How Countries Stack Up on Trump's Reciprocal Tariffs

On February 13, President Donald Trump issued a Fair and Reciprocal Plan designed to reduce U.S. trade deficits in goods. The plan will assess “non-reciprocal trade relationships” and respond by imposing tariffs calibrated to targeted countries’ total trade barriers. The tariffs are scheduled to be announced on April 2.

The administration has not provided details on how the reciprocal tariffs will be calculated and which countries will be targeted. However, Trump’s team has indicated that reciprocal rates will reflect a combination of factors specific to each country, such as their tariff rates, value-added taxes (VATs), nontariff measures, and foreign-exchange policies. On March 18, Secretary of the Treasury Scott Bessent stated that the administration will focus on partners with whom the United States has a large trade deficit. Bessent referenced the “Dirty Fifteen,” which he explained as the fifteen percent of countries that make up “a huge amount of our trading volume.” To date, no countries have been officially named.

While there is a lot of uncertainty around “Liberation Day,” the name the Trump administration has given April 2, there is little doubt that tariffs are coming. On March 12, Trump imposed 25 percent tariffs on all steel and aluminum coming into the United States, and on March 26, he announced 25 percent tariffs on all automobiles imported into the United States. At a press conference on March 24, Trump said April 2 will include “everything,” both sectoral and reciprocal tariffs, but offered no specifics. He also said his administration “may charge less than what [other countries are] charging because they’ve charged so much, I don’t think they could take it.”  

While the formula for calculating reciprocal tariff rates remains unclear, below is a comparison of average applied tariffs, VATs, nontariff barriers, and exchange rate policies in the fifteen countries that had the largest goods trade surpluses with the United States in 2024.

Average Applied Tariffs

The United States maintains lower average applied tariff rates than most of the comparison countries, which likely means a substantial increase in tariff rates for many of them. For instance, if the United States uses simple applied tariff rates as the benchmark, it could raise tariffs on India from 3.3 percent to 17 percent on the approximately $87.4 billion dollars’ worth of goods it imported from India in 2024.

Value-Added Taxes

The Trump administration has also mentioned foreign partners’ value-added taxes as another factor that could influence reciprocal tariffs. A VAT is a consumption tax that reflects the value added at each stage of a good’s production, and is ultimately paid by the consumer. The United States does not have a VAT, relying instead on state and local sales taxes, but many other countries do. The question remains as to how the Trump administration will use countries’ VAT rates to calculate reciprocal tariffs. For example, the United States could seek to mirror Italy and impose an additional 22-percent tariff on Italy for having a VAT at that level.

Nontariff Measures

Nontariff measures (NTMs) are policies other than tariffs that impact international trade. They include sanitary measures, technical regulations, anti-dumping and other contingent trade-protective measures, quotas, price controls, and export controls.

The UN Conference on Trade and Development (UNCTAD) uses data collectors in countries around the world to collect information on NTMs from legal and regulatory documents. Data collectors review countries’ relevant documents and classify them under predefined NTM codes. While UNCTAD provides a manual of guidelines to help collectors with uncertainty, this process is still subject to human interpretation; it is not an exact science. Even with those caveats, UNCTAD’s work can serve as a reference for comparing countries’ NTMs.

The prevalence score uses UNCTAD data to quantify the average number of regulations, quotas, price controls, and other measures applied to imported goods. The frequency index is the percentage of imported goods subject to NTMs. It remains unclear how nontariff measures will be quantified and factored into reciprocal tariff rates, but UNCTAD data could provide clues. 

Exchange Rate Policies

In addition to considering tariffs, VATs, and NTMs, the Trump administration has suggested that it also wants to ensure that other countries are not getting an unfair trade advantage through undervalued exchange rates that make their exports more competitive.

Analysis from the Treasury Department could provide a way to define such countries. The Treasury releases a biannual report on foreign exchange policies with major trading partners [PDF] that includes a “Monitoring List” of countries that are under “intensified evaluation” for their foreign exchange and trade-related policies. When deciding which countries to add to the list, Treasury considers whether a country has

• “a significant bilateral trade surplus with the United States” (defined as a bilateral surplus of goods and services of $15 billion or more);
• “a material current account surplus” (of at least 3 percent of GDP); and/or a
• “persistent, one-sided intervention” (net purchases of foreign currency at least eight out of twelve months with a value of at least 2 percent of GDP).

In the most recent November 2024 report, China, Germany, Japan, Singapore, South Korea, Taiwan, and Vietnam were on the Monitoring List. Of those countries, Germany, Japan, South Korea, Taiwan, and Vietnam all were found to have a material current account surplus and a significant bilateral trade surplus with the United States. China was included on the list due to its exceedingly high trade surplus and nontransparency surrounding intervention. Finally, Treasury’s report found that Singapore had a material current account surplus and used persistent, one-sided intervention.

The Trump administration has not explained how Treasury’s Monitoring List will be reflected in its reciprocal tariff rates on April 2. Whether countries on this list will see tariffs increased by 5 percentage points, 10 percentage points, or even 20 percentage points is unclear. But it seems plausible that inclusion on the Monitoring List will result in some upward adjustment of the reciprocal tariff rate.

Conclusion

In preparation for Liberation Day, the Trump administration is likely reviewing countries’ tariffs, VATs, NTMs, and exchange-rate policies to determine what reciprocal tariff rates it will apply to which countries. The world will need to wait until April 2 (or beyond) to know how Trump’s team uses this data to calculate reciprocal tariffs and how those tariffs will impact domestic and local economies.