On "Liberation Day" President Trump revealed he would impose reciprocal tariffs on more than 180 countries. Each country, he claimed, had been charging America unfair tariffs for years, and now America is going to "balance the scales."

But you know what?

The formula used to calculate these tariffs wasn’t derived from trade law, tariff schedules, or global customs agreements. Instead, it was built on a crude shortcut:

U.S. Reciprocal Tariff (%) =
U.S. Trade Deficit with Country X / U.S. Imports from Country X x 100

This has nothing to do with the actual tariffs other countries charge. It’s simply a ratio of how much more the U.S. buys from a country than it sells to them.

Verified U.S. Trade Data Examples (2024)

China
•U.S. Imports: $438.9B
•U.S. Exports: $143.5B
•Trade Deficit: $295.4B
•Calculated "Tariff Charged to USA": 295.4 ÷ 438.9 = 67.3%
•Trump’s Reciprocal Tariff: 34% (≈ half of 67%)

India
•U.S. Imports: $85B
•U.S. Exports: $35B
•Trade Deficit: $50B
•Calculated Tariff Charged to USA: 50 ÷ 85 = 58.8%
•Trump’s Reciprocal Tariff: 29% (≈ half of 59%)

Bangladesh
•U.S. Imports: $8.366B
•U.S. Exports: $2.214B
•Trade Deficit: $6.152B
•Calculated Tariff Charged to USA: 6.152 ÷ 8.366 = 73.5%
•Trump’s Reciprocal Tariff: 37% (≈ half of 74%)

United Kingdom
•U.S. Imports: $64B
•U.S. Exports: $71B
•Trade Surplus: -$7B
•Calculated Tariff Charged to USA: N/A (U.S. runs a surplus)
•Trump’s Reciprocal Tariff: 10% (Minimum flat rate applied when calculated result is under 20% or surplus exists)

They were simply trade deficit ratios.

Yet based on this logic, the U.S. imposed new import taxes on hundreds of billions of dollars in goods. Countries like Vietnam, Cambodia, and Bangladesh were labelled as extreme tariff violators, even though many of them have low or moderate import taxes on U.S. goods.

Another interesting fact is countries with which the U.S. runs a trade surplus — like the UK, Australia, and Chile — were hit with a flat 10% tariff.

Trade deficits are not inherently bad. America runs trade deficits with many countries because U.S. consumers buy a lot of foreign goods, and U.S. exports include high-value services that aren’t captured in goods-only numbers.

Using this kind of math to justify tariffs doesn’t address real trade barriers. It punishes countries simply for selling more than they buy, regardless of their actual policies.

The irony? These tariff numbers are now being used in real trade negotiations. But how can countries "bring down" tariffs they never imposed in the first place? Today, I was listening to the economic advisor, and they pointed out: "U.S. cotton enters Bangladesh at 0% tax. Another U.S. item? Just 3%."

Reciprocal tariffs are a powerful idea. But if the data behind them is fiction, the policies become fictions too. And when trade policy turns into puffery, businesses suffer, markets destabilize, and trust evaporates.
Truth in numbers matters. Especially when numbers become law or policy.

“Just buy more U.S. products,” they say — cotton, lentils, gas, oil.
But you know, WTO rules require equal treatment for all trade partners. So if you lower a tariff for the U.S., you’ve got to do it for everyone.

That’s the twist.