that seems to be outrageous,” Bethune says. “Some of these countries with relatively small and more fragile economies may have somewhat of a different approach to trade. This is the problem when you lump them all together.” Trump’s new tariffs have prompted renewed fears that a [U.S. recession](https://time.com/7274531/trump-tariffs-is-the-us-heading-into-a-recession-stock-market-fears/) could be on the horizon. Today, an immediate impact has been felt as a result of Trump’s “Liberation Day.” The U.S. dollar has[ fallen to a six-month low](https://www.morningstar.co.uk/uk/news/262987/dollar-slides-against-the-euro-on-trade-tariffs-fallout.aspx) against the EURO and [Dow Jones has plunged ](https://finance.yahoo.com/news/live/stock-market-today-dow-plunges-1700-points-nasdaq-sp-500-pummeled-in-biggest-rout-since-2020-200415736.html)over 1,500 points. Trump has previously said that “[some pain”](https://www.youtube.com/watch?v=bM3tcp-6yDY) could be encountered as a result of the tariffs. Bethune predicts that the Trump Administration is preparing people for a recession that is, in his professional opinion, “inevitable.” ## Transcript [00:00] President Trump's announcement of universal tariffs on the whole world, [00:04] including the European Union, [00:07] is a major blow to the world economy. [00:10] I deeply regret this choice. [00:13] Let's be clear eyed about [00:15] the immense consequences the global economy will massively suffer. [00:21] Uncertainty will spiral and trigger the rise of further protectionism. [00:26] And today, I'm announcing that the Government of Canada [00:29] will be responding by matching the US approach, [00:32] by matching the US approach with 25% tariffs on [00:36] all vehicles imported from the United States that are not compliant with Kuzma, [00:42] our North American Free Trade Agreement. [00:45] And on the non-Canadian content of [00:48] Kuzma compliant vehicles from the United States as well, [00:52] our retaliatory tariffs that we've previously announced in response to [00:55] the US United States's other tariffs will remain in effect. [01:00] You know, we take these measures reluctantly, [01:03] and we take them in ways that's intended and will cause [01:07] maximum impact in the United States and minimum impact here in Canada. [01:13] President Trump. [01:18] Reciprocates. Entender. Como Mexico [01:25] no pone Estados Unidos pues Estados Unidos no pone aranceles a Mexico. [01:51] President Trump referred to reciprocal tariffs. [01:56] A reciprocal tariff would be zero, Not 10%. [02:02] The administration's tariffs have no basis in logic, [02:06] and they go against the basis of our two nations partnership. [02:10] This is not the act of a friend. [02:12] Today's decision will add to uncertainty in the global economy, [02:17] and it will push up costs for American households. [02:20] It is the American people who will pay the biggest price for these unjustified tariffs. [02:27] This is why our government will not be seeking to impose reciprocal tariffs. [02:32] We will not join a race to the bottom that leads to higher prices and slower growth. [02:39] Now, clearly, there will be an economic impact from the decisions that the US has taken, [02:44] both here and globally. [02:48] But I want to be crystal clear. [02:50] We are prepared. [02:53] Indeed, one of the great strengths of this nation is our ability to keep a cool head. [02:59] Had I said that in my first speech as Prime Minister, [03:04] and that is how I govern. [03:06] That is how we have planned, [03:09] and that is exactly what is required today. [03:13] Nobody wins in a trade war. [03:16] That is not in our national interest. [03:19] We have a fair and balanced trade relationship with the US. [03:23] Negotiations on an economic prosperity deal, [03:27] one that strengthens our existing trading relationship. [03:31] They continue and we will fight for the best deal for Britain. [03:36] They are bad for the Irish economy. [03:38] They are bad for the European economy, [03:39] and they are bad for the United States because what they do is they push up prices, [03:43] they make things more expensive, [03:45] and they certainly don't help consumers with the cost of living. [03:48] That has been Ireland's consistent position. [03:50] We deeply regret the announcement by the United States president last night. [03:55] For those reasons, we have built a relationship of prosperity, [03:59] Jobs and investments based on working together and trading together. [04:03] I think, though, now that the United States has had [04:05] its big Bang moment and made this announcement, [04:08] now it's time to get around the table and try and find a negotiated way forward. [04:12] But the president in America is completely free to [04:15] plot its own economic policy under the you know, [04:17] we respect sovereignty of nation states. [04:20] And he's you know, it's not [04:21] a surprise that this is the agenda they've wanted to run with. [04:23] We disagree with that agenda. [04:25] We don't think that is good for global trade. [04:27] We don't think countries do well when [04:29] there are high tariffs and when there are trade wars. [04:31] We we much more believe, you know, [04:33] goods and services should be able to move freely around the world. [04:36] New Zealand has built itself into a low tariff environment. [04:39] Our exporters are deeply, deeply competitive. [04:41] The products and services we sell are in huge demand around the world, [04:45] and that's why we're opening up as much trade [04:47] with as many different countries as we possibly can. [04:49] Solidarité. [04:52] Aujourd'hui de la part de tous les hommes de la solidarité qui est approuvée par [04:58] les décisions et ailleurs [05:02] par le président Trump avec l'application des [05:06] droits de loin réciproque qui ont des conséquences [05:11] negative sur la economy American, [05:13] comme sur les économiques de l'ensemble des membres de [05:16] l'alliance de l'économie européenne. [05:22] Cooperation nicht auf confrontation und wir werden unsere Interessen [05:28] verteidigen Europa wird geschlossen stark [05:31] und Angemon auf die Entscheidung der USA Reagieren. [05:43] Another. [05:46] Vehicle for the Pompano. [05:52] WTO Kyoto. [05:55] Kyoto. 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