This is how the big differences in Trump's tariffs were calculated

• President Donald Trump's new tariffs vary greatly between different countries.
• The US Trade Representative explained the pretty simple formula used.
• This has led to some confusing rates, such as a 50% levy on a tiny island of 5,000 people.

It turns out a pretty simple formula was used to calculate President Donald Trump's "Liberation Day" tariffs.

The levies on imported goods into the US vary widely between countries, ranging from 10% to 50%.

The formula used — which prompted derision from some once revealed by the US Trade Representative — involves dividing a country or territory's trade surplus with the US by the value of its exports to the US. Then, the resulting figure was divided by two, to make the tariff rate.

The approach has led to some eyebrow-raising rates. The French territory Saint Pierre and Miquelon, which has a population of around 5,000 people, has a 50% tariff.

Data from the US Census Bureau shows that $3.4 million of goods were imported from the islands to the US in 2024, while Saint Pierre and Miquelon imported $100,000 from the US that year so that trade imbalance was used to calculate the tariff rate.

In a statement published on Wednesday night, the US Trade Representative said the tariffs were "calculated as the tariff rate necessary to balance bilateral trade deficits between the US and each of our trading partners."

A number of countries, like the UK, Singapore, and Brazil, were hit with the base rate of 10% tariff. Israel, which scrapped all tariffs on American goods, was hit with a 17% levy.

Vietnam, a key competitor to China, is subject to a 46% tariff.

"If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair," the US Trade Representative said.

Here's what economists had to say

Economists were quick to weigh in on the revelation of exactly how the Trump administration calculated the tariffs.

"The tariff calculation approach arguably makes for a more free-wheeling and open-ended nature to potential trade negotiations in coming months," George Saravelos, head of FX research at Deutsche Bank, said in a note.

"It seems there are no specific and identifiable policy asks per se but ultimately a desire to reduce bilateral trade imbalances," he added.

Others shared pointed criticism of the approach.

Nouriel Roubini, professor emeritus at the NYU Stern School of Business, wrote in a post on X that the formula used is "totally flawed" because it assumes that a fair trade balance has to be equal to zero.

"By that standard since the US runs a trade surplus in services other countries should impose a large services reciprocal tariffs against the US to balance that trade too!" Roubini said.

Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, said in a post on X that the tariffs are based on "a bogus formula that attributes any nation's trade surplus to tariffs, even if tariffs are low or nonexistent."

"Running bilateral trade surplus/deficits with different countries is the way it should be," Olivier Blanchard, Robert M. Solow professor of economics emeritus at MIT, wrote in an X post. "Trying to eliminate each one is simply stupid."

"I have a trade deficit with my grocer, a trade surplus with my employer. I am not sure it would be a great idea for me to work for my grocer," he said.

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