WASHINGTON >> After weeks of anticipation and speculation, President Donald Trump followed through on his tariff threats this week by declaring a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States.

Global markets cratered the day after the announcement and then fell further when China announced it would retaliate with tariffs equal to the ones the U.S. is imposing.

In announcing what he has called reciprocal tariffs, Trump was fulfilling a key campaign promise by raising U.S. taxes on foreign goods to narrow the gap with the tariffs the White House says other countries unfairly impose on U.S. products.

Trump’s higher rates would hit foreign entities that sell more goods to the United States than they buy. But economists don’t share Trump’s enthusiasm for tariffs since they’re a tax on importers that usually get passed on to consumers. It’s possible, however, that the reciprocal tariffs could bring other countries to the table and get them to lower their own import taxes.

What is Trump trying to accomplish with his tariffs?

Trump has said that tariffs can raise money for the U.S. Treasury, protect U.S. industries, draw factories to the United States and serve as a negotiating tactic to get other countries to bend to his will, whether it means getting them to reduce their own tariffs or to crack down on the illegal flow of drugs and immigrants into the United States.

But if tariffs mean Americans buy fewer imports or if companies relocate factories to the United States, then revenue from tariffs will fall, undercutting his plan to use them as a money generating alternative to the income tax.

The president on Thursday said the levies “give us great power to negotiate” and were coaxing other countries into offering to lower their own trade barriers.

The same day, White House trade adviser Peter Navarro told CNBC that the tariffs were meant to stay: The idea is to get companies to produce goods in America, not abroad, bringing down longstanding U.S. trade deficits.

What is currency manipulation?

Currency manipulation takes place when a country deliberately pushes the value of its currency lower, which makes its companies’ exports cheaper in foreign markets and gives them an unfair competitive advantage. It can do this by selling its own currency and buying another country’s — usually the U.S. dollar — in foreign exchange markets.

In announcing sweeping tariffs this year, Trump has accused other countries of using this tactic to gain an unfair edge over American companies. China, in particular, was notorious for years for manipulating its currency lower to boost exports. But last November the Biden administration’s Treasury Department concluded that “no major U.S. trading partner” had manipulated its currency to gain an unfair advantage in the fiscal year that ended in June 2024.

How were the tariffs imposed by Trump calculated? Do other countries really have such high tariffs?

According to the Trump administration, the European Union’s tariffs and trade barriers against the U.S. amount to a 39% tariff on U.S. goods, while China’s, it says, are 67%, and India’s 52%.

Those are much higher than what other sources say. The World Trade Organizations puts the EU’s average tariffs on all imports at 2.7%, China’s at 3%, and India’s at 12%.

The Trump administration says it is including currency manipulation, government subsidies, and other barriers to trade in its calculations. Trump said Wednesday he was being “kind” and then charging half what other countries imposed on the U.S. So the U.S. will as of April 9 impose 20% duties on imports from Europe, 26% on India, and 34% on China. For China, that’s in addition to other duties, which means some Chinese goods will face duties as high as 79%.

Many countries do take other steps besides tariffs to restrict access to their markets. The EU, for example, restricts imports of hormone-treated beef from the U.S. And the U.S. government has long complained that China doesn’t protect intellectual property, such as software made by American companies.

Still, those factors don’t explain how the administration came up with such high numbers for other countries’ tariffs. Instead, the White House says it did a simple calculation: It took the size of each country’s trade imbalance on goods with the United States and divided that by how much America imports from that nation.

It then took half that percentage and made it the new tariff rate.