Calculating the United State’s ‘reciprocal’ tariffs

Soon after Trump’s tariffs were announced, it was noted the ‘reciprocal’ tariffs looked suspiciously like the US trade deficit divided by imports.

Ever the skeptic, I couldn’t believe it could be this simple, so I decided to check it out myself with the help of R and UN Comtrade data. Here’s my answer, neatly documented in R code.

If you’re interested in reproducing this analysis you’ll need to get an API key for the comtradr package.

Code block: project setup:

#load packages
library(googlesheets4)
library(tidyverse)
library(countrycode)
library(comtradr)

#set comtrade api key
set_primary_comtrade_key(ref_comtrade_api_key)

ref_gsheet_url<-"https://docs.google.com/spreadsheets/d/1AbPFX21KKfiCr8WWA6fwfPVKAjE5MUCzdWVitV0ZuWM/edit?usp=sharing"

#read data from google sheet 
dta_us_tariffs<-read_sheet(ref_gsheet_url)

#add countrycodes
dta_us_tariffs<-  dta_us_tariffs |> 
  mutate(iso3c= countrycode(sourcevar=country, origin="country.name", destination="iso3c"))

#assign _KS as as code for Kosovo as per Comtrade country code list (KSV is also used by some providers)
dta_us_tariffs[dta_us_tariffs$country=="Kosovo","iso3c"]<-"_KS"

#create reference list of focus countries
ref_focus_countries<-dta_us_tariffs$iso3c 

# get bilateral trade data for US 
dta_comtrade <- ct_get_data(
  reporter = 'USA',
  partner=dta_us_tariffs$iso3c,
  commodity_code = 'TOTAL',
  start_date = 2024,
  end_date = 2024,
  flow_direction = c('import','export')
)

# select focus variables and round to billion USD
dta_comtrade<-dta_comtrade |> 
  select(ref_year,partner_iso,flow_desc,fobvalue) |> 
  mutate(fobvalue= fobvalue/10^9) 

# Pivot dataframe by flow type
dta_comtrade<-dta_comtrade |> 
  pivot_wider(names_from=flow_desc, values_from = fobvalue)

#calculate trade balance
dta_comtrade<-dta_comtrade |> 
  mutate(trade_bal= Export- Import, 
         trade_bal_to_m_ratio= round(trade_bal/Import,2)*100)

#join comtrade data with tariff listing
dta_us_tariffs_and_trade_flows<-left_join(dta_us_tariffs,dta_comtrade, by=c('iso3c'="partner_iso"))

There’s more I’d like to do with this data, but for now I thought I’d share my code and the answer: yes. The reciprocal tariffs look almost identical to the trade balance to imports ratio.

@carlbergstrom.com‬ has a great thread (skeet?) on this on Bluesky.

Code block:

#create filtered dataframe where tariff > standard rate
#drop EU countries as individual reciprocal tariffs weren't published 
dta_plt_us_tariffs<- dta_us_tariffs_and_trade_flows |>
  filter(us_tariffs_applied >10,  
         EU == "N") 

#plot where tariff != reciprocal tariff
plt_us_tariffs<-ggplot(data=dta_plt_us_tariffs,
                       aes(y=us_claimed_reciprocal_tariff,
             x=trade_bal_to_m_ratio))+
  geom_text(aes(label =iso3c), size=2)+
  theme_minimal()+
  labs(x= "Imports / Trade Balance (%)",
       y="Announced 'Reciprocal' Tariff")

plt_us_tariffs