That approach meant Trump and his advisers simply took the U.S. trade deficit with the European Union — $235.6 billion in 2024 — and divided it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the “unfair” trade advantage the EU holds over the U.S. From there, the White House proposed a 20 percent tariff, framing it as a corrective measure to level the playing field.
Trump, speaking in the White House Rose Garden on Wednesday, said he was being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six research references to underscore the credibility of its momentous economic decision. Incidentally, that formula describes the same calculation detailed by Surowiecki in his analysis.
Washington claimed its reciprocal tariffs, masterminded by the Council of Economic Advisers, were based on a formula accounting for trade barriers, import elasticities and tariff pass-through rates — aiming to set tariffs high enough to eliminate bilateral trade deficits. It also considered value-added tax as a trade barrier — even though this is paid on products and services sold in a country regardless of where the company selling them is from.
The White House’s calculated figure of 39 percent is more than 10 times higher than the actual average, trade-weighted tariff charged by the EU of 2.7 percent, according to the World Trade Organization.
The calculations by Surowiecki, best known as the author of bestselling book “The Wisdom of Crowds,” were a big talking point on Thursday in Europe. Politicians and officials are themselves trying to crowdsource a response to Trump’s tariffs that, according to European Commission President Ursula von der Leyen, include a threat to retaliate while remaining willing to negotiate.