Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
Editorials & Other Articles
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Trump's Tariff Formula Slammed As 'Fake' And 'Incredibly Stupid' By Experts
trump is an idiot and is very bad at math. trump does not understand trade deficits and balance of trade numbers which is why trump keeps claiming that the US is subsidizing Canada. The math behind the trump tariffs is incredibly stupid and simplistic. Again trump is using a stupid formula because he is too stupid to understand the math
https://bsky.app/profile/forbes.com/post/3llweasa4at22
Link to tweet
https://www.forbes.com/sites/saradorn/2025/04/03/trumps-tariff-formula-slammed-as-fake-and-incredibly-stupid-by-experts
The tariff rates unveiled by President Donald Trump on Wednesday stems from a simple formula based on U.S. trade imbalances with other countries—not the tariff rates they charge the U.S., along with “currency manipulation and trade barriers,” as the White House initially claimed.
Key Facts
Chief Critics
“If the Trump administration didn't calculate the "tariff rates" other countries are supposedly imposing on us by using the formula trade deficit/imports, it's an amazing coincidence that every single country's "tariff rate" is equal to trade deficit/imports,” economic journalist James Surowiecki wrote on X. Thomas Sampson of the London School of Economics told the BBC "the formula is reverse engineered to rationalise charging tariffs on countries with which the US has a trade deficit. There is no economic rationale for doing this and it will cost the global economy dearly."
Key Facts
Trump, debuting rates including 54% for China, 20% for the European Union and 26% for India, said the figures were based on “the combined rate of all their tariffs, non-monetary barriers and other forms of cheating” that was then divided in half because Trump wanted to be “kind.”
Analyses posted on social media and in news articles determined the numbers were based on a much more simplistic calculation made by dividing a country’s trade surplus (representing the value by which a country’s exports exceeds the cost of its imports from the U.S.) by its total export value, then multiplying the figure by 0.5.
The formula matched the tariffs Trump debuted for China, the European Union, Indonesia, India and Vietnam, Ian Bremmer, a global political scientist and founder of Eurasia Group consultancy firm, pointed out on X, writing “this is…incredibly stupid.”
China, for example, had a trade surplus of $295 billion with the U.S. last year, with $438 billion worth of goods exported to the U.S.—$295 billion divided by $438 billion is equal to 67%, and divided in half equals the 34% tariff rate Trump debuted Wednesday.
The Office of the U.S. Trade Representative later confirmed the formula by publishing what appears to be a complex math equation for calculating the tariff rates, but when stripped of its Greek letters, shows it’s essentially based on countries’ trade surpluses with the U.S. divided by their export value then divided in half.
The approach suggests countries could lower their tariffs by buying more U.S. products, which would be “very difficult for Asian, particularly poorer Asian countries, to meet US demand . . . given that U.S. goods are much more expensive, and the purchasing power is lower for countries targeted with the highest levels of tariffs,” Natixis senior economist Trinh Nguyen told CNBC.
Chief Critics
“If the Trump administration didn't calculate the "tariff rates" other countries are supposedly imposing on us by using the formula trade deficit/imports, it's an amazing coincidence that every single country's "tariff rate" is equal to trade deficit/imports,” economic journalist James Surowiecki wrote on X. Thomas Sampson of the London School of Economics told the BBC "the formula is reverse engineered to rationalise charging tariffs on countries with which the US has a trade deficit. There is no economic rationale for doing this and it will cost the global economy dearly."
Again, the formula used by trump is very stupid
11 replies
= new reply since forum marked as read
= new reply since forum marked as read
This is a very stupid way to calculate tariffs
Link to tweet
Link to tweet
Here is the Vietnam example
Link to tweet
This guy cracked the tariff formula:
@orthonormalist
It’s simply the nation’s trade deficit with us divided by the nation’s exports to us.
Yes. Really.
Vietnam: Exports 136.6, Imports 13.1
Deficit = 123.5
123.5/136.6 = 90%
@orthonormalist
It’s simply the nation’s trade deficit with us divided by the nation’s exports to us.
