alt Hacker NewsI see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work?
Would appreciate you (or anybody else) shed some light on the economics of the thing.
Replies
You can see the report here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Given that both elasticities were set to cancel each other, that's why you get a flat trade deficit/imports calculation.
This is, sadly, the way a freshman econ student would calculate tariffs.
If he used real numbers the tariffs would be so low that it wouldn't make any sense.
Suggestion that the admin is vibe governing: https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
The label "tariffs charged to the US" is just straight-up wrong, either due to incompetence or malice (likely to justify the high tariffs).
But basing the tariffs on import/export ratio makes sense if your goal is to be a net exporter with every country, as it discourages imports until that's the case. It's still somewhat arbitrary though; my guess is that the White House is pursuing that goal mostly for political, not economical reasons.