DONALD TRUMP’S TARIFF announcement on Wednesday has sent the global economy spinning, with markets plunging and countries scrambling to react to the new US levies.

The defining moment from Trump’s ‘Liberation Day’ speech came when he pulled out a gigantic chart that apparently showed the tariffs that other countries placed on US goods.

Trump’s administration appears to have used these figures as the basis for the US tariffs – including those imposed on goods from European Union countries like Ireland.

But how accurate is the EU figure?

Donald Trump with his massive chart of reciprocal tariff calculations Alamy Stock Photo Alamy Stock Photo

The Claim

According to the figures on Trump’s gigantic chart, the European Union imposes a 39% tariff on goods imported from the United States.

The Evidence

Multiple sources have suggested that import tariffs imposed by the European Union on US goods are far lower.

The World Trade Organization (WTO) previously said in a tariff profile that the EU’s trade-weighted average tariff rate in 2023 was 2.7%.

This rose to 8.4% for agricultural products, but was around 2.3% for non-agricultural products that year. 

The European Commission said in February that the average tariff rate is around 1% for both sides – that is, for European imports to the US and American imports to Europe.

The White House also cited a WTO figure for what are called “most favoured nation” tariff rates, which require nations who are members of the WTO to give the same terms to other members.

According to a fact-sheet circulated by the Trump administration on Liberation Day, the MFN rate for the EU was 5%.

At the top of Trump’s big chart of countries, there was also a note saying that the figures representing the tariffs charged to the US included “currency manipulation and trade barriers”.

However, it is not entirely clear what these terms include.

All of the above figures are far below the 39% figure that featured on the chart, so how was that figure calculated? 

It appears that rather than being based on tariffs, Trump’s figures were actually based on the trade deficit between the United States and the various countries on the list.

A trade deficit is when a country imports more products than it exports to another country (or, in the case of the European Union, a group of countries).

Although a trade deficit figure can help one understand the extent of the trading relationship between two countries, it doesn’t provide any information about the rate of tariffs that are imposed between them.

This was first pointed out by James Surowiecki, a financial writer, in a post on X.

“So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is,” he wrote. 

It’s possible to glean the 39% figure for Europe using the exact same method.

Figures from the Office of the United States Trade Representative show that in 2024, the US had a $235.6 billion trade deficit with the European Union and imported $605.8 billion worth of European goods.

Dividing the first figure (235.6) by the second (605.8) leaves a figure of 0.3889 – or 0.39 if one rounds up.

Deputy White House press secretary Kush Desai also published the methodology behind the calculations in a post on X that responded to Surowiecki’s initial post, and inadvertently confirmed that this is how the figure was calculated.

The formula is here, and as Surowiecki has pointed out, it essentially shows that the US tariffs were calculated by dividing the US trade deficit figure by its imports from each country.

Several economists have since criticised the way in which these so-called ‘reciprocal’ figures were calculated.

Nobel laureate Paul Krugman, a trade economist who famously coined the term “Leprechaun Economics” in reference to Ireland’s GDP, was one of those left scratching his head.

“There’s so much wrong with this approach that it’s hard to know where to start,” he posted online.

Irish economist David McWilliams also told BBC that “if a student in my class in Trinity came up with that to explain tariffs, I’d have failed them”.

“It makes no sense. What it’s basically saying is ‘the best exporters we’ll punish most, and the worst exporters, we won’t touch at all’,” he said.

“But being the best exporter doesn’t mean you’re playing unfairly; it usually means you’re more productive and have better products.”

Verdict

Donald Trump’s ‘Liberation Day’ chart claimed that the European Union charges 39% tariffs on imports from the United States.

However, the White House has calculated this figure erroneously, using a figure that is based on trade deficits instead.

Multiple economists and financial experts have dismissed this as a method for calculating ‘reciprocal’ tariffs.

The actual rate of European tariffs on US goods varies: the White House itself has said it’s around 5%, while the European Commission has said it’s closer to 1%.

We therefore rate the claim that the EU charges a 39% tariff on US goods as NONSENSE.

As per our verdict guide, this means the claim is “wildly inaccurate, logically impossible, and/or ridiculous”.

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