The US President Donald Trump seems to be telling other countries to jump via his threats of higher tariffs. For many, the response seems to be, ‘how high?’ Some countries can ‘jump’ higher than others. For a start, there are not many whose leaders can bring an invitation for a State visit, as UK Prime Minister Starmer did last week. Canada and Mexico, which seem to face steep tariff increases this week, can conceivably do something about them if they tighten the borders to the extent that Trump wants.

However, many other countries can’t or won’t make concessions that will avoid tariffs. China, for one, has not even tried. Most of the high-tariff nations lie in the emerging markets, and it is difficult to see what they can offer to forestall higher tariffs if Trump really does stick to an aim of reciprocal tariffs on all.

Perhaps fortunately, many analysts doubt that Trump will do this. But plenty of others will likely feel the wrath of tariffs. It implies that, rather than the uniformity of the 10% or 20% global tariff that Trump threatened during the election campaign, tariffs will be run on more of a competitive principle. If that’s the case, we need to think about which countries and regions might be most impacted.

So far, we know that Canada and Mexico will be particularly hard hit – if the 25% tariffs go ahead from tomorrow and persist for a considerable time. We know as well that China is in the US’s sights with the current 10% tariff set to rise to 20%. But what about elsewhere? We can clearly work out who might suffer the most from the imposition of product-specific tariffs, such as steel and aluminium. But as for this idea of reciprocal tariffs, the winners and losers might not appear as obvious.

Take the UK and the EU for example. Tariff levels in the two are pretty similar, and both charge similar levels of Value Added Tax (VAT) of around 20% (which Trump labels as a tax on US firms selling to these countries). However, Trump has singled out the EU as particularly egregious when it comes to trade; accusing the region of levelling sky-high tariffs on autos for example.

On the other hand, he is also supporter of Brexit and, of course PM Starmer bought that letter from King Charles. Trump even spoke about a trade deal with the UK last week. Of course, this ‘deal’ could be a euphemism for higher US tariffs but, all the same, it does seem as if the UK finds better favor with Trump than the EU. And that might account for part of the reason why the pound has been doing so well against the euro recently.

But what about all the other countries the US has to consider in this mammoth operation to impose reciprocal tariffs? For the issue is not just reciprocating whatever tariffs are levied on the US; account will also be taken of countries trade surpluses with the US and the extent to which they keep their currencies low.

With this in mind, the best starting point is probably the Treasury’s semi-annual FX report. The last of these had a ‘monitoring list’ of the following countries: China, Japan, Korea, Taiwan, Singapore, Germany... These countries are deemed to be breaking some of the Treasury’s golden rules of fairness. These include having large trade surpluses with the US, big current account surpluses on a global basis, and alleged currency manipulation. But which of these also has high tariffs? Vietnam and Korea certainly do (at around 5% and 8% respectively, compared to the US level of around 2%). China is not especially high at around 3% while Taiwan, Singapore and Japan have lower average tariff rates than the US.

Germany has slightly higher tariffs overall but, as we mentioned earlier, if the US wants to add the 19% VAT rate then Germany and, in all likelihood, the rest of the EU, could really be the ones to suffer from this reciprocal arrangement given both the VAT issue and the fact that the EU has a huge trade surplus with the US (USD236bn for goods in 2024). The EU does not manipulate the euro but you could be forgiven for thinking that Trump would like to see the currency trade at much higher levels against the US dollar.