Here's how Trump evaluated tariff rates for each country: The formula and Math explained

reciprocal tariffs" on more than 200 nations.
The majority of countries received a standard tariff rate of 10%, while others were imposed tailored rates according to a given formula created by the US Trade Representative (USTR).
This equation, designed to balance trade imbalances, establishes tariffs based on import, export, and demand elasticity factors.
The following is a detailed explanation of how the Trump Tariff equation operates and what it implies for international commerce, as mentioned in a report by USA Today.

Understanding the Trump Tariff Formula

The USTR made a step-by-step explanation of how tariff levels were calculated based on the following mathematical formula:

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Δτi = (xi — mi) / (ε * φ * mi)

Where:

Δ (Delta) indicates a change in the tariff rate of imports.

τi (Tau) is an import tariff rate.

xi represents exports from the U.S. to a country.

mi represents imports from that country into the U.S.

ε (Epsilon) is the price elasticity of import demand, fixed at 4 by the USTR.

φ (Phi) is the elasticity of import prices with respect to tariffs, fixed at 0.25.

Change in tariff import rate = (exports — imports) / (4 * 0.25 * imports)

By simplifying the equation, since 4 multiplied by 0.25 equals 1, the formula reduces to:

Change in tariff import rate = (exports — imports) / imports

This formula is used as a basis for setting tariff rates on specific countries.

Using the Formula: Case Study of China

To use the formula in context, let's take the U.S.-China bilateral trade relationship in 2024:

U.S. exports to China:$143.5 billion

U.S. imports from China: $438.9 billion

Using the formula:

(143.5 — 438.9) / 438.9 = -0.673 (or -67.3%)

This result corresponds to a 67% tariff increase