Balance of trade data from census department through 2024, chart by MishReciprocal TariffsReuters reports Trump Says He Will Announce Reciprocal Tariffs on Many Countries Next Week.
President Donald Trump said on Friday he plans to announce reciprocal tariffs on many countries next week, a major escalation of his trade war.
Trump did not identify which countries would be hit but suggested it would be a broad effort that could also help solve U.S. budget problems.
“I’ll be announcing that, next week, reciprocal trade, so that we’re treated evenly with other countries,” Trump said. “We don’t want any more, any less.”
Trump told Republican lawmakers of his plans during budget discussions at the White House on Thursday, three sources familiar with the plan told Reuters. Trump and top aides have said they plan to use higher tariffs on foreign imports to help pay for extending Trump’s 2017 tax cuts, which independent budget analysts say could add trillions of dollars to the U.S. debt.
In a confirmation hearing on Thursday, Trump’s U.S. trade representative nominee Jamieson Greer said other countries will need to reduce barriers to U.S. exports if they want to maintain access to the U.S. market, citing Vietnam in particular.
The China, Vietnam, Mexico ConnectionI am very aware of Vietnam. I have been tracking that country for years.Trade deficits with China have come down but increased dramatically with Vietnam and Mexico.Evidence is strong that China has circumvented tariffs by masking exports via Vietnam and Mexico.2024 Balance of Trade Select Countries 
2024 Balance of Trade Select Details
Those 8 listed countries account for 948 billion of the total 1.203 trillion US deficit, 78.8 percent of the US trade imbalance.China is understated by about $100 billion so other countries are overstated by about that amount.The above data is goods only. The US has a trade surplus in services making the total trade deficit about $918 billion.Annual Goods and Services Balance of Trade 
Annual balance of trade data from Census Department, chart by MishFor details, please see December Had the Second Largest Monthly Trade Deficit in History
The latest trade report will give Trump something more to howl about.
Trade Deficit with China is Understated 
I discussed China on January 18 in The US Trade Deficit with China is Understated by as Much as 30 Percent
Normal trade math does not add up. US imports and China exports are not in sync.
I asked Brad Setser, senior fellow for international economics at the Council on Foreign Relations, and Director of International Economics, for the United States Department of the Treasury to comment.Setser replied “Chinese exports started exceeding US imports only in those categories with tariffs, and only after the tariffs were imposed.”I commented “This appears to be an amusing case of China cleverly avoiding US tariffs but not clever enough to hide it better.”US Imports and Exports, Goods Only, China, Canada, Mexico 
On January 7 I noted January 31, 2025: Seven Charts Show Tariffs Would Harm the US Auto Industry
The CATO institute does a great job explaining why tariffs on Canada and Mexico would be a very bad idea.
The average $25,000 price of a car imported from Mexico or Canada could jump $6,250 if the tariffs take effect, according to an analysis by S&P Global Mobility.Not even the UAW wants Trump to increase tariffs on cars.On February 2, I asked Trump Claims “We Have All the Oil We Need” True or False?
By volume, we are reasonably close. But by grades of oil US refiners need, we aren’t.
Refineries run on a mix of crude oils in order to run efficiently and maximize outputs.
We have to import 40 percent of the oil we need. That oil comes from Canada, at extremely good prices. We get more for our oil exports than we pay Canada.And without those Canadian imports, the US has a big trade surplus with Canada.In short, Canada is doing the US a favor. So is Mexico especially in regard to auto parts without which car prices in the US would rise by thousands of dollars.Are Trump’s Tariffs Really Tariffs?It is sheer idiocy to claim Tariffs are Not Tariffs but that is the preposterous claim made by Victor Davis Hanson on the Daily Caller.Hanson dives into BS about fentanyl which has nothing to do with anything. If you sign a deal with your neighbor to buy peaches, you can’t break the deal and shoot your neighbors dog if it pees on your lawn.Trump is breaking his “Best in History” USMCA deal, an authority he does not even have given The Senate passed USMCA 89-10.Trump does not give a damn about the law and neither does Hanson.And Hanson never even bothered to make the case tariffs are not tariffs (which is of course mathematic idiocy).Finally, US consumers are getting a great deal on our trade relationship with Mexico and Canada as noted by CATO (and any bit of common sense). Only fools want the price of cars to rise by thousands of dollars.Actions by Trump will make the US the highest cost producer of literally everything and strengthen the dollar too.How anyone can possibly think that will help exports is a mystery.And let’s take a look at Trump’s budget proposals.TCJA and Other Promises Annual Subtotals
That’s $883 billion per year.Using Tariffs to Reduce the DeficitIn sleight of hand nonsense Trump claims he can use tariffs to reduce the fiscal deficit.In fact they are supposed to reduce the fiscal deficit, the trade deficit, and bring jobs back to the US simultaneously.That is mathematical nonsense.The US total goods and services debt is $918 billion as noted. In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion (not counting the above $883 billion additions).On what planet is the US supposed to collect $1.9 trillion on tariffs on a total deficit of $918 billion.I will tell you right now Trump will be lucy to collect $250 billion per year in tariffs (up from the current $90 billion), and all of it will come from US consumers in the form of a huge tax hike, while delivering tax cuts to a select few.Factoring in Trump’s fiscal proposals, the deficit would soar even if the economy magically avoid stagflation from these ridiculous proposals.Related PostsNov 22, 2024: Should Anyone Care Whether Underwear Is Produced in the US or China?
This ridiculous-looking question gets to the heart of tariff discussions.
November 27, 2024: What Industries Will Suffer the Most Under Trump’s Plan to “Make Tariff’s Great Again”?
Trump is upping the rhetoric on Mexico, Canada, and China on top of previous tariff threats. Who will be hardest hit?
On March 2, 2018 I posted Trump Tweets “Trade Wars are Good and Easy to Win”If trade wars are good and easy to win, Why didn’t Trump win them then? And please note that Biden kept intact all of Trump’s tariffs and even added some.September 26, 2024: Trump Claims Tariffs Will Reduce the Trade Deficit. Let’s Fact Check.
Trump proposes 60 percent tariffs on China. Would that reduce the trade deficit? Where? How?
If Trump imposed 60 percent tariffs on China, I believe all trade with China would cease.The US would not collect a cent on those tariffs. That’s the good side actually because would be US consumers who paid the tax.November 22, 2024: Trump’s Proposed Tariffs Are a Tax on Consumers, Primarily the Poor
For the poorest fifth of Americans, who will have incomes of less than $29,000 in 2026, the tariffs will impose a tax increase equal to 5.7 percent of their income that year.
If Trump wants a recession, he can escalate, escalate, and escalate tariffs. Meanwhile, Trump is oblivious as to the real problem and so is Hanson.Monstrous fiscal and trade deficits are a direct result of Nixon ending gold convertibility.I discussed gold, NAFT, and trade imbalances on February 6, 2017 in Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?Nothing has changed except bigger trade and fiscal deficits. Tariffs cannot and will not fix structural imbalances when there is no brake on fiscal insanity.More By This Author:Nonfarm Jobs Rise By 143,000 In January, But The Big Story Is Revisions Huge BLS Benchmark Revisions Remove 610,000 Jobs From 2024Initial Unemployment Claims Increase By 11,000, Continued Claims By 36,000
