Trump Team Made a Critical Math Error When Calculating Extreme Tariff
The Trump administration’s calculations justifying the most consequential tariff scheme of the last century are all wrong.
In an op-ed for The New York Times published Monday, economist Brent Neiman, whose research was used to justify the White House’s implementation of reciprocal tariffs, wrote that the White House fundamentally misunderstood his work.
“My first question, when the White House unveiled its tariff regime, was: How on earth did it calculate such huge rates?” Neiman wrote in the op-ed. “The next day it got personal.”
Shortly after the Trump administration announced its plan to implement tariffs of 10 percent or more on 90 countries—which it claims will eliminate the trade deficit but has only spurred global economic chaos—the Office of the United States Trade Representative published its methodology for the tariff calculations, citing a paper by Neiman and four other economists.
“But it got it wrong. Very wrong. I disagree fundamentally with the government’s trade policy and approach,” Neiman wrote. “But even taking it at face value, our findings suggest the calculated tariffs should be dramatically smaller—perhaps one-fourth as large.”
So if the White House had done the math right, and wanted its absurd trade plan to actually work, 20 percent tariffs should have been … 5 percent.
That wasn’t the only mistake, Neiman pointed out. The Trade Office claimed its reciprocal tariff calculations would eliminate trade deficits with each American trading partner. Neiman concluded that is not a “reasonable goal.”
“Trade imbalances between two countries can emerge for many reasons that have nothing to do with protectionism.… There are some reasonable arguments in favor of reducing the overall trade deficit, such as to reduce risks from our debt. But these arguments don’t apply country by country,” Neiman wrote, further exposing the White House’s lack of reasoning.
Even if all trade deficits are eliminated (which Neiman points out is basically impossible), reciprocal tariffs still won’t work.
“The administration’s tariff formula assumes that a tariff placed on one country won’t affect imports from any others and ignores any implications for exports,” Neiman said. “These assumptions may work for an action against one small trade partner, but not for the broad salvo announced last week.”
Neiman went on to decimate pretty much every justification the Trump administration has provided for tariff implementation, including its selective picking and choosing of his research results to support its claims.
“As a result of these and other methodological choices, Wednesday’s reciprocal tariffs will bring average tariff rates to their highest level in over 100 years. I would strongly prefer that the policy and methodology be scrapped entirely. But barring that, the administration should divide its results by four.” Neiman concluded, a grim reminder of the economic chaos yet to come.