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One of the most important trade proposals put forward by President Trump – especially if it replaces blanket global trade tariffs – is “reciprocal tariffs”. The idea is simple: the US would tariff imported goods at the same rate that other countries tariff imports from the US.

However, although the notion of “reciprocity” is embedded in trade agreements (you lower your tariffs, and I’ll lower mine), it has generally not applied at the individual product level.

The US has around 12,500 tariff lines and roughly 200 trade partners. If you wanted to examine/adjust each tariff line, that’s up to 2 ½ million product/trade partner combinations to look at.

Reciprocal tariffs would have a surprisingly small impact on the weighted average tariff rate of the US. We estimate that the US weighted average import tariff would increase by 1.65pp (roughly 0.8pp for DM and 2.2pp for EM) and would mostly impact a number of emerging markets.

India, Argentina, Indonesia, Thailand, Saudi Arabia, Brazil, and Turkey could have the most to lose, though if you adjust for the relative trade exposure to the US, it’s Vietnam and Thailand that have most “GDP at risk”.

From a global perspective, reciprocal tariffs would do substantially less damage than a blanket global tariff: e.g. at a 10% rate, we estimate that a blanket US tariff would reduce global GDP by a full percentage point, whereas the impact of reciprocal tariffs would be perhaps one fifth of that.

Our ��ţ�������� Research estimate of the impact is substantially lower than some of the other numbers we’ve seen quoted in the press, mainly we think because others have not cleaned the international tariff/trade data. Basically, those databases revert to most favored nation tariff levels when there is missing data, but that’s not the tariff rate being applied. Once you correct for that, the tariff differential vs Mexico, for instance, largely disappears.

What the analysis shows is that there is no obvious dimension for which the US is singled out for supposed biased treatment and a third of the countries we analyzed would have more to gain from full reciprocity than the US.

However, US agricultural goods face disproportional foreign protectionism (about a 5pp tariff differential), while the US itself disproportionately protects textiles (a 4pp differential in favor of the US).

We estimate that reciprocal tariffs would raise only USD 18-32bn in revenue annually (0.1% of GDP). The cost-benefit analysis of reciprocal tariffs suggests a higher likelihood of ending up with some other combination of tariffs (indeed President Trump has indicated further tariffs over and above reciprocal tariffs).