The U.S. announced what it described as ‘reciprocal tariffs’ on all nations in April 2025. These ‘reciprocal tariffs’ for each country were determined by a formula based on the trade deficit that the U.S. has with each country or, where it does not have a deficit, a standard tariff rate that the country imposes on U.S. imports.

Introducing ‘reciprocal tariffs’ at some stage was unsurprising, as the president made changing trade terms and trying to leverage changes in other countries’ tariffs a priority. However, imposing ‘reciprocal tariffs’ that are not solely based on the tariff that countries impose on U.S. imports and basing it on the trade deficit means that many countries, government and financial markets were surprised by the extreme nature of some tariffs on key exporters to the U.S.

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