Trump slapped Cambodia with one of the highest tariffs, because, he claimed, Cambodia poses 97% tariffs on the US. When you look at a list of Cambodian tariffs on US imports, you see meats and food products at 15%, with other products at 7-15%, nowhere near the 97% calculated by the Trump team.
So I went looking for the Trump formula, which is
This formula has nothing to do with a country’s tariffs, but rather, its trade balance with the US. So I looked up Cambodia’s trade figures, which show 320 million in exports to the US (xi in the formula), and 12 billion in imports (mi in the formula). That’s about a 3% ratio of exports to imports, so the Trump claim would be that Cambodia charges 97% tariffs on American goods.
This despite official figures showing most tariff items at 7-15%, making the 97% claim look ridiculous.
I started reading about other countries. Lesotho had the highest tariff on the list, because its exports of diamonds far outweigh imports at virtually 0, since Lesotho imports most food, etc. from South Africa.
Also Vietnam: Vietnam-US bilateral trade in 2024 neared US$150 billion, with Vietnam enjoying a substantial surplus of US$124 billion.
But then the penny dropped. Wait a minute! Cambodia has a huge deficit ratio with the US, while Lesotho and Vietnam have surpluses. In fact, if you look back at that formula, you see that xi – mi for deficit Cambodia is actually negative. The formula calculates that Cambodia has a negative tariff of 97%, whatever that might mean.
I can only conclude that that erudite formula has no meaning at all, but uses all those fancy Greek letters to impress readers and make it appear that the designers had some idea what they were doing, which they obviously don’t.
So why should Cambodia, with its trade deficit, and Vietnam, with its trade surplus with the US, be lumped into the same high tariff rate of about 46% assigned by Trump?
The answer is found in one word: China. Trump doesn’t want China evading tariffs by channeling its goods, or producing them through Southeast Asia. Therefore, he slaps a high tariff on all Southeast Asian countries so that they cannot be used as staging by China.
I’ve got news for you — China is going to use Cambodia anyway. China will be making a lot of products which it can no longer sell to the US, and will be looking for other markets. Cambodia, on the other hand, may not be able to import its meat and food from the US, so it will turn to China. Thus, a greatly increased trade between China and Cambodia can be expected.
Trump is using the trade war as a personal bargaining chip, in hopes that countries will concede something to Trump’s personal bank accounts. Already, Cambodia’s leaders have written to Trump, bending the knee and begging him to lower the tariff, expressing their willingness to cooperate with the almighty Trump.