"Reciprocal" tariffs: What are they really for?

Robert Lawrence

No PB25-6, Policy Briefs from Peterson Institute for International Economics

Abstract: This Policy Brief evaluates the evolving reasons for and application of the Trump administration's "reciprocal" tariffs and finds them wanting. The tariffs, adjusted most recently on August 1, 2025, were originally supposed to achieve reciprocity between the United States and its trading partners but were based on a defective measure because bilateral imbalances do not necessarily indicate foreign unfair trade practices; the methodology used to estimate the reciprocal tariffs was biased towards overstatement, particularly for countries producing primary commodities, which will have high pass-through into US final prices, and for countries exporting products with high import content. Given these defects, the reciprocal tariffs are better seen as a dressed-up anchoring ploy to strengthen America's hand in negotiations rather than credible estimates of the unfair trade practices that the United States faces. Moreover, even if reduced to 15 percent, the application of these tariffs to America's poorest trading partners would do little to reduce the overall US trade deficit but considerably harm their economic development.

Date: 2025-08
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