alt Hacker News> Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports.
Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
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I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise
for reference, the Deputy White House Press Secretary's tweet (providing evidence of (2): https://x.com/KushDesai47/status/1907618136444067901
'Excuse me, we used Greek symbols to calculate this! Checkmate, libs!'
wait seriously? can you provide a source? That is some serious denial of reality by the administration
Wow I really just read a .gov website trying to obscure a formula by multiplying 0.25 by 4.
I'm stunned.
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."