Special Edition – The Mad Trump: What We've Learned So Far About Trump's Tariffs
- Ann Yu
- Apr 3
- 5 min read
April 3, 2025
Here’s a 5-minute power-packed update on what we’ve uncovered about Trump’s tariffs so far!
Facts | |
|---|---|
Market Reactions | |
Wild Guess |
Facts: Who Pays What and How the Rates Are Calculated
Donlad Trump imposed the steepest American tariffs in a century - he will apply at least a 10% tariff on all exporters to the US, with even higher duties on some 60 nations to counter large trade imbalances with US.
Bloomberg Economics estimates the effective tax rate on over $3 trillion worth of imported goods could climb to 23% - a jaw-dropping leap from 2.3% in 2024. That’s nearly 10 times higher and even surpasses the infamous tariffs of the 1930s, which many blame for worsening the Great Depression and eventually led to the formation of General Agreement on Tariffs and Trade in 1947 (later known as the World Trade Organization).
How Are They Calculated?
The reciprocal tariffs stem from the Trump administration’s assessment of barriers and levies imposed by other countries on American goods, and Trump said he's only charging "half" of those rates.
Here’s the formula according to a statement by the United States Trade Representative
Take a country's trade surplus with the US.
Divide that surplus by its total exports.
Cut that number in half to get the "reciprocal tariff rate".
For example:
China had a trade surplus of $295 billion with the US last year and total exports of $438 billion - a ratio of 67%. Divided by two, this yields the 34% reciprocal tariff rate, stacked on top of the 20% duties already imposed this year due to fentanyl trafficking
Similar calculations determined rates for Japan, South Korea, and the European Union. Even countries where the US runs a trade surplus weren’t spared, facing a flat 10% rate regardless. Below chart shows only the most notable ones. Full lists can be found here.
When will the new tariffs take effect?
The 10% baseline charge kicks in after midnight Saturday, while higher duties on targeted countries roll out on April 9th.
Some Exemptions
Canada and Mexico are exempted this time around, as they’ve already been hit with 25% tariffs tied to fentanyl issues under previous executive orders.
Products like steel and aluminum, already subject to tariffs, won’t face additional reciprocal rates.
Some "Fun/Sad" Facts
This round of new tariffs even included Heard and McDonald Islands, an uninhabited archipelago near Antarctica that serves as a breeding habitat for penguins.
Israel, one of Trump's closest allies, announced Tuesday it had pulled down all duties on US products, only to be hit the next day with 17% levies.
Hyundai Motor announced billions in US investment only to see Trump hit auto imports with tariffs that disproportionately hit the South Korean automaker, plus a 26% duty on Seoul.
Apple's $500 billion US investment pledge, which Trump loves to tout, didn’t stop high tariffs aimed at China and nearby Asian nations that are low-cost manufacturers.
For your reference only. Not investment/product recommendations.
Market Reactions – The Winners and Losers So Far
Equities & FX
US equity index futures tumbled more than 4% in after-market trading.
MSCI Asia Pacific was down 1.7% at its lowest, with Japan down 3%, Hang Seng down 1.6%, and CSI 300 down 0.6%.
Europe opened down around 2% to start with.
USD index is heading for one of its worst days of the year, as traders prepared for the economic impact.
JPY gained 1.5% against USD, while EUR rose more than 1%.
Gold continues to make new highs and was briefly above 3167/oz, extending YTD gains to 18%.
"The narrative is moving from US exceptionalism to US alienation," said a sales trader at Maybank Securities in Singapore.
Fixed Income
US 10-year treasury yield fell toward the closely watched 4% level as investors worried the trade war will backfire on the US economy. The 10-year yield has dropped 50 basis points so far this year as investors spurned risky assets in favor of havens.
A 10-year yield below 4% would be a "clear, global risk-off signal as the uncertainty of a tectonic shift in the US economy permeates markets," said head of research at hedge fund K2 Asset Management.
For your reference only. Not investment/product recommendations.
Wild Guess - What Will Happen Next?
Technically, tariffs are paid by the importer (or an intermediary), but the cost rarely stops there. Trump insists exporters ultimately foot the bill, but studies suggest it's more of a hot potato - with businesses, manufacturers, and consumers all scrambling not to get burned.
So, what happens behind the scenes?
🛠️ Manufacturers' Dilemma: Some overseas manufacturers might slash prices to keep importers happy, while others consider relocating factories to dodge tariffs. But in a world where Trump’s trade policies seem omnipresent, some companies are even pondering a return to China - for its robust supply chains and efficient workers.
🏬 Importers' Game Plan: Big US importers like Walmart and Target have another trick up their sleeves - price hikes. Instead of taking the hit, they simply pass the cost to consumer to shoulder the tariff cost indirectly.
A 2018 model from the Federal Reserve suggests that each 1 percentage point hike in the tariff rate lowers US GDP by 0.14% and pushes up prices by 0.09%. Based on that model, Bloomberg Economics estimates that the reciprocal tariff alone could deliver a hit to GDP of 2.4% and a price boost of 1.4%
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