Balance or Bust

Do big tariffs make the USA stronger financially? Using math and information available, we can decide whether this administration’s “reciprocal” tariffs help our economy, balance of trade and the rising deficit. Generations to come will look back at our decisions now to study how global wealth and power were or weren’t redistributed by cartel quality brute force executed by the fastest losing brand value in the world.

Trade Agreements, Deficits and Tariffs

Tariffs are paid to customs agencies on taxes on goods and/or services coming into one country from another (when the destination country requires those tariffs). Tariffs increase the cost of goods and services, and price increases impact consumer buying decisions, as well as business risk decisions. Tariffs can be used to motivate domestic manufacturing, to strategize industry growth and market gains, to punish undesirable actions, or to isolate a country’s economy for other reasons. Countries around the world, including the United States, have used tariffs for hundreds of years.

According to the World Trade Organization, the United States imposed an average of 3.4% tariff on the imports of many other countries in 2024. The U.S. average tariff was not considerably different than about 60 other countries, including Canada at 4%. These average percentages are based upon the simple average of the most favored nation rate, which also accounts for any individual good’s higher and lower tariffs rate. Europe, Mexico, China and Canada were by far the biggest trading partners of the United States in 2024.

Trade agreements are entered into between countries to amplify economic benefits for the governments and consumers of both countries. The United States has free trade agreements (FTAs) in force with 20 countries, such as Australia, Canada, Mexico, Guatemala, Korea, etc. According to the U.S. Chamber of Commerce, “For American farmers and ranchers, America’s FTAs have been a bonanza . . . FTA partner countries represent 10 percent of the world’s GDP and 6 percent of global population, yet they account for 43 percent of U.S. agricultural exports to the world, up from 29 percent in 1990, before the majority of U.S. FTAs were implemented.”  

The Balance of Trade (BOT) for a country equals its exports minus its imports, which can include both goods and services that can contribute to a country having both a surplus and deficit with another country as basic free market principles drive demand. For example, the U.S. exports a lot of services such as travel, banking, telecommunications and other, and imports a lot of products such as computers, pharmaceuticals, cars, food and toys.

In January of 2025, President Trump announced new blanket tariffs on other countries, including the U.S. biggest trading partners. He says his tariffs will positively impact illegal border crossings of people and drugs, and that “Tariffs are about making America rich again and making America great again.”

Math Based On Fiction

As of April 2025, President Trump has threatened, scheduled, enacted, removed, delayed, and revised what he calls “reciprocal tariffs”. President Trump’s explanation of reciprocal is “they do it to us and we do it to them.” However, his cited reciprocal tariffs do not equal tariffs other countries have on the U.S. Instead, the numbers shown represent trade deficits and other non-tariff factors that exist due to differences in cost of labor, natural resources, technology, population size, consumer preferences, etc.

The current administration often displays incorrect math (check out the previous blog, “Cost or Savings”). Take birthright citizenship for example, President Trump wants to end it because, in his words, “Do you know we’re the only country in the world that has it?” Oddly, the world knows the opposite . . . more than 30 countries offer unrestricted birthright citizenship.

The “non-tariff factors” presented in President Trump’s equation refer to each country’s trade deficit, except there are other numbers added for fluctuations in markets and pricing that basically cancel each other out according to El Pais. So, the equation lacks solid mathematical principles and independent research is necessary.

Finding information on specific tariffs can be like finding a needle in a haystack though. So, next we will take some example countries to walk through to determine the validity of President Trump’s reciprocal tariff list. The basic process below can be used for your own confidence level in President Trump’s tariff statements. All country’s tariffs could be checked in a similar way.

1. Go to the World Trade Organization trade site and select a country. Here you can view overall trade information for a chosen country including average tariffs, biggest trading partners, products making up most imports and exports, etc.

2. To drill down into tariffs on specific goods, go to the Tariff and Import query option. Here you can select the country, year desired for data, and specific goods and services to see a complete list of tariff rates, quotas, trade agreements, etc. for any item you want. If you want to speed up your search, you can look up the exact category you are looking for first.

