Posted on 04/03/2025 7:06:12 PM PDT by Miami Rebel
One of the surprises out of Wednesday's big tariffs announcement was that the Trump administration used a surprisingly simplistic approach to calculating these much-hyped reciprocal tariffs.
Why it matters: This was not a finely tuned set of import taxes calibrated to exert pressure on trading partners to adjust specific policies with which the U.S. has grievances.
Rather, it was some simple arithmetic, based on overall trade data, that became the justification for the most sweeping U.S. duties in generations — a trade-weighted 22.5% tariff, per the Yale Budget Lab, up from around 2.4% last year. It implies fewer off-ramps for countries that seek tariff relief, and thus less potential for de-escalation. If tariffs are applied without regard to the details of each country's economic policies and circumstances, what is there to negotiate? State of play: Wednesday, some social media sleuths figured out, and the administration confirmed, that there was a simple formula behind the reason, say, Vietnam was slapped with a 46% tariff while Norway faces 15%.
The formula is to divide the U.S. trade deficit with each country by that country's exports to the U.S. The final reciprocal tariff was then divided by 2, with a minimum of 10% (which applies even to those countries with which the U.S. has a trade surplus). "While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero," per the U.S. Trade Representative's explainer. Between the lines: This logic implies that any country with which the United States experiences a trade deficit, regardless of the reason, is in some way a bad actor and requires tariffs as payback.
But even if you believe that it's not good for the U.S. to run large, persistent overall trade deficits (which can contribute to financial imbalances and under-investment in key industries), it doesn't imply that there needs to be balanced trade with every individual country. Depending on U.S. consumer demand for a given country's exports, whether it seeks to buy U.S. financial assets, and myriad other factors, even in a world where there is balanced U.S. trade, some countries would be expected to run surpluses and others deficits. Moreover, the 10% minimum tariff — even on countries with which the U.S. runs a surplus — implies that tariffs of more than 4x their previous levels are a new minimum that will apply to the rest of the world, no matter how a given country tries to respond to U.S. concerns. What they're saying: Tobin Marcus and Chutong Zhu of Wolfe Research write in a new note that "since these 'reciprocal' numbers are driven not by actual tariffs but by the simple fact of trade deficits, they will be very challenging to negotiate away, and policy changes may do nothing to alleviate them."
The bottom line: The calculation method used for this round of tariffs implies they won't be negotiated away quickly or easily.
No. Document in your words, using real data, that the Trump's column labeled "tariffs charged to the US" is wrong.
For example, for China, the EU, Vietnam, Taiwan, Japan and India, according to the table, those countries charge us 67%, 39%, 90%, 64% and 46% respectively. Document the real numbers.
I'll look for your answer.
"Flexport's team was able to reverse engineer the formula the Administration used to generate the "reciprocal tariffs." It's quite simple, they took the trade deficit the US has with each country and divided it by our imports from that country."
https://simplicius76.substack.com/p/trumps-liberation-day-another-pr
The numbers are from the trade deficit for each country. Not tariffs. It is completely false to call that column "tariffs." Trade deficits are not tariffs. Do you understand this?
Poor messaging by the Trump team. Tariffs against the US are still the problem and Trump is correct to work to correct it.
The money we would generate by these tariffs would not amount to much. But they would harm a developing country a lot. We will make plenty by reciprocal tariffs on rich countries.
They would be helped a LOT more by development, by growing their domestic industries and by having access to our markets.
As opposed to USAID-type corrupt 'aid' that is more or less just stolen by politicians here and abroad.
So, choose your poison. I would prefer the poor countries grow and stand on their own two feet, not be dependent and poor forever. Definitely not virtue signaling by my recommendations.
As far as your nasty "learn more and shut up"-type comments...
All I can say is, the 'experts' (you sound like one and probably believe you are one) have gotten us in this horrible, maybe terminal, economic mess that we are in.
Thirty-eight trillion USD in debt, insolvent Social Security, unaffordable homes, unaffordable higher education, both parents slaving at multiple jobs just to survive, feral and illiterate children, an obliterated middle class, anemic home industry, no personal savings, tons of personal debt, etc., and these same experts have been guiding us along the whole way.
Maybe it is time for the point of view of a moron like me to be considered.
Have a nice day.
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