The rollout of President Trump’s new reciprocal tariffs included some big surprises, as economists and trading partners sifted through which countries were hit the highest rates, and who was spared.
Questions swirled over the calculations and decision-making process within the White House while administration officials and Republicans hit the airwaves to defend the tariffs, urging investors and the broader public to trust Trump as stocks plunged on Thursday morning.
Here are five surprises from Trump’s new tariffs.
The scale and scope
After months of walking back, delaying and watering down previous tariff proposals, many on Wall Street wondered if Trump was serious about imposing major tariffs on all U.S. imports.
It appears he was.
“The reciprocal tariff announcement by President Trump was significantly bolder than market expectations, ushering in new uncertainty,” Ed Mills, Washington policy analyst at investment firm Raymond James, wrote in a Thursday analysis.
The analysts said Trump’s Wednesday announcement amounted to $600 billion in new taxes on Americans, bringing the average tariff rate up to 25 percent — far higher than the 10-15 percent expected by the market.
“We have seen a variety of countries seek to lower trade barriers, reduce tariffs, and directly engage the Trump administration. This has not seemed to have prevented the reciprocal tariffs from being announced,” Mills wrote.
“We expect that President Trump and his administration will begin to engage in negotiations, but given the enormity of the announcement, this will take time.”
Uninhabited territories included
The Heard and McDonald Islands, which are Australian territories and considered some of the most remote places in the world, were hit with a 10 percent tariff. The sub-Antarctic volcanic islands are populated mainly by penguins and seals.
Other Australian territories — Norfolk Island, Cocos Island, and Christmas Island— were also included on the list, getting hit with 29 percent, 10 percent and 10 percent respectively. The population of Norfolk Island is under 2,000 people, while Christmas Island has just under 1,700 people and Coco Island just over 500.
Another small territory, Diego Garcia, is a British territory that is made up mostly of military personnel, including some from the U.S. It is being hit with 10 percent tariffs.
Australian Prime Minister Anthony Albanese said that targeting these low-population territories is a sign that “nowhere on earth is safe,” The Guardian reported. While Norfolk Island faces a 29 percent tariff, Australia was only hit with a 10 percent tariff.
Russia, North Korea not included
Russia and North Korea, as well as Belarus and Cuba, were not included in the tariffs, while dozens of other countries that are historic allies and close trading partners with the U.S. were hit with up to 40 percent tariffs.
The White House defended the decision to leave those four countries out, telling The Hill that they are not subject to the new tariffs because they “are already facing extremely high tariffs and our previously imposed sanctions preclude any meaningful trade with these countries.”
Among the countries being targeted with reciprocal tariffs are China, Vietnam, Taiwan, Japan, India, South Korea, Thailand, Switzerland, Indonesia, Malaysia, Cambodia and the European Union.
China will face the highest reciprocal tariffs, with a 35 percent tariff announced Wednesday going on top of a previously implemented 20 percent for a total 54 percent tariff on goods.
A White House official also noted that Trump has “recently threatened to impose strong sanctions on Russia” to further explain leaving out Moscow from Wednesday's action.
Trump said last month he is weighing additional sanctions and tariffs on Russia as a way to bring them to the negotiating table to end the war in Ukraine. Russia said weeks later that it expects the U.S. to ease certain sanctions as part of an agreement for a limited ceasefire with Ukraine.
Unclear calculations
Trump and top administration officials said during Wednesday’s announcement that they calculated individual reciprocal tariff rates using a model that factored both tariff and non-tariff trade barriers.
Several analysts, however, figured out that the White House’s reciprocal tariff rates were calculated by taking the total trade deficit between the U.S. and that nation, dividing it by the total value of U.S. good imports, and then either dividing that number in half or setting the rate at 10 percent.
The White House insists tariff and trade barriers were part of the calculation.
“No we literally calculated tariff and non tariff barriers,” White House spokesperson Kush Desai said on X, which received a community note explaining the formula. X is owned by Trump adviser and close ally Elon Musk.
When pitching the upcoming tariffs, Trump said for weeks they would be reciprocal as a way to create fairness. He argued that countries should be charged what they charge the U.S. on imports.
On a call with reporters just before the announcement on Thursday, White House officials said that the reciprocal tariff rate would be lower and “we're only charging half because the president is lenient and kind.”
'Not a negotiation'
Trump has often used tariffs to push countries toward trade deals and other agreements, and said Wednesday that trading partners could rid themselves of the new burden with good behavior.
But top White House officials have offered conflicting opinions on whether Trump would be willing to ease tariffs or strike agreements.
“We’re very focused on getting this tariff regime in place,” a senior White House official said on Wednesday, just ahead of Trump’s announcement. “This is not a negotiation, it’s a national emergency.”
Commerce Secretary Howard Lutnick offered conflicting guidance Thursday, insisting that Trump wouldn’t “back off” his tariffs, but would also be open to deals.
“This stuff has got to stop. America has got to stop being exploited, and you're going to see America prosper. And then, and only then, will Donald Trump make a deal with each country when they've really, really changed their ways,” Lutnick said.
“That's not back off. That is, let the dealmaker make his deals when and only if, these countries can change everything about themselves, which I doubt they will.”
And, the president’s son, Eric Trump, advised that countries facing new tariffs should act quickly to negotiate for the president to drop them.
“I wouldn’t want to be the last country that tries to negotiate a trade deal with @realDonaldTrump,” the younger Trump wrote on X.
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