GMF has some amusing insights on reciprocal tariffs.
Trump’s Reciprocal Tariff Policy
Please consider the GMF report on Trump’s Reciprocal Tariff Policy.
US Treasury Secretary Scott Bessent recently presented the clearest explanation of the tariffs the Trump administration is planning to levy.
How the United States will calculate reciprocal tariffs remains unclear.
Will the administration consider the overall difference in tariffs or focus on peak tariffs on specific industries? Currently, the United States has a trade-weighted average import tariff rate of 2.5%, while the EU’s is 2.7%, China’s is 3.1%, and India’s is 11.5%.
The legal authority that the administration will invoke to impose tariffs is also unclear. Most existing trade tools (e.g., trade laws including Section 301, Section 232, and Section 338) require an investigation first. And although the United States looks at only trade deficits for goods, the White House is including barriers to services (most notably technology or digital services) as a justification for reciprocal tariffs.
Will the United States provide any exclusions for items not domestically produced or available? And which lucky countries will be exempt from tariffs due to agreements negotiated before April 2?
Clear Clarifications
I don’t know about you, but I am pleased and delighted with clear clarifications.
I covered clear clarifications in my post Should New Zealand, Germany, and France Set US Trade Policy?
Bessent told Fox Business Network’s “Mornings with Maria” program that Trump on April 2 would give trading partner countries a reciprocal tariff number that reflects their own rates, non-tariff trade barriers, currency practice and other factors, but could negotiate to avoid a “tariff wall.”
Do to Them What They Do to Us
We will impose the same tariffs on other countries as they impose on the US: “No more, no less,” said Trump. “What they charge us, we charge them.”
Is that clear or what?
Here is a needed further clarification: The reciprocal number is based on tariff rates, non-tariff trade barriers, currency practice and other factors, but Trump could negotiate to avoid a “tariff wall.”
I also noted that Trump ruled out tariff tiers. He wants individual tariffs for all 200 countries the US trades with, based on Trump’s interpretation of what he says they do to us.
Thus, Trump will let every nation on the planet set US tariff policy, based of course on Trump’s calculation of what their policy is.
Clear Q&A Example
For example, as of March 19, 2025, New Zealand generally does not have tariffs on U.S. wool under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement that includes New Zealand and the United States.
Q: Can I assume the US will not put a tariff on New Zealand wool?
A: Ha Ha. Reciprocal does not mean reciprocal, silly. It means whatever Trump says it means.
Q: For how long?
A: Good question. Perhaps a day, a week, a month, or hours. No one has any idea.
Q: How many items are we talking about?
A: Great question. The Harmonized Tariff Schedule of the U.S., which details individual rates on particular commodities, has about 13,000 line items. The U.S. trades with roughly 200 countries.
The Trump Trust Factor
Q: Why should any country believe Trump will honor any agreement he signs?
A: There is no reason and there is no trust. Trump tore up his own “best trade deal ever” USMCA.
What Can Go Wrong?
Don’t worry. The trade department has more than 200 people charged with devising the reciprocal tariff plan on 200 nations and 13,000 items. For those doing the math, that’s a 2,600,000 matrix.
But here’s the beauty of it all. Whatever the team decides, Trump can rectify at a moment’s notice, based on exchange rates, VATs, non-trade barriers, drugs, and what side of the bed Trump gets up on.
So nothing can possibly go wrong.
Final Q&A
Q: Can I have a synopsis.
A: Sure. Reciprocal means whatever Trump says it means whenever he says it!
How can that possibly not be perfectly clear?
Related Posts
March 4, 2025: A Global Trade War Has Started – Global Recession Will Follow
The most significant global trade war since Smoot-Hawley and the Great Depression is underway.
March 9, 2025: Cheese Was a “Key Achievement” of Trump’s USMCA Trade Agreement
Trump is complaining about Canada’s cheese tariffs. In 2018, he was bragging about cheese.
That post is a real hoot. Please give it a look.
March 16, 2025: Trump Wants a Weak Dollar But Needs a Strong One
Trump wants the Fed to cut interest rates to weaken the dollar and boost exports. But that’s not what helped him get elected.
For discussion of the small business hit, please see How One Small Business Owner Is Coping With Trump’s Tariffs
Fifty-four percent of small businesses polled said that tariffs would negatively affect their companies, while just 11 percent said they would benefit.
Please read the above post and multiply it by tens of thousands of small businesses.
Welcome to the global recession.
