A Tariff Mirage
American President Donald Trump announced a series of record-high tariffs today. On top of a baseline 10% tariff for all foreign goods into the United States, some countries like China, Cambodia, Myanmar and particularly Vietnam were hit particularly hard.
During a speech given to reporters in the Rose Garden, Trump displayed a chart listing “tariffs” charged to the United States by foreign nations, with the reciprocal US tariff being listed next to it.
The problem arises in what Trump claims are the “tariffs charged” by foreign nations. Among these, ludicrous claims like Cambodia charging a 97% tariff on US goods, 90% for Vietnam, 88% for Myanmar, 67% for China and 39% for the European Union, a historical ally, stood out.
But these “tariff” rates don’t reflect the realities of economic policies in these nations. What the Trump administration is claiming are tariff rates are actually the result of dividing the trade deficit of a country by the amount of goods exported to the US by that country, according to yet unconfirmed sources.
The Trump administration has published the formula it used to calculate these tariffs. While being more complex than the equation below, the results seem to broadly line up within a 5% margin of error.
For example, the “90% tariff rate” supposedly charged by Vietnam is actually the result of the $123.5 billion trade deficit divided by the total value of goods exported to the US, $136.6 billion. Basic mathematics confirm this : 125.5/136.6 ≅ 0.904 x 100 = 90%.
This helps explain the wildly unrealistic claims that Cambodia, a nation marked by widespread poverty and economic struggle, is supposedly imposing a 97% tariff on US goods.
Trump’s Trade War: Towards A Global Recession
Multiple nations targeted by these tariffs have responded to the Trump administration, with the White House stating they were currently in talks with many governments to determine tariff rates.
In particular, Australia and the European Union, longtime allies of the United States, warned the American government that “this is not the act of a friend”, as declared by Australian Prime Minister Anthony Albanese, and President of the European Commission Ursula von der Leyen warning that the EU is “preparing for further countermeasures”.
Meanwhile, rival superpower China pledged through its Ministry of Commerce to take “resolute countermeasures”, and characterized Trump’s policies as “a typical act of unilateral bullying”.
Markets reacted poorly to Trump’s announcements, with NASDAQ futures taking a 3% dip. Major companies like Nike and Apple reported a 7% drop in share value, and shipping giant Maersk, seen as an indicator for global trade, saw a 7.4% loss.
US-Vietnam Trade
Trump’s announced “reciprocal tariff rate” of 46% on Vietnamese goods is set to cause major disruption in a previously fruitful economic relationship. As of March 2025, the American trade deficit with Vietnam stood at $123.5 billion, with the US importing up to $136.6 billion of Vietnamese goods, while exporting only $13.1 billion in return.
March 2025’s figure is an all-time high, a 15% increase over 2024, itself a 18% increase on 2023’s figure of $94.8 billion. Electronics, furniture, textiles and footwear dominated Vietnamese exports to the US.
In the face of looming tariffs, the manufacturing sector is set to be hit particularly hard. The Vietnamese stock market fell by almost 100 points, a 6.68% decrease from April 2nd to April 3rd.
Trump’s increasingly isolationist economic policies are forcing historic trade partners to turn away from the United States. While China is set to overtake the U.S.’s economy by 2035, other rising economic powers like the BRICS countries and ASEAN members like Vietnam and Thailand are turning to new partners to ensure future economic growth and stability.