What are reciprocal tariffs? Here’s what Trump is doing with them, list of impacted countries

AI-assisted summary
• Reciprocal tariffs are calculated to balance bilateral trade deficits between the U.S. and each of its trading partners.
• The universal 10% tariffs will take effect on April 5 and the reciprocal tariffs will kick in on April 9.

President Donald Trump on Wednesday announced reciprocal tariffs on imports for dozens of countries, including some of America’s biggest trading partners. 

"This is Liberation Day," Trump said during a Rose Garden ceremony on Wednesday. "For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike."

U.S. stocks plummeted Thursday morning when the markets opened.

What is a tariff? What are reciprocal tariffs?

A tariff is a form of tax imposed on imports from another country.

Tariffs create more demand for domestic manufacturers, but those companies are also part of the global supply chain and therefore also impacted by tariffs, experts have previously explained to USA TODAY.

Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners, according to the U.S. Trade Representative.

"Reciprocal. That means they do it to us, and we do it to them," Trump said.

Economic experts have said that determining reciprocal tariffs can be extremely complicated with many variants for each market.

What is Donald Trump's reciprocal tariff plan? How did Trump decide what tariffs to charge which countries?

Trump explained there will be a "baseline" tariff of 10% on all imports, along with higher rates on dozens of trading partners such as China, India and the European Union. 

During his speech, he defended all of his tariffs as “kind,” saying the taxes, by and large, are lower than the tariffs and other trade barriers other countries impose on imports from the United States.

It’s unclear how the White House calculated the tariffs other countries impose on the U.S. that Trump cited Wednesday. The figures, calculated by Trump's top economists at the Council of Economic Advisers, included “currency manipulation and trade barriers.”

According to journalist James Surowiecki in a post on X, the Trump administration seems to have simply divided each country's trade deficit by its exports to the U.S., times ½. The calculation was backed up by Wall Street analysts, CNN reported.

“Knowing how these rates were calculated highlights that they are generally going to be most severe on the nations that US companies rely heavily upon in their supply chain,” Mike O’Rourke, chief marketing strategist at Jones Trading, said in a note to investors Wednesday. “It is hard to imagine how these tariffs would not wreak havoc upon the profit margins of major multinational corporations.”

The Trump administration has argued these tariffs will raise revenue and boost manufacturing within the U.S.

“It's our turn to prosper, and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it'll all happen very quickly,” Trump said.

Which countries are impacted by Trump's reciprocal tariffs? See list

According to a chart Trump held up during his press conference, here's which countries will be affected by new tariffs:

What's next? When do tariffs take effect?

The universal 10% tariffs will take effect on April 5 and the reciprocal tariffs will kick in on April 9.

Trump's 25% on imported automobiles and car parts will also go into effect on April 3.

USA TODAY contributed to this report.