A television screen shows the Nasdaq composite (.NCOMP) price at the Nasdaq market site as U.S. stock markets opened Tuesday following Monday's broad sell-off in New York City, U.S., March 11, 2025. REUTERS/Mike Segar
Economists blast calculations for ‘bombshell’ Trump tariffs as faulty while stocks plunge
by Ashley Murray, Daily Montanan
April 3, 2025
WASHINGTON — Markets and business owners in the United States and around the world reeled Thursday following President Donald Trump’s announcement of sweeping and steep tariffs that are not “reciprocal” but rather punish many countries that U.S. importers heavily rely on, experts say.
U.S. stocks plummeted, posting the worst one-day drop since June 2020, financial media reported at the closing bell Thursday. Business groups issued criticisms, experts predicted increases in household spending and even a conservative Republican senator pushed legislation that would increase congressional power over tariffs.
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Trump unveiled the tariffs Wednesday during a White House Rose Garden event billed as “Liberation Day,” where he told the crowd that trading partners and allies have “torn apart our once beautiful American dream.”
His answer: Signing a “historic executive order instituting reciprocal tariffs on countries throughout the world. Reciprocal. That means they do it to us, and we do it to them. Very simple.”
But economists say the new U.S. tariffs Trump revealed Wednesday — illustrated on a large display table — do not match one-for-one other countries’ levies, as Trump said during his remarks.
Trump held in his hands a chart that claimed to show a list of other countries’ taxes on American imports.
But it was wrong.
Vietnam does not charge a 90% tariff on American imports, as the chart said. Rather its rate for imported U.S. goods was on average 9.4% in 2023, according to the World Trade Organization.
“The actual calculation (circulated by the White House) doesn’t factor in other countries’ tariffs,” said Brad Setser, senior fellow on global trade at the Council on Foreign Relations, a think tank focused on international affairs.
In other words, Setser told States Newsroom Thursday, “It’s a tariff on big bilateral trade deficits.”
And so, what does that mean? And why did the president’s chart say that the U.S. would now be charging a 46% tax on every imported good from Vietnam?
Vietnam is a small country, but a competitive exporter, particularly in broadcasting equipment, microchips and computers. And the U.S. is a big customer.
In 2023, the U.S. imported $118 billion in goods from Vietnam, while Vietnam imported about $9.6 billion in U.S. products that year, according to the Observatory of Economic Complexity, a trade data project with roots at MIT.
The White House claimed on the chart that Vietnam applies a 90% tariff on the U.S. — when actually that percentage is roughly the dollar amount of the U.S. trade deficit divided by the dollar amount of how much the U.S. imports from the country. So, $120B – $10B = $110B, then divide that by $120B, and you get roughly 91%.
Trump said he would be “kind” and give trading partners “discounted” tariff rates by about half, and that’s how Vietnam landed at a 46% tax on its imports into the U.S.
“So Vietnam got hit with a huge tariff. It is literally that simple,” Setser said.
Economists and journalists almost immediately took to social media to question the glaring inaccuracy.
The new rates are a “bombshell” on U.S. allies and trading partners, said Jack Zhang, a professor of political science who runs the Trade War Lab at the University of Kansas.
Vietnam tried to head off Trump’s announcement in March by cutting levies on U.S. imports and signing “big purchase agreements,” Zhang said, but it didn’t work.
Historically countries have negotiated tariffs product by product in “laborious” talks, Zhang said.
“You know, ‘You reduce tariffs on your stuff, I will reduce tariffs on maybe some other stuff.’ And it nets out to be fair. This sort of lazy, back-of-the-envelope kind of calculation based on the trade deficit, it makes it really hard to negotiate in those terms,” he said.
Products from the European Union will now be taxed at 20%, Japan’s new rate is 24%, and South Korea’s 25% — all significant U.S. allies and trading partners. The EU has already threatened to retaliate if the U.S. does not come to the negotiating table.
