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Trump’s Tariff Logic Confirms That We’re Being Governed By Idiots
If you’ve been on social media at all recently, you’ve probably seen that Trump’s team used a foolishly simple and logically ridiculous method to calculate America’s tariffs on its trading partners.
The formula they used — the tariff for country A is calculated as country A’s trade surplus with America divided by country A’s total exports to America. Take that number, divide it by two, and you get Trump’s tariff.
So making up numbers — if Germany had a $200 billion trade surplus with America while exporting $400 billion of goods to America, the levied tariff rate would be 200/400/2 = 25%.
This is basically something ChatGPT would recommend. Any serious economist or policy maker would be extremely embarrassed by this.
This formula blindly penalizes trade surpluses without any thought to why those surpluses might exist in the first place. It wrongly assumes that any time a country has a trade surplus with America, America suffers.
American trade deficits (other countries’ trade surpluses with America are trade deficits from our perspective) exist for many reasons.
It’s true that in some cases they are the result of currency manipulation. China and other countries in Asia have famously kept their currencies…
