A graphical summary of Trump tariffs

The much-dreaded “Liberation Day” and “reciprocal tariffs” are finally here. This is the Executive Order, this is the tariff calculation. It has a baseline tariff of 10% and a country-specific “individualised reciprocal higher tariff” on the 60 countries with the largest deficits, ranging from 10-50%.

The tariffs were calculated by taking half the ratio of the US trade deficit in goods with each country in 2024 (a proxy for alleged unfair practices) and the amount of goods imported from that country. This is a good primer, this is a summary of the likely impact on various sectors, this looks at different scenarios of tariffs and retaliation and how they would impact trade partners, and this examines the rates under different circumstances.

The reciprocal tariffs are proportional to the US goods trade deficit, with a baseline tariffs.

These are the rates on a few countries.

The tariffs cover all except North America and (surprisingly) Russia.

And unsurprisingly, Factory Asia is the worst impacted

It takes the world back to not only the pre-WTO era but much farther back to the Depression-era Smoot Hawley Tariff Act. The Yale Budget Lab has estimated that the effective US tariffs are now the highest since 1909.

Many large companies from Asia-Pacific and Europe have large US market exposures.

With China facing new tariffs of 54%, there’s an imminent danger that the displaced Chinese imports could swamp Europe and other developing countries. EU is already considering raising tariffs on Chinese imports to stem any flood of displaced Chinese exports.

The overall share of local content of imports in the U.S. is about 43%.

About 45% of U.S. imports reflect intermediate inputs to the production of American goods, while the remainder corresponds to imports of final consumption goods.

These percentages mean that the import content of domestically produced goods and services (about 45%) amounts to nearly as much as the local content of the amount spent on imported final goods (about 43%).

An illustration of the disruption associated with the Trump tariffs is the sneakers market. All three major brands - Addidas, Nike, and Puma - have several manufacturing facilities in countries hit by the tariffs.

Vietnam has in recent years become the athletic shoe manufacturing centre of the world. Nike now has 130 supplier-factories in Vietnam producing shoes, clothing and equipment, and the country accounts for half of its footwear production. Addidas gets 39% of its shoes from Vietnam.

Vietnam is a good example of excessive trade dependence and the risks it entails. With exports to the US making up 30% of its GDP, the 46% tariff rate is expected to seriously contract output. It had the third biggest trade deficit for the US at $123.5 bn in 2024.

Vietnam’s woes presents an opportunity for India

Industry executives said Chinese electronics contract manufacturers Luxshare and Goertek, which have invested heavily in Vietnam since the 2018 tariffs on China to manufacture for Apple and other multinational brands, would have to move or add capacity elsewhere yet again. Japan’s Nintendo has been shipping hundreds of thousands of its new Switch 2 games consoles from its Vietnamese facilities to the US, while South Korea’s Samsung, the second-largest mobile phone brand in the US after Apple, now has 45 per cent of its smartphones manufactured in Vietnam, according to Taipei-based electronics research firm TrendForce. Some observers see an opportunity for India, which got off comparatively lightly, with a 27 per cent tariff rate… Compared with the higher combined tariffs China and Vietnam are facing, India would enjoy a “valuable near-term window of export competitiveness”.

While it’s a window for sure, in the current circumstances, there are clear limits to how much Indian exports to the US can increase at the margins, given it already has a $37 bn trade surplus with the US and President Trump will be watching any rise. There are limits to how much petrol and gas India can buy to offset any further rise in exports.

As to the end game for the tariffs, the one thing to watch is the trajectory of inflation which can trigger massive voter backlashes.

FT links to 15 charts on how the markets have been reacting.

Finally, the tariffs mark a decades old ideological belief that Donald Trump has entertained about others ripping off America by free-riding on its large domestic market and its security umbrella. It’s best captured in this advertisement that he took out in 1987 for $94,801 where he railed at the impact of strong dollar on US manudacturing, Japan’s large trade surplus and advocated that the US present a bill to Western Europe and Japan for America’s security umbrella.

The world is laughing at America's politicians as we protect ships we don't own, carrying oil we don't need, destined for allies who won't help. Over the years, the Japanese… have brilliantly managed to maintain a weak yen against a strong dollar… It's time for us to end our vast deficits by making Japan, and others who can afford it, pay. Our world protection is worth hundreds of billions of dollars to these countries, and their stake in their protection is far greater than ours. Make Japan, Saudi Arabia, and others pay for the protection we extend as allies. Let's help our farmers, our sick, our homeless by taking from some of the greatest profit machines ever created — machines created and nurtured by us. "Tax" these wealthy nations, not America. End our huge deficits, reduce our taxes, and let America's economy grow unencumbered by the cost of defending those who can easily afford to pay us for the defense of their freedom.

A remarkable consistency in a radically different belief on trade for at least four decades!

Update 1 (10.04.2025)

John Burn-Murdoch has a nice set of graphics that capture the impact of Trump tariff announcements. Consumer confidence is badly hit.

Economic uncertainty has surged.

And all this alienating his non-MAGA support base.

Martin Wolf has several good graphics on the Trump tariffs.

Update 2 (13.04.2025)

The share of goods exported by South East Asian countries to the US and elsewhere.

Update 3 (15.04.2025)

Interactive Trump tracker here.

Update 4 (28.05.2025)

How an American home looks without Chinese imports.

During his first term, Mr. Trump put tariffs on a long list of Chinese products. Some items, like wooden furniture and washing machines, were subject to other protective duties even before that. The import taxes prompted manufacturers to open new factories in countries like Mexico, Vietnam and Thailand. These places now import record amounts of Chinese components and sell assembled products, like Nintendo gaming consoles, to the United States. These countries are replacing China as the top supplier for some products. Take vacuum cleaners: Four out of five used to be from China, but Vietnam is now the largest supplier, despite barely making any five years ago.

US trade deficit with partners in 2024