3. To understand how countries compute their non-tariff measures, you can view the integrated analysis available.

Example 1 - Viet Nam

This administration says that Viet Nam tariffs U.S. product imports at 90% based upon tariff rates, currency differences and trade barriers. To reciprocate, President Trump wants to apply a “generous” import tariff on Vietnam of 46%. However, trade information for 2023 for Viet Nam revealed its average tariff as 9.4%.

Electronic circuits and petroleum were Viet Nam’s largest share of imports, whereas television, phone, data processing equipment, and footwear are their biggest exports. Further down the page is a list of Viet Nam’s trade agreements. Digging deeper, the USA’s biggest imports from Viet Nam were $10M in footwear and $39M in assorted voice machines, so when items 851762 (TV/Audio) and 640411 (Sports Footwear) are queried, tariffs paid by the U.S. of 0% on TV/Audio equipment and 30% on shoes can be seen.

Therefore, the USA paid roughly a 10% tariff to Viet Nam in aggregate based on the two largest imports (very close to Viet Nam’s average tariff rate). While Viet Nam’s import tariffs on certain items like ketchup were 35%, the U.S. doesn’t typically export these items to Vietnam. For example, the U.S. is one of the world’s largest producers and consumers of ketchup so there is not an actual financial concern to either country. Other higher % Viet Nam tariffed items can also be researched and considered in this economic commonsense approach.

So, if the Trump administration charges a 46% across the board tariff on items imported from Viet Nam, Viet Nam businesses can’t continue selling Samsung and Nike products to the U.S. without raising prices on these items. The U.S. import office, on the other hand, might increase revenue on this on again off again 46% tariff paid by U.S. consumers which could potentially be used to pay down the nation’s deficit . . . if that happens, it simply means that U.S. consumers bore the brunt financially (no different than increased taxes on products you buy except that other countries lose the incentive to sell products to the U.S. and focus exports elsewhere).

In summary, Trump’s 46% tariff on imports from Viet Nam is not reciprocal and has negative economic impacts on phone and shoe buyers in the United States.

Example 2 - Canada

This administration’s math says that Canada “imposes a 250% to 300% tariff on many of our dairy products”. Those percentages refer to the Trump administration’s 2018 negotiation with Canada. According to Farm Progress, those percentages exist but do not reflect actual amounts paid because a threshold must be met before those tariffs go into effect, and thus far the quota has not been met (even with ample Canadian demand).

Meanwhile, almost 50% of Canada’s imports come from the U.S. and 77% of Canada’s exports go to the U.S . . . a difference largely attributed to population (39M Canadians in comparison to 342M people in the U.S.) and the USMCA (the 2018 free trade agreement). The trade war initiated by the Trump administration in January 2025 however has sparked actual reciprocal tariffs by Canada which will actually make many goods more expensive for consumers of both countries and motivate Canada to strengthen trade relations with other countries, also at the expense of U.S. consumers.

Considering only one type of product for example, Canada imported nearly $500M in soybeans and seeds from the USA in 2022. If Canada reacts to Trump’s increased tariffs with tariffs of their own, in the very least U.S. farmers of soybeans will pay a price.

Example 3 - European Union

President Trump says that the EU charges 39% tariffs to the U.S. and therefore announced the “generous” “reciprocal tariff” for the EU to be 20%. However, according to the World Trade Organization, the European Union has a 5.1% simple applied average tariff on goods.

Imports to the EU from the USA were mostly mineral fuels, electrical machinery and nuclear parts) and exports from the EU to the USA were mostly nuclear parts, pharmaceutical products, and vehicles. The U.S. imported $113M of pharmaceuticals from the EU at a 0% tariff and $57M of motor vehicles at a 16% tariff. The European Connection writes that, “Despite the US being the EU’s largest trade and investment partner, there is no dedicated free trade agreement between the EU and the US. The Transatlantic Trade and Investment Partnership (TTIP) negotiations were launched in 2013 but ended in 2016 without conclusion”.

