President Donald Trump promised tariffs that would raise US import taxes high enough to mirror what others assess as trade penalties on American goods.
What he's actually imposing is based on far more complicated math.
Here's a look at how the White House got its numbers:
Why do the new tariff rates differ by country?
The Trump administration has declared an "economic emergency" to bypass Congress and impose a 10% tariff on nearly all countries and territories. It has set even higher levies for about 60 nations that it says are the "worst" offenders.
The 10% global tariffs take effect at 12.01am Saturday (US time). The higher tariffs set for specific countries are due to kick in at one minute past midnight on April 9.
Logan Church reports on the global fallout from the US President’s so-called Liberation Day for America. (Source: 1News)
Among the so-called worst offenders was China, which Trump argued protected its producers through "malicious" trade practices in addition to tariffs. Those efforts included actions such as imposing value added taxes on all goods, dumping overproduced products on markets to artificially deflate prices, or manipulating currency.
To determine how much higher those nations' rates should be, the White House said it calculated the size of each country’s trade imbalance on goods with the United States and divided that by how much America imported from that nation.
It then took half that percentage and made it the new tariff rate.
Why not just charge reciprocal rates?
The White House said its calculations kept new tariffs from going even higher for many countries and demonstrated that Trump was being "kind" to global trading partners.
The administration maintained that creating a baseline levy with few exemptions was necessary to keep China and others from skirting the new tariffs by manufacturing goods and then shipping them to Vietnam, Cambodia, Mexico or elsewhere to then be sent to the US.
That was why the White House list of tariffed locations included obscure places such as the Heard and McDonald Islands, which were uninhabited. They were 4100 kilometres from the coast of mainland Australia, which claimed them as a territory.
Is every country affected?
No. Canada and Mexico were excluded because they already were facing 25% taxes on most imported goods that Trump announced last month, in an attempt to force both to crack down on fentanyl smuggling into the US.
The White House originally said all others would be affected by at least the 10% tariff. But administration officials clarified today that countries already subject to stiff US sanctions — for example, Russia due to its invasion of Ukraine, as well as Iran, North Korea, Cuba, Belarus and Venezuela — would not face the new, 10% global base tariff.
Officials said that was because sanctions and other existing barriers meant the US had so little trade with those places that deficits were minimal.
Why is Trump doing this?
The president has spent months insisting America was at its wealthiest at the end of the Gilded Age in the late 1800s and early 1900s, when it imposed high tariffs as the key means of generating revenue for the federal government.
Trump even suggested yesterday that the US moving away from higher tariffs and toward a federal income tax in 1913 helped trigger the Great Depression of the 1930s — a claim that economists and historians roundly rejected.
A more contemporary explanation might be found in Project 2025, a comprehensive blueprint compiled by leading conservatives about how to shrink the federal workforce and push Washington further to the right. It spelled out how Trump might impose high tariffs around the globe, giving his administration more room to negotiate lower levies with trading partners in exchange for US priorities.
White House officials insisted the new tariffs were more about closing trade deficits, stimulating US manufacturing and generating government revenue than eventually negotiating new trading deals.
But Trump has shown he was willing to back off on threats of tariffs in exchange for offers of concessions. His administration has said the president was always ready to make deals, a sign the new tariffs might prove to be more a bargaining chip than permanent policy.
Flying to Florida aboard Air Force One today, Trump said, of making possible deals to reduce tariffs imposed around the world going forward, "Every country’s called us".
"We put ourselves in the driver’s seat," he said. "If we would have asked some of these countries, or most of these countries, to do us a favour, they would have said, 'No'. Now they’ll do anything for us."
Why do US trade imbalances matter?
American trade policy created a US trade imbalance worth US$1.2 trillion (NZ$2.1 trillion) last year, a gap that some experts believed should be addressed in order to ensure the country's long-term economic strength.
But many economists said the trade imbalances that Trump was looking to correct were based on more than countries just using high tariffs or protectionist trade practices to boost their own exports. Basing the White House's tariff math solely on trade deficits, for instance, failed to take into account US consumer demand.
Americans relished buying BMWs assembled in Germany, as well as French wine and coffee beans from Guatemala, and their spending could fuel trade imbalances regardless of the tax and tariff policies of the countries producing those goods.
That meant any attempt to close US trade gaps by tariffs would likely mean increasing the cost of imported goods that Americans were buying, which in turn could hurt the economy because of increased inflationary pressures.
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