alt Hacker NewsWow 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."
Replies
"Assuming that offsetting exchange rate and general equilibrium effects are small enough to be ignored"
Yes, let's assume the world is constant and changes are made in isolation.
Thank you for finding this. It's extremely valuable for those of us who are trying to make sense of the tariffs.
This is the same president that took a sharpie to a map, to show the incorrect path of a storm, because he could not admit being wrong or making a mistake.
These people are either malicious or incompetent. That's been the case for every single day of the decade-ish that Trump has been foisted upon us.
In practice I believe at least 90% of Americans can’t figure out what that formula actually means; but if they drop the epsilon phi bullshit only 70% can’t figure it out. So it’s pretty effective obfuscation after all.