How Trump’s “Liberation Day” tariffs were calculated

On Wednesday, President Trump unveiled a flat 10% tariff on all imports, with higher rates for certain nations the White House considers “bad actors” on trade, in a bid to boost domestic manufacturing and raise revenue.

But how did his administration come up with the exact percentages for each nation?

The tariff formula

In a statement explaining its methodology, the US Trade Representative detailed a formula that divides each country’s trade surplus with the US by its total exports, based on 2024 Census Bureau data.

That figure was then divided by two, producing the “discounted reciprocal tariff” rate imposed by the Trump admin. In countries where the US ran a trade surplus or trade was roughly even, a flat 10% tariff was applied.

For example:

• China had a trade surplus of $295 billion with the US last year on total exports of $438 billion, representing a ratio of 68%. Dividing by two per the formula yields a 34% tariff rate.
• The UK had a trade deficit with the US, so they received a 10% tariff.

Tariff turmoil: A handful of companies yesterday halted or canceled production at plants in Canada and Mexico, citing new US tariffs. US stocks lost $3.1 trillion in market value, marking their largest decline since March 2020 (S&P: -4.8% | Dow: -4.0% | Nasdaq: -6.0%). And some nations are vowing retaliatory tariffs against the US—including China, Canada, and the EU—while others are aiming to strike a deal with the Trump admin.