I suspect that you and many of your readers enjoy “inside baseball” assessments. I think there would be great value in exploring the decay in our trade balance as effected by intellectual property theft and purposeful industrial policy that has hallowed out our “middle class”. Most of us thought of ourselves as middle class before China was given most favored nation status and allowed to join the WTO. We are undoubtedly poorer now.
What about “valued added taxes” VAT? Most countries charge a VAT on all US goods that enter the country, and also give a VAT refund/rebate on all goods exported to the US. If trump were to implement something similar that would be very helpful to competitiveness of US production. Republicans in congress were working on a “border adjustment tax” around 2016/17 that accomplished essentially the same thing in a less inflationary way, but Trump decided he liked tariffs better so he killed the idea-too bad, it would have made a large difference.
One of the (many) things the Trump people don’t understand is that import tariffs are usually one of the few effective tools for collecting taxes in poorer countries. These countries can’t run modern tax administrations that rely on taxing income and consumption. Everybody who works on development economics would agree that tariffs are really bad way to collect taxes, but there are often no good alternatives, especially if the country is not a significant commodity exporter. From this cross-country perspective, it’s easy to see why tariff are a stupid idea.
When you look through the list of countries with and without tariffs, it’s difficult to see a pattern to it. The highest tariffs are in Bermuda and Caymans, two of the top tax havens going; but also a lot of poor African countries. Of those places without tariffs, there are still plenty of little islands and poor countries in the mix. I don’t buy into Mish’s simplistic tariffs argument that he gets so heated up about; but then I don’t buy into his notions about “inflation”, when there is so much deflation about, and so little expansion of money supply and credit to fuel actual inflation.
Toronto Sun
Sep 14, 2016 · “There is no core identity, no mainstream in Canada,” Trudeau said, concluding that he sees Canada as “the first post-national state.” Even the New York Times called the …
New York Times
Dec 8, 2015 · Trudeau’s most radical argument is that Canada is becoming a new kind of state, defined not by its European history but by the multiplicity of its identities from all over the world.
Vancouver Sun
Mar 13, 2016 · Justin Trudeau says Canada is the world’s first “postnational state.” But the goal of the alternative, transnationalism, is to override the rules, …
The Niagara Independent –
Mar 10, 2023 · Recent revelations about election interference and infiltration of our systems at all levels by the Chinese Communist Party (CCP) make Trudeau’s view that Canada is a “post-national state, with no core identity” even more …
What about the natives? Canada should probably never have bothered leaving mother England’s tit, she just isn’t as much of a whore as America, so she can’t expand quick enough and add population and the income that comes from that.
Every country is arbritrary on their imposition of tariffs. Trump is no different. Those protesting his policies are only consistant in their principles if they protest all tariffs while protesting them all with equal vigour. As a Canadian I can tell you my federal government is complete hypocrites on the tariff issue. Most countries protesting the tariffs are in reality protesting the fact they are being treated in the same manner they treat the United States.
Wall street gangs sent gold to $3K and SPX to 5,500. The overextended gold might drop to the 2,800/2,500 area and SPX to a new high. Tariffs will humbled gold, strengthen the dollar and boosted SPX. USMCA socialism created jobs in Mexico and Canada spread all over the place, connected by trains, subjected to clogging. Mexico entered the top ten of the “Happiest Countries” while the US dropped (under Biden) to the 28 place, Canada is #18.. Bring them home onshore from Europe, China and Vietnam. Takedown import, increase construction, productivity and consumption.
Iran is #101 out of 146 countries. Afghanistan is the most depressed country on earth, after we left. In Iran the lakes and rivers are drying up. U can’t take a shower when u need one. Tehran reservoirs are at 5%/15% capacity. During the summer the teps can exceed 50C
One of the central tenets of conservatism has always been that good things are easily destroyed but difficult to build. The international trade system is a good thing, but, as we can see, destroying it is indeed very easy.
Let the left destroy themselves, the conservative’s job is to set up fortresses to preseve as much civilisation as possible until this flaming cultural revolution runs out of fuel, heat and oxygen.
I would like the few remaining conservatives in the Republican Party to grow a spine to stop the vandalism that is now destroying everything that was built by conservatism since WW2.
