How does President Donald Trump calculate the 46% reciprocal tax imposed on Vietnam?

The 46% reciprocal tax rate for Vietnamese goods announced by President Donald Trump in the early morning of April 3 shocked the business community.

While Vietnamese goods are subject to a 46% reciprocal tax when exported to the US, many other countries such as Thailand, Indonesia, India... have lower tax rates. Why are there different tax rates like above? According to economic expert, Associate Professor, Dr. Ngo Tri Long, the US has a reciprocal tax formula applied to countries of 1/2 x trade deficit/export value of that country to the US.

For example, according to the US announcement, Vietnam's goods exports to this country are 136.6 billion USD and in return, Vietnam buys goods from the US is 13.1 billion USD. The US has a trade deficit of 123.5 billion USD, equivalent to a ratio of 90% (123.5 billion USD/136.6 billion USD). Thus, the US chooses a reciprocal tax rate of about 1/2 of the above ratio but chooses a higher rate of 46% (instead of 45%).

Vietnamese goods exported to the US will be subject to a 46% reciprocal tax.

PHOTO: DAO NGOC THACH

Similarly, Cambodia exports to the US 12 billion USD and imports back from the US 0.3 billion USD. The US trade deficit with Cambodia is 11.7 billion USD, equivalent to 97.5% and the US imposes a reciprocal tax on Cambodia at 49%. Or Indonesia exports to the US with a value of 28 billion USD, imports back 10.1 billion USD, so the trade deficit is 17.9 billion USD, equivalent to 64%, so the US imposes a reciprocal tax on this country of 34%. For China, the US trade deficit is 279 billion USD on a total export value of 418 billion USD, equivalent to 67% and the US announced a reciprocal tax on this country of 34%...

In the report published by the US, in the explanation of the reason for the increase to resolve the trade imbalance and create a level playing field for American businesses and workers, President Donald Trump said that the US is one of the countries applying a low average most-favored-nation (MFN) tax rate of 3.3%. While many major trading partners are applying a higher average MFN tax rate, citing examples such as Brazil (11.2%), China (7.5%), the European Union (5%), India (17%) and Vietnam (9.4%)...

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Source: https://thanhnien.vn/thue-doi-ung-46-ap-voi-viet-nam-duoc-tong-thong-donald-trump-tinh-nhu-the-nao-185250403103747133.htm