There is growing controversy over how the U.S. government calculates tariff rates following U.S. President Donald Trump’s announcement to impose a 25 percent reciprocal tariff on South Korea. Although it states that tariffs and non-tariff barriers imposed by countries, including South Korea, have been considered, only a simple calculation method has been applied to impose higher tariffs on countries with larger trade surpluses against the United States. Also, some argue that Trump's claims about South Korea's "automobile trade barriers" are untrue.
President Trump released U.S. reciprocal tariffs applied to various trading partners in the Rose Garden of the White House on Wednesday (local time), announcing that the tariffs would be half the rate of the tariffs, including non-tariff barriers, imposed by each country on U.S. goods. That is, given that South Korea imposes a 50 percent tariff on U.S. products, a 25 percent tariff will be imposed on South Korean goods.
Right after the announcement, the U.S. Trade Representative (USTR) explained the tariff calculation method on its website, claiming that it had considered factors such as the price elasticity of imports and the share of tariff costs covered by importers. However, it has turned out that the formula divides U.S. trade deficits with each trading partner by its import value. Simply put, Washington imposes higher tariffs on countries with larger trade deficits.
As of last year, the United States saw a trade deficit of 66 billion dollars in goods trade with South Korea. When this figure is divided by the total import value from South Korea, 131.5 billion U.S. dollars, the result is 50.2 percent (expressed as a percentage). This explains why the U.S. tariff rate for South Korea is 50 percent. The same calculation method has been applied to all countries where Washington announced reciprocal tariff rates.