As Trump’s long-threatened tariffs were announced on Wednesday, the social media platforms were flooded with posts, comments, and tweets, deciphering the logic behind these statistically wrong tariffs.
Trump’s Statistically Wrong Tariffs
On top of a baseline 10% tariffs against the entire world, individual countries will face additional tariffs as Trump believes they are unfairly threatening the US. Trump announced that reciprocal tariffs will be imposed on countries, including 34% on China, 32% on Taiwan, and 20% on Europe. The social media users found Trump's accusation wrong as they did not align with other countries' charges on US imports, and some countries like Australia have a surplus with the US. Moreover, some territories on Trump’s list are uninhabited, like Heard Island. The users opined that such wrong tariffs could be an outcome of a chatbot.
Surowiecki Re-engineered Trump’s Formula
On X, seasoned economist James Surowiecki posted about the possible explanation for the tariff pricing. He tweeted
"Just figured out where these fake tariff rates come from. They didn't actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us" "So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is"
According to this math, the White House’s number could be achieved by simply taking a given country’s trade deficit with the US and dividing it by its total exports to the US. If that number is halved, ‘discounted reciprocal tariff’ is achieved.
Although, White House rejected this formula, the Vege claims that prompting various chatbots for a simple way to rectify trade imbalances with other countries, the suggestions given by chatbots align closely with the one used by the White House.