Yes. Really.
Vietnam: Exports 136.6, Imports 13.1
Deficit = 123.5
123.5/136.6 = 90%
The formula used by trump makes no sense
An overly simplistic formula for “reciprocal tariffs” is unlikely to lead to the elimination of trade deficits, trade experts warn.
https://bsky.app/profile/dailybug.bsky.social/post/3llwqvnpvb22c
Link to tweet
https://www.washingtonpost.com/business/2025/04/03/how-trump-calculated-tariffs
Economists say the crude formula the White House used to calculate what it’s calling “reciprocal tariffs” is too simplistic to achieve its goal of wiping out U.S. trade deficits — and, for that matter, they say that goal doesn’t make sense, either.....
The math used to come up with those rates is what experts are lampooning.
A formula released by the U.S. trade representative ties those punitive taxes to the United States’ bilateral trade deficit in goods with each country — in other words, how much more the U.S. imports from those countries than it exports to them. The calculation finds the ratio between the U.S. trade deficit with a country and that country’s total exports to the U.S. It then divides the ratio in half to produce what the administration called a “discounted reciprocal tariff.”
Economists criticized the formula for its assumption that persistent trade deficits are a reflection of allegedly unfair trade practices by U.S. trading partners. They point out that the math apparently leaves out services — which make up the bulk of the U.S. economy and an important proportion of its exports — from calculations of trade deficits, which has the effect of making U.S. trade relationships look more one-sided.
They also say there’s nothing “reciprocal” about the punitive tax rates because they’re disconnected from any actual barriers countries impose on U.S. imports.
“They’ve got an indefensible foundation to an indefensible policy,” said Douglas Holtz-Eakin, president of the conservative American Action Forum.......
The formula produces significantly different results based entirely on the size of a country’s trade deficit or surplus with the United States, heavily penalizing any nations that have sold more goods here than they have bought. For instance, Vietnam and Cambodia face massive additional tariffs of 46 percent and 49 percent, respectively, because of their large trade deficits with the United States — deficits that sprang up recently in part because companies moved production to those countries when the U.S. government indicated it didn’t want them making goods in China. The European Union, with a more modest trade deficit, faces a 20 percent added tax.
Meanwhile, countries that don’t have a trade deficit with the U.S. will pay only the flat 10 percent tax imposed on all goods. Countries the White House put in that club include Britain, Brazil and Singapore.
The math used to come up with those rates is what experts are lampooning.
A formula released by the U.S. trade representative ties those punitive taxes to the United States’ bilateral trade deficit in goods with each country — in other words, how much more the U.S. imports from those countries than it exports to them. The calculation finds the ratio between the U.S. trade deficit with a country and that country’s total exports to the U.S. It then divides the ratio in half to produce what the administration called a “discounted reciprocal tariff.”
Economists criticized the formula for its assumption that persistent trade deficits are a reflection of allegedly unfair trade practices by U.S. trading partners. They point out that the math apparently leaves out services — which make up the bulk of the U.S. economy and an important proportion of its exports — from calculations of trade deficits, which has the effect of making U.S. trade relationships look more one-sided.
They also say there’s nothing “reciprocal” about the punitive tax rates because they’re disconnected from any actual barriers countries impose on U.S. imports.
“They’ve got an indefensible foundation to an indefensible policy,” said Douglas Holtz-Eakin, president of the conservative American Action Forum.......
The formula produces significantly different results based entirely on the size of a country’s trade deficit or surplus with the United States, heavily penalizing any nations that have sold more goods here than they have bought. For instance, Vietnam and Cambodia face massive additional tariffs of 46 percent and 49 percent, respectively, because of their large trade deficits with the United States — deficits that sprang up recently in part because companies moved production to those countries when the U.S. government indicated it didn’t want them making goods in China. The European Union, with a more modest trade deficit, faces a 20 percent added tax.
Link to tweet
Meanwhile, countries that don’t have a trade deficit with the U.S. will pay only the flat 10 percent tax imposed on all goods. Countries the White House put in that club include Britain, Brazil and Singapore.