Every email in my inbox this morning starts with some form of, “this is worse than the worst-case scenario.” And, well, it’s hard to disagree. Going into the press conference, the consensus was that the Trump administration would implement reciprocal tariffs by putting an across-the-board 20% tariff on all goods entering the US. Markets initially breathed a sigh of relief because President Trump mentioned the phrase “10%” in the beginning of the press conference. However, the relief was short-lived once he pulled out his visual aids.  

In reality, the country is placing a universal tariff of 10%, and for many it will be much higher. For the “worst offenders,” the rate will be half of what the Trump administration deemed the foreign country’s tariff rate. The Trump administration said this rate takes into account both tariff and non-tariff barriers into consideration. However, it took social media a full two hours to figure out the actual equation. The “foreign tariff rate” is simply the country’s trade deficit with the US, divided by the total imports into the US. This could bring the trade-weighted US tariff rate to around 20-25%. That range is well above the level of the 1930 Smoot-Hawley tariffs, which most people (other than economists) have probably only heard of from that boring high school teacher in “Ferris Bueller’s Day Off.” 

You can now read the full whitepaper at the link below