In other words, it is and will continue to be a shit show! Trump ran his businesses without accountability to anyone, which is how he operates as President. He does not act within the reality that he is simply a temporary steward of the Office of the President; he operates as if the Executive Branch and the country’s international relations are his personal reality TV show. I do not think there is enough discussion about how much damage is being done to the United States’ credibility and trustworthiness and whether this damage can be quickly repaired when Donald Trump is no longer President. I think the damage is done, whether Trump is President or not. The last eight years have laid bare the inherent weakness in our system of government when someone is elected who does not respect agreements entered in by past administrations, the institutional knowledge of the non-political parts of government, and moral and ethical norms.
While everyone is bickering about nothing the non war president is getting ready to start one.
Did he not just “bomb the shit out of” the Houthi’s. I guess it already started.
He also doesn’t want to waste the military budget of 900 billion a year, which is more than combined next 10 countries.
This new season of “The White House” seems like the old season except there are more villains this season, the kind that salute Nazis.
Yemen has a GDP of $16bn, which is about 1/3 of the smallest state’s GDP, Vermont.
they have the right to bear arms though – you don’t need no licence in Yemen.
I see an opportunity to lower global tariffs across the board. Tariffs are bad for everyone but politicians.
How do you see this opportunity? Trump is doing nothing but talking about raising them!
Yeah, then once they’re raised, he can spend the second half of his term lowering them in a series of “deals”… isn’t it obvious?!
Like most things, tariffs are not black and white, good or bad. Most of the world has seen tariffs come down over the last 50 years. One way to look at tariffs more nuancedly is that in a global economy, tariffs between trading partners are akin to the handicap system in golf, and America is a scratch golfer. Fair tariffs serve to level the playing field. The current system governed by the WTO regarding trade has not been perfect. Still, America certainly cannot credibly cry that it was unfair when America has economically outperformed everyone one of its democratic peers over the last 30-40 years.
In SEAsia, you foreign beer has huge tariffs on it, to allow the local crap to be sold everywhere to tourists. If you want to avoid that pesh, you have to spend at least western prices on, sometimes more. Tariffs are everywhere.
Yep, so you are making my point. In much smaller economies, small local breweries cannot realistically compete on a level playing field with global conglomerate beer brands. If those tariffs are eliminated, local small breweries, as would those jobs, would likely disappear. The tariffs level the playing field and help offset large global brands’ inherent advantage.
How long before Americans regret having their standard of living lowered?
That’s been happening for decades. Are you just now noticing? We’ve been boiling frogs for some time.
Robert Lighthizer has written a book title No Trade is Free. I heard it mentioned by an excellent economist who notes there are some interesting points in his book and they contradict the consensus school of thought. I have not read it yet but have ordered it to see what this is all about.
Under what circumstances would a government goon kick down someone’s house door, f their dog and and shoot their wife on tariff-based taxes?
Follow-up hoot question: is that GDP positive right now? Like the door replacement?
You’ve thought about the issue a thousand times more than anyone in the Trump administration, whose main task is to attempt to sane wash whatever brain fart squeezes past his mouth in any given moment.
Well Mish, you just don’t understand the 4D Chess being played here. All of these Tariffs are going to make it so that our trading partners pay us. So therefore we can lower tax on hardworking Americans like Elon Musk, and the anchors on Fox News. But, these tariffs are going to be renegotiated and will all come down to zero, due to our dealmaker in chief, because the other countries are going to fold because, well, Trump is just simply so awesome. Once that happens, we can cut taxes again, because everything is going to be cheaper. And, all of that, as any rational person can see, will lower the deficit and solve our debt problem. Wake up!
Of course, how could I have been so stupid! 4D chess, like he played when he bankrupted his Trump casinos and Trump Airlines. Then, of course, the infamous Trump University was ultimately closed down due to fraud findings. 4D chess is laughable; Trump’s intelligence and business acumen are more akin to his golf game, “Big Hat, No Cattle.”
I appreciate great sarcasm
Well tariffs are just an stupid idea country’s send goods and services and you give back printed paper the circus show is going to end badly. And yes there is data is about 1.6 and indias about 4.% the lowest ever and clown and his minions want higher tariffs go figure.
We are all being dragged into Trump’s casino, and hallucinations.
There is a meltdown of meaning, and it is not just in legal issues. Everything funnels into “what Trump says it is today,” which is a very short window. Like, not even the full length of today. Businesses are caught right in the crux of this. It is a commerce freezer. I suspect businesses not trapped inside this (supposedly protective) wall (of confusion) will look to alternatives elsewhere.
Has anyone here seen a TABLE OF WORLD TARIFFS, spelling out what we are seeing with Tariff percentages charged to America?
NO?
That explains the confusion……there is NO DATA that I have seen presented by TrumpCO.
