U.S. President Donald Trump announced that Korea's tariff rate reaches 50%, noting that he would impose a 25% reciprocal tariff on Korea, stirring debate over the calculation method for the tariff rate.
On 2nd (local time), President Trump announced the reciprocal tariff while holding up a panel indicating each country’s tariff rates against the U.S. The panel stated that Korea's tariff rate was 50%. However, as Korea has a free trade agreement (FTA) with the United States that allows most goods to be traded duty-free, President Trump's claim that Korea's tariff rate is 50% is not accurate.
In response, the White House stated that it calculated the tariff rate while considering not only the tariffs imposed by various countries on the U.S. but also non-tariff barriers such as subsidies and exchange rates. However, it did not disclose specific grounds or formulas.
As President Trump claimed that he 'kindly' set the reciprocal tariffs compared to other countries’ tariff rates, there is controversy surrounding the White House's method of calculating the tariff rates. Claims are spreading on social media such as X (formerly Twitter) that the White House's calculated tariff rate is 'the last year's trade deficit of the United States divided by U.S. imports, then halved.' If this method is applied, the greater the U.S. trade deficit, the higher the tariff rate, and the lesser the deficit, the lower the tariff rate.
Calculating according to this method, the U.S. trade deficit against Korea last year was $66 billion, which divided by $132 billion of imports results in 50%. Half of this value is 25%, which corresponds to the reciprocal tariff rate announced by President Trump for Korea.
Calculating using Japan, which has a reciprocal tariff of 24%, yields similar results. In Japan's case, the U.S. trade deficit is $68.5 billion, and the imports amount to $148.2 billion. Dividing $68.5 billion by $148.2 billion and then halving it results in 23%, which is similar to the tariff rate imposed by the U.S.
Applying this calculation method to China, the European Union (EU), Vietnam, India, and others also yields the same or similar numbers. Countries that recorded trade surpluses with the U.S. or had minimal trade deficits were subject to the basic tariff of 10%.
James Surowiecki, a U.S. journalist, stated on X that 'they did not actually calculate the tariff rates and non-tariff barriers,' and 'I figured out where this fake tariff rate comes from. They brought trade deficits for every country and divided it by what that country exported to us (the U.S.).'