Trump’s tariffs on U.S. goods in the wake of “Liberation Day” and the economic woes of the economy

It’s a push he is branding as “Liberation Day,” promising it will bring in foreign tariff revenues to be put toward U.S. tax cuts and deficit reduction, and spur a renaissance in U.S. manufacturing.

But the pledge has glossed over the pain expected to be felt by U.S. consumers who economists expect will end up paying higher prices — and by U.S. farmers and exporters targeted for retaliation by other countries.

The formula hinges on the assumption that tariffs will raise prices. Trump’s math assumes that only a quarter of the tariffs would be passed onto American consumers in the form of higher prices. But economists who have studied Trump’s tariffs in 2018 — on steel and aluminum and various products from China — calculate that almost all of those tariffs ended up being passed onto Americans.

Thus far, he has imposed tariffs on steel and aluminum, Chinese goods, and some goods from Mexico and Canada. But he has also threatened, delayed, or withdrawn tariffs on an array of other goods, often telegraphing new potential moves while providing few to no details.

The uncertainty over the policy has roiled the economy. The S&P 500 stock index just closed out its worst quarter since 2022, and consumer confidence recently hit a 12-year low.

How unfair are trade barriers for the U.S. economy and their dealings with other countries, and how to respond to them in the next president’s speech?

“They took advantage of us,” Trump told reporters on Monday. “And we are going to be very nice by comparison to what they were. The numbers will be lower than what they’ve been charging us and, in some cases, maybe substantially lower.”

In addition to the aggressive rhetoric around tariffs and unpredictability of his announcements, Trump’s economic policy is unique.

The reciprocal tariffs are one example of this pattern. A February 13 memo instructed Cabinet members and advisers to look into the consequences of non-reciprocal trade relationships with other countries.

At the time, Commerce Secretary Howard Lutnick said those studies would be done by April 1. “We will hand the president the opportunity to start on April 2, if he wants,” Lutnick said.

That still leaves flexibility in the timing of imposing the tariffs. While it’s not clear when specific tariffs will come into effect, White House press secretary Karoline Leavitt said on Tuesday that they would be imposed “immediately.”

But that’s not to say that any of Trump’s tariff calculations arrive at the right answer. These are not easy to calculate, back-of-the-envelope. As laid out, this formula treats every trading partner, every good and every industry the same. Bananas, oil, clothing, computers or cars — it doesn’t matter what a country sends to the U.S.

If I were to be reciprocate, that would be very tough for people, Trump said in an interview last week.

A more conventional approach to pressuring other countries to lower their tariffs might be to specifically target a country or a good, said Doug Irwin, professor of economics at Dartmouth College.

“What’s less normal is when you have a much more vague objective, a broad-brush approach to many countries, many possible sectors,” he said. Things are not fair with other countries. It’s difficult to have a uniform approach to all of that.

“There are some unfair trade practices out there. So to the extent that you threaten tariffs … that would call for a very surgical approach,” Veroneau said. The number of U.S.exporters who complain about specific trade barriers is likely to exceed those who complain about these tariffs.

This is a symptom of the bigger problem with how Donald Trump talks about tariffs as a solution to policy problems, some of which conflict with each other.

The tax would raise the prices of Chinese products in the United States, according to Trump’s math. Americans would be less likely to buy Chinese products or products that contain Chinese components if the prices were higher.

Take China for instance. There were more than $439 billion of products imported by Americans from China last year. According to this formula, a 67% tax on those Chinese products should correct this trade imbalance. On Wednesday, Trump announced that the tariffs would only be 34%.

Behind these Greek letters there’s a blunt but understandable approach. Essentially, the equation is trying to answer the question: How high should we set tariffs in order to get Americans to buy fewer foreign products, and close the trade deficit? This math says, the more of a trade deficit the U.S. has with another country, the higher that tariffs should be on that country’s products.

President Trump’s tariffs on Wednesday created an economic mystery. What is the location of those numbers in the world?

That is not true. These are not reciprocal tariffs. They do not correspond to tariffs in other countries. There is a more interesting truth behind where these tariffs came from.