Countries carrying a trade surplus with the U.S. — meaning they import more American goods than they sell back to the U.S. — did not escape the policy, as Trump imposed a universal 10% tariff on every nation.
The United Kingdom, which runs a trade surplus with the U.S. and in 2023 charged an average of 3.8% on imported American products, will now see a 10% tax on its items headed to U.S. buyers. Australia, whose Prime Minister Anthony Albanese called the tariffs “totally unwarranted,” faces the same situation.
Trump’s informational table falsely stated that the U.K., Australia and a host of other countries — including the Heard and McDonald Islands, inhabited by penguins and seals — have been charging a 10% tax on American goods.
Trump did not include Canada and Mexico in his announcement Wednesday.
But those countries are already subject to up to 25% taxes on steel, aluminum and other imports that the administration enacted in March, after declaring emergencies over illicit fentanyl and immigrants crossing the northern and southern borders.
Additionally Trump’s 25% foreign car tax launched Thursday. The neighboring countries factor big into the automobile supply chain.
“Given the prospective damage to their own people, the American administration should eventually change course, but I don’t want to give false hope. The president believes that what he is doing is best for the American economy,” Canadian Prime Minister Mark Carney said Thursday in remarks that streamed on C-SPAN. Carney said he and Trump have agreed to economic and security negotiations next month.
The proposed tariffs will amount to an average $2,100 tax increase per American household, according to an analysis released Thursday by the center-right Tax Foundation, which advocates for lower taxes.
The average levy on all imports will reach 18.8%, compared to 2.5% in 2024, according to the foundation’s modeling.
Numerous trade and advocacy groups spoke out against the tariffs.
The National Association of Manufacturers urged the Trump administration to “minimize tariff costs for manufacturers that are investing and expanding in the U.S.”
The center-right Taxpayers Protection Alliance issued a scathing statement Thursday. “American consumers and taxpayers should be appalled by this executive overreach,” said its president David Williams.
States Newsroom spoke to small business owners from around the country who expressed fear about the cost of day-to-day supplies. One Arizona coffee shop owner told the news outlet that he purchased a year’s supply of disposable coffee cups from China last year in anticipation of Trump igniting a trade war.
Trump announced a 34% tax on Chinese imports Wednesday, and some experts say that will stack on top of the existing 20% tariffs Trump imposed during his first administration that were kept in place by former President Joe Biden.
A bipartisan pair of senators introduced on Thursday what they’ve titled the “American Trade Review Act of 2025,” aiming to claw back congressional power over the president’s near unilateral decision-making on U.S. tariffs.
“Inflation and high costs are a threat to the stability and prosperity of American businesses of all sizes, to our farmers and to our consumers,” Democratic Sen. Maria Cantwell of Washington state said on the Senate floor. She and Republican Sen. Chuck Grassley of Iowa are co-sponsoring the legislation.
“We live now in an interconnected world, a global economy, and advances in technology and transportation have brought that world closer and closer together. We have a global economy,” Cantwell continued.
States Newsroom sent a list of questions to the White House regarding their informational table of tariffs presented Wednesday and an opportunity to respond to criticism.
In a statement, White House spokesperson Kush Desai said, “Trillions in historic investment commitments from industry leaders ranging from Apple to Hyundai to TSMC are indicative of how this administration is working with the private sector while implementing President Trump’s pro-growth, pro-worker America First agenda of tariffs, deregulation, tax cuts, and the unleashing of American energy.
“These America First economic policies delivered historic job, wage, and investment growth in his first term, and everyone from Main Street to Wall Street is again going to thrive as President Trump secures our nation’s economic future,” the statement continued.
TSMC, a Taiwanese mega semiconductor producer, received $6.6 billion in direct funding from the U.S., plus $5 billion in cheap loans, under Biden’s administration after he signed the CHIPS and Science Act, according to an analysis by the Council on Foreign Relations. The country announced an additional $100 billion investment in early March.
Trump announced a 32% tariff on the island nation.
Last updated 5:46 p.m., Apr. 3, 2025
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