"Reciprocal" tariffs announced

After tariffs were announced on April 2, the New York Times tells us what to know about Trump’s new tariffs, and the Financial Times finds that economists are baffled by Trump’s tariff formula. The Council on Foreign Relations reacts to "liberation day". Peter Ungphakorn in the Trade ß Blog teaches the lessons of the Kindleberger spiral and the Wall Street Journal explains why the US dollar is devaluing. Deborah Elms of the Hinrich Foundation breaks down what’s truly unfair in the impact of Trump’s reciprocal tariffs.

Mentioned publications

Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits – Executive Order, The White House, April 2, 2025
President Trump’s latest executive order establishes a sweeping reciprocal tariff regime aimed at correcting persistent US trade deficits. It directs the US to impose tariffs on imports that mirror the trade barriers of partner countries, particularly targeting sectors like autos, semiconductors, and pharmaceuticals. It seeks to push foreign governments to lower their tariffs and non-tariff barriers.
What to Know About Trump’s New Tariffs – Anna Swanson, The New York Times, April 3, 2025
President Trump’s sweeping tariff overhaul introduces a 10% baseline duty on nearly all imports and additional "reciprocal" tariffs ranging from 1% to 40%, calculated based on trade deficits rather than actual trade barriers. Major trading partners such as China, Japan, South Korea, and Vietnam are heavily impacted. While the administration touts it as a path to economic revival, economists warn it could raise consumer prices – costing the average American household an additional US$2,100 annually – disrupt global supply chains, and risk pushing the US toward economic contraction.
HF sponsored access Donald Trump baffles economists with tariff formula – Peter Foster and Sam Fleming, Financial Times, April 3, 2025
Economists have slammed President Trump’s new reciprocal tariff formula as economically flawed, warning it punishes poorer countries and won’t eliminate trade deficits. By basing tariffs solely on trade imbalances, the policy is expected to raise prices for US consumers and reduce export competitiveness while failing to address the structural drivers of America’s trade gap. Critics argue the approach is both misguided and economically damaging.
Liberation and Its Discontents – Council on Foreign Relations, April 4, 2025
President Trump’s new tariff regime marks a historic departure from decades of US trade policy. The administration justified the tariffs by treating trade deficits as a proxy for unfair practices, abandoning principles grounded in reciprocal negotiation and comparative advantage. The move has triggered global market turmoil, sparked retaliation from key partners like China, and raised serious legal and economic concerns. Critics argue it could drive up consumer prices, risk a recession, and damage US global economic leadership. The unilateral move undermines the rules-based global trade order, isolates the US, and creates broader geopolitical risks.
Tariffs: Kindleberger spiral back from the dead, and who pays the tariffs? - Peter Ungphakorn, Trade ß Blog, April 3, 2025
Trump’s "reciprocal tariffs" are based not on matching trade barriers but on the size of US trade deficits with each country, leading to high tariffs that disproportionately impact poorer nations and violate WTO principles such as non-discrimination and preferential treatment for developing countries. The WTO warns these measures could shrink global merchandise volumes by around 1% and spark a new wave of retaliatory protectionism. Economists argue that the approach is economically flawed, with trade partners and supply chains likely to suffer widespread disruption.
Trump’s Tariffs Were Supposed to Boost the Dollar. Why the Opposite Happened. – Jon Sindreu, The Wall Street Journal, April 3, 2025
Trump’s "Liberation Day" tariffs have significantly weakened the US dollar, signaling eroding investor confidence in America’s long-term economic outlook. The erratic and economically flawed policies risk undermining US competitiveness, potentially stunting innovation and investment, and prompting foreign capital to shift away from US assets. Blanket tariffs on auto parts could make US car production less efficient, risking isolation rather than integration in global supply chains.
What’s really unfair in the impact of Trump’s reciprocal tariffs – Deborah Elms, Hinrich Foundation. April 4, 2025
President Trump unveiled his long-promised list of sweeping new worldwide reciprocal tariffs in an outdoor ceremony at the White House on April 2. Every single country was assigned a new tariff rate, starting at 10% for all and rising as high as 50% on many economies, with particular damage to smaller, developing economies. This staggering act of self-harm by and to the United States immediately triggered market meltdowns and deep anxiety domestically and across US trade partners.