Dylan Wagemans
“THEY charge us 39%, so we’re going to charge them 20% – we’re charging them essentially half,” is what US President Trump said about the trade tariffs he put on the EU.
Trump claimed, as part of his ‘Liberation Day’ announcement, that the EU ‘rips off’ the US by charging a 39% tax on US-made products entering the many nations of the EU.
This is how he has ‘justified’ the 20% reciprocal tariff on EU-made products entering the US.
But the actual tariffs the EU imposes on US-made products isn’t 39%.
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It’s not even close to that number, according to multiple sources.
The actual tariff that the EU levies on the US products entering the Union lies somewhere between 1% and 5%.
The European Commission says that it charges an average tariff of just 1% on US products, while the World Trade Organisation (WTO) estimates that the figure is 4.8%.
Although it’s not immediately clear how much the EU charges exactly, it’s obvious that it comes nowhere close to the claimed 39%.
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Then where does the 39% figure come from?
Both Euronews and The New York Times have made a simple formula that explains where Trump got his numbers.
The number seems to have been calculated by taking Washington’s trade deficit with the EU and dividing it by its exports to the US.
The number was then divided in half to become Trump’s reciprocal tax rate.
The calculation used by Trump has shocked economists, many of whom say that it makes no sense.
The US Trade Representative said that the calculations involved a much more complex formula, and that it was based on factored-in ‘non-tariff barriers’.
These so-called ‘non-tariff barriers’ include intellectual property rules, environmental and digital regulations and, in some cases, ‘corruption’.
In 2023, the total trade in goods between the US and the EU accounted for €851 billion.
The EU exported €503 billion of goods to the US market, while importing €347 billion.
This resulted in a goods trade surplus of €157 billion for the EU.
No wonder Trump & co is busy firing all those government employees. I mean he needs an army of mathematicians to work out duties in the way suggested in the article – and even then there seems to be some doubt as to the result! Crazy!