So, in the absence of a successful trade agreement, the USA paid roughly a 5% tariff to the EU in aggregate based on the two largest imports (the EU’s average tariff rate). It is unclear where the Trump administration’s 39%, or for that matter 20%, reciprocal tariff comes from. Perhaps it is derived from other non-tariff barriers such as the EU’s restriction on hormone-treated beef determined by the EU to be a health concern.

So, if the Trump administration charges a 20% across the board tariff on items imported from the EU, consumers of necessary pharmaceuticals coming from the EU will pay the increased price. In summary, Trump’s tariff on imports from the EU are not reciprocal and have negative economic impacts on consumers requiring certain medications in the United States.

The Price of Uncertainty

From the preceding examples, it is clear that import and export trade requires careful thought, analysis and measurement to ensure consumer health and solid economic decisions, which is where trade committees ordinarily come in. This administration, however, has chosen alternative means to form trade decisions, and in so doing has added to both foreign and domestic uncertainty.

The uncertainty partly comes from tariff percentages being assigned without an economic equation that yields gains. Uncertainly is also driven by frequent changes (threats, schedules, enactments, removals, delays, and revisions) that drive business and consumer confidence down all over the world and can result in steadily weakened economies. But perhaps the greatest uncertainty is that the measure of strength around the world, the U.S. dollar, built upon a trustworthy government, a resilient U.S. economy and free market trade is no longer a beacon of those things. Diminished trust also diminishes power, resilience and freedom.

This administration’s talking points for tariffs to its base include the U.S. being treated unfairly and being taken advantage of by other countries. However, the administration does not further explain that this perceived unfairness has not hurt the U.S. economy. Perhaps the real source of imbalance experienced by the U.S. is the loss of some manufacturing jobs in recent decades and rise of the deficit since the Covid pandemic.

The shift of manufacturing jobs includes many factors such as technology. While adding manufacturing jobs back to the U.S. is an important element for the supply chain as well as economic health, targeted efforts towards what is needed are necessary as across the board tariffs will not bring the manufacturing jobs most needed or desired back.

As far as the increased deficit, work must be done toward balancing it; however, tariffs, if used as President Trump, has stated, will simply shift that bill to U.S. consumers - who in turn have less money to spend, which in turn decreases business investments, which in turn lowers the value of markets, which in turn decreases the wealth of the United States. So, in the end there is a lot of consumer and business suffering, and the deficit problem still exists.

At the National Republican Congressional Committe Dinner, President Trump said, “I’m telling you, these countries are calling us up, kissing my ass . . . They are dying to make a deal. ‘Please, please, Sir, make a deal. I’ll do anything. I’ll do anything, sir!’” This type of cartel quality brute force President Trump is using is referred to by his base as the “art of the deal”. However, negotiation 101 principles include awareness that bullying tactics lead to agreements in public and coalitions with others behind closed doors.

The Trump administration implies that the chaos around tariffs is all a master ploy to win tailor made plans with countries. Oddly, reliable methods to do just that have existed all along . . . yet those techniques were not employed in favor of defacing alliances in public to win economic enemies for years to come.

China and Mexico may be some of the greatest benefactors of this administration’s trade war. This administration’s tariffs on China are the most punitive, but they may not have the desired effect. Hindsight will reveal which country gains more power at home economically and in the world politically, but the writing is already on the wall. In the meantime, the “brand” of the United States of America that took a generation to build is falling fast in the world, and regaining the favors of brand power will require heavy lifting for the next generation.

A Better Future

There is always room for improvement everywhere, but balancing trade, balancing tariffs, and balancing the deficit is much more complicated than blanket tariffs.

It is time to return tariff authority to congress and trade experts. It is time for elected representatives and expert economists to analyze trade agreements, economic impacts, dollar strength, the brand of the United States, non-monetary trade barriers, manufacturing goals, and the deficit in ways that add win-win potency to formulas that work to fulfill not only the “American Dream” but also can regain political and financial integrity and true global alliances.