Reciprocal Tariffs: A Potential Solution for Balancing Trade Deficits
2025-04-05
This report explores the concept of 'reciprocal tariffs,' designed to balance bilateral trade deficits between the U.S. and its trading partners. It calculates the tariff rates needed to drive bilateral trade deficits to zero. The study finds reciprocal tariff rates ranging from 0% to 99%, with an unweighted average of 20% and an import-weighted average of 41%. Persistent trade deficits are attributed to a combination of tariff and non-tariff factors hindering trade balance. The report employs an elasticity model, utilizing estimates of tariff elasticity of import demand and price pass-through to calculate reciprocal tariffs.
(ustr.gov)
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