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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.

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