Brace Yourself!
The report sent you on Friday 15, 2025 - The Anatomy of Exceptionalism- deals with the categories of Tariffs President Trump is likely to impose see Chapter 2: "The Trump 2 Administration policies- will they maintain Exceptionalism?".
The three Economic categories of tariffs and their purpose are: "economic tariffs to include: remedial or reciprocal tariffs (equating US and foreign tariffs at a country level); sector tariffs (e.g. steel, aluminium with autos pharmaceutical, etc.); and blanket tariffs to address US trade deficits (e.g. China with the EU, Japan (?) & EM’s to come)".
I have calculated the potential rate of remedial or reciprocal tariffs based on the average tariffs currently charged by trading partners on imports from the US less the existing US tariffs on countries' exports to the US plus any VAT rates reimbursed on exports to the US. This is a rough exercise: but it is clearly not being taken into account by markets.
Reciprocal/remedial tariff rates (rough estimates)
Developed Economies:
EU: 25%
UK 24%
Canada: 1-2% (I have not added differences between US and Canada in Gross Sales Tax to this estimate).
Japan 2%-3%
Australia 2%
Emergent Economies
China 3-4%
India: 25- 30%
Mexico 20% - 25%
Brazil 28%
Korea 13%
Taiwan 12%
Singapore 9%
Reciprocal- Remedial estimated tariffs to be applied to imports from each country that exports to the US has been calcualted as the difference between the tariff rate applied by the US' to imports from the target country and the target's tariffs on. imports from the US (using WTO average tariff rates) augmented by the average VAT rates for the non-US country. I have not included govt subsidies as i can't estimate them. IN some cases they ould be substantial.
So: in the case of target country A and the US let T= tariff and VAT= V:
Remedial tariff rate (RTR) to be imposed by US = RTR = TA - TUS + AV.
All values in percentages.
The highest rates in India, Mexico and the EU stem from differences in VAT rates more than Tariffs. I have not factored in non-VAT GST rates for countries that do not have VAT. President Trump has said in his White House interview that VAT rates should be included in reciprocal/remedial tariffs because VAT is reimbursed on exports is reimbursed to producers.
If you want to discuss please let me know.
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