US President Donald Trump holds up a poster board and announces “reciprocal” tariffs on US trade partners from the White House Rose Garden on April 2, 2025. (AFP/Yonhap)
US President Donald Trump announced reciprocal tariffs on Wednesday against the “worst offenders” he said are taking advantage of fair trade with the US. However, contrary to prior statements, his administration is using outlandish calculation methods that compare a country’s total exports to the US to their trade surplus with the US — a metric that has no direct relation to unfair trade practices — to come up with its contrived tariff rates.
Holding a poster board listing the supposed high tariffs that other countries charge on US goods and the “discounted reciprocal tariffs” calculated in response, Trump gave a speech Wednesday in which he referred directly to South Korea numerous times as a country with trade policies that are unfair to the US.
“Perhaps, worst of all, are the non-monetary restrictions [against US products] imposed by South Korea, Japan and many other nations,” Trump said.
“As a result of these colossal trade barriers, 81% of the cars in South Korea are made in South Korea, 94% of the cars in Japan are made in Japan,” he continued. He also took issue with the maximum tariff on US rice imported to Korea — 513%.
Throughout his speech, Trump referred to a report on foreign trade barriers issued by the Office of the US Trade Representative (USTR) on Monday.
The reciprocal tariffs of 25% imposed on South Korean goods are higher even than the tariffs imposed on goods from the EU (20%), which Trump criticizes frequently. They are also higher than the tariffs imposed on Japan (24%). In fact, they are the highest among any nation with a free trade agreement with the US.
“The tariffs on South Korea were high, while those against the EU, whom he [Trump] had consistently threatened, were lower than expected,” said Kim Hyok-jung, an associate research fellow at the Korea Institute for International Economic Policy.
Yet contrary to initial claims about quantifying unfair trade practices that take the form of tariffs and non-tariff trade barriers, the Trump administration appears to have calculated tariff rates through a simple yet flabbergasting formula involving the country’s total trade surplus with the US in proportion to its total exports to the US. The USTR issued a statement on Wednesday, saying that it utilized “import and export data from the US Census Bureau for 2024” to calculate reciprocal tariffs.
For instance, South Korea’s exports to the US totaled US$131.5 billion in 2024. Its trade surplus with the US came to US$66 billion, resulting in a ratio of 50.2 that is then divided by half, resulting in 25%. China’s ratio turned out to be 68, resulting in reciprocal tariffs of 34%.
In a memo released in February, Trump announced that he would consider various factors such as tariffs and non-tariff barriers such as value-added tax, subsidies, regulations, and exchange rates and currency manipulation.
Ahead of Trump’s announcement, a senior US official told reporters that the Council of Economic Advisers had used a “well-established” methodologies to come up with the tariff rates and said the method was based on the notion that the trade deficit the US has with a country represents all unfair trade practices and “cheating” by the given country.
In his speech, Trump also referred to countries “manipulating their currencies” and other factors that act as non-tariff trade barriers against the US.
When experts and the media expressed skepticism about the USTR’s calculations, the agency belatedly admitted, “While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero.”
The highly questionable argument is that if there are no trade barriers, there is no reason for the US to suffer a trade deficit, so the calculation poses no problems.
The White House has also provided conflicting figures regarding reciprocal tariffs on South Korea.
Trump initially announced tariffs of 25% on Korean goods from the Rose Garden, but the executive order cited 26% tariffs, which was then revised to 25%. The tariffs Trump cited against India, Switzerland, and the Philippines were all 1% lower than the tariffs cited in the executive order.
South Korean Deputy Trade Minister Park Jong-won said, “It is night in the US right now, but we are confirming things through diplomatic channels.”
By Lee Bon-young, senior staff writer
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