Our Head of Research Analytics, Alex Etra, uncovered a striking pattern in how the U.S. administration set its reciprocal tariff rates—an insight that quickly went viral on our social media and became highly sought after by financial professionals. The data has sparked intense debate, as investors and analysts try to make sense of the underlying strategy.
Our CEO, Jens Nordvig, also received a flood of positive feedback and connection requests following the release of this analysis. It’s clear that the data we presented has struck a chord across the financial community, with many seeking deeper insights into the implications for markets and policy.
How did the U.S. administration come up with the tariff rates? They were communicated as being linked to various tariff rates and non-tariff barriers to trade. But in reality, we can fully explain the tariff rates simply by looking at U.S. bilateral trade deficits in relation to overall trade.
This is a remarkable finding in itself, and it may also shape policy going forward. If tariff rates are set in proportion to bilateral trade deficits, it now seems that the goal is simply to reduce those deficits—aligning with Trump’s long-standing rhetoric.
This, in turn, suggests that negotiations should not be expected to deliver quick tariff reductions, despite many still hoping for a swift resolution.
Alex has dived deeper into this data on our Substack in his latest article, “Liberation Day.”
If you’re interested in the underlying data, we’ll be sharing more details in tomorrow’s newsletter. You can sign up for the email subscription here.
