By coinnews 
00:00 George
President Trump and his team had said a wide array of practices would go into their calculations for reciprocal tariffs announced this week, but once the numbers were released, it quickly became clear the way they came up with the differing rates was actually much simpler. Joining us now as Yahoo Finance’s Ben Werschkul to break it all down. Ben.
00:21 Ben Werschkul
Yeah, hey Josh. So, so throughout the buildup to this liberation day, the the Trump team had listed all these factors that they that they wanted to take into consideration, tariffs, currency manipulation, value added taxes, agriculture, all these different things. And there was a question, I did some reporting on this of sort of how hard that was going to be to boil it down to a single number. What they did in the end, um, as you mentioned in the open, is to sort of go a much simpler route. It’s basically a formula that even me, very much not a math major, could understand, which is the trade deficit. It was the the formula was um net um net imports divided by total imports, essentially. So it created this ratio that then they translated into tariffs. Um the case here from the administration about why why they’re doing this, you can see the the formula on screen there. The case here for the administration is that the trade deficit is a proxy for everything, that if you take the trade deficit and you boil it down, it sort of goes in there. As one senior administration official said, it represents all the cheating that’s out there. There’s a lot of economists that would disagree with that, with that assessment. There’s a lot of reasons they say for for having trade deficits, but this is the administration’s case. As for what it says about Trump going forward, I do think it’s worth noting that this is a kind of a change for negotiations to lower these duties going forward. You know, if you’re relying on the trade deficit, that’s a very hard thing for a country to change. It’s one thing to change a tariff rate, you can move that up and down, but changing your your complete trade deficit with the country takes a lot longer. Um there’s other other ways that the administration now says they suggest tariff that suggest negotiations are going to be tricky in the years ahead. They say their the phones always open, but it’s going to be a challenge for certain.
03:00 George
Do you get the sense at all that there are any specific countries that maybe are getting the proverbial short end of the stick, if you will, by because of the Trump administration choosing the trade deficit as their main metric to measure trade unfairness and imbalances?
03:29 Ben Werschkul
For sure. Yeah. I mean, I think the the big one, um, that you see sort of throughout this administration is China. That was the first one Trump had on the top of his list. Um the total rates on China are now 54%, um which actually is right in line with what Trump promised during the campaign, which very people thought was going to be there’s no way he’s can do 50 to 60% tariffs on China, which is what he’s what he said he’s said to do. Others, I think they’re at sort of top of the list are the European Union, which is what Trump has been he’s been aiming to go for for a while and that was that was a top one on his list too. But but again, this reciprocal idea, the way they did this is it’s very broad. So anyone with a trade deficit has has bigger tariffs and everyone has 10% duties.
04:28 George
Right. Thank you, Ben. Appreciate it.
04:32 Ben Werschkul
Thanks.