I think it works something like:
I punch you in the shoulder.
You punch me in the nose.
I threaten you with a knife.
You threaten me with a gun.
etc, etc, etc…
Something like that.
That’s a good description of the world order before WW2, and Trump wants to take us back to that lost paradise.
No, it is not clear. Saying thusly would be clear: what they charge their own, we charge our own.
There is a great write-up on Linked-In today by Michael Every of Rabo Bank about changes coming in the shipping industry. Just go to Linked-In and type in his name. The really disturbing thing is how we let the US shipping industry fade to almost nothing. We really need to take our fate out of the hands of politicians. Michael also emphasizes the extent to which the US defense establishment is driving the bus now, consistent with the conclusion of Luke Gromen. The biggest danger to the Trump administration, and Mish has noted this, is that it will try to move too quickly and create too much disruption. A large number of Americans can’t see past the end of their noses, so thinking strategically might not happen with the majority of voters. However, even if the next administration is from the other party, the defense establishment will probably still be calling the shots, so I’m not sure that we should expect much change in this regard.
In all fairness, Americans are not being informed of the Administration’s strategic plans .
For example, if the govt plans to enforce the Monroe Doctrine, they should inform the public, so that they can get used to the idea.
Disruption without information is pointless.
Here is a simple response to all the hand wringing by cringing Globalists.
Try entering a Foreign Nation without your passport.
See how far you get past the airport gate.
Defending the status quo is not working.
Wtf does that even have to do with anything? And, tell me you’ve never been to Europe without telling me you’ve never been to Europe.
Far too much of America for me to visit. Europe is not in the cards.
However I do grow Pinot Noir, French beans, French Figs, Charentais melons, Reine Claude Doree plum as they and other European plants do well in my climate.
But yes you go right on ahead believing that America is going to just keep open doors for everyone around this world cause, well just because.
P.S. have also heritage apples from UK
My garden and orchard do reflect some international aspects.
I can see by all the downvotes people just do not appreciate how good pinot noir grapes berry tastes.
Am willing to give credit where credit is due.
Unlike Europe who hate on Americans for calling a Turd a Turd.
Try not flying into a foreign country’s airport.
Try riding.
Better yet, try walking.
Some folks have to wade…
People are welcome in my house if they knock on front door and ask owner of this Castle if they might come in.
Suggest not to force entry via back door.
We carry our passports and are good to go, for example, for 90 days with a tourist Visa in the Schengen zone. In order to stay for an additional 90 days means that we have to: 1) Prove we have income. 2) Prove that we have an actual address in Portugal for the balance of our stay. 3) Prove that we have return Tickets to the USA. 4) ON AND ON. They are VERY strict and if you get caught, there is a 200 plus Euro Fine per person and you will be barred re-entry to Europe.
Same folks going Ballistic because Trump wants some balance in trade relations.
The big risk the US is running with the “tariff reciprocity” approach a La Trump is that the international trade system will be rebuilt around China. No country in this world wants to trade with an anchor country that doesn’t know in the morning what its trade laws are going to be in the evening. China has a potentially much larger market to offer than the US, it’s increasingly a technology leader, and, compared with present US policies, China comes across as a beacon of credibility and reliability.
Tell me about the Chinese economy as it stands today.
Given Trump’s motto “Make China Great Again,” China may come out of this as the new global leader. Even the Canadians may prefer to deal with China rather than its completely wayward neighbor to the south.
The US Federal Reserve made a sharp downward revision in its forecast for US economic growth this year at its meeting yesterday amid what chair Jerome Powell referred to as “high uncertainty” surrounding the effect of the economic policies of the Trump administration. https://www.wsws.org/en/articles/2025/03/20/hzqk-m20.html
This interview is also excellent. Clearly outlined with historical perspectives.
Bob Lighthizer: Why Trump’s Tariffs are the Only Way to Save the Middle Class
Tucker Carlson
March 19, 2025 https://www.youtube.com/watch?v=p0IUh8kNSqY
Anytime Barrack said, “Let me be clear …” an obfuscation followed. Then it caught on across the left. Leveling playing fields on trade is a good thing. Clarity is very helpful, but it means little until the sausage maker starts grinding and we see the effects. Like Musk and SpaceX, make mistakes, make them fast, correct course fast. In other words, theory is great, practice is where we all live.
I’m having buyer’s remorse but only until I remember the alternative.
Succinct. Love this high dose of truth.
Not Me
I wrote in Mish