Looks fancy! What this means is you take our trade deficit with each country and divide it by the country's exports to us. For example, we have a $17.9 billion trade deficit with Indonesia, meaning we buy $17.9 billion more from them than they buy from us. Its exports to us are $28 billion. $17.9 billion divided by $28 billion is 64%, which Trump says is their tariff on American imports. That's right, a trade deficit is a "tariff." Divide this in half and you get 32%, which is now our tariff on Indonesian goods.
Just to be clear, Indonesia does not have a 64% tariff on American goods. We buy more from them than they buy from us because we're a bigger market and have more money. It would be like me complaining that I have a "trade imbalance" with Publix, because I buy food from them, but they don't buy anything from me. That leads to a 100% trade imbalance, so by Trump's logic, I should impose a 50% tariff on anything I buy from Publix. This is why the tariff on goods from Lesotho (a small, very poor country in southern Africa) is 50%, because we buy some stuff from them, but they don't buy much from us.
There is also a tariff on goods from Heard Island, and the McDonald Islands, which are Australian territories, and are uninhabited by anyone other than penguins. Meanwhile, there are no tariffs on imports from Russia, Cuba, and North Korea.
If you're wondering where this formula came from, the source is "Grok," Elon Musk's AI platform.
The irony here is that there are three known ways/ policies to reduce the US trade deficit, and higher tariffs aren’t one of them. Apparently these AI bots don’t know that.
Another irony is that the Administration wants to extend the 2017 tax cuts and if they do that will greatly increase the trade deficit they hate so much.
@LeopoldBloom I hope this scenario unfolds as you say it will. I am not a hope sort of guy. If it dies not, the best path to elimination is the court challenge as the legal authority for the latest tariffs is untested. Barring that, the tariffs on China at least, will remain as will the Chinese retaliatory tariffs.
@BiasForAction The Constitution gives Congress the power to impose tariffs. The President's power is based on several laws that limit it to specific situations. Trump's blanket, across the board tariffs are blatantly illegal and unconstitutional. Whether the Republicans in Congress grow a pair and do something about this is the question. I'm hopeful that the results of the special elections earlier this week demonstrate that Trump and Musk aren't kingmakers and the Republicans are under a greater threat from Democratic opponents than they are from some Musk-backed lunatic primarying them from the right.
All the bs about they charge x so we're reciprocating with y it's simply a trade deficit calculation a high school kid could have dreamt up. 🤦🏼♂
Then a country like UK gets 10% even though we have a trade surplus
From https://ustr.gov/countries-regions/europe-middle-east/europe/united-kingdom
U.S. goods exports to the United Kingdom in 2024 were $79.9 billion, up 7.6 percent ($5.6 billion) from 2023. U.S. goods imports from the United Kingdom totaled $68.1 billion in 2024, up 6.0 percent ($3.9 billion) from 2023. The U.S. goods trade surplus with the United Kingdom was $11.9 billion in 2024, a 17.4 percent increase ($1.8 billion) over 2023.
One example is tariff on coffee from Indonesia 37%, a country which has no export of coffee😂 10% tariff on every country which has deficit on trade with USA 🤫Europe , Canada and Mexico are ganging up with new trade agreement as it suites their economies best ,bypassing USA.
@Khenpal1 about £14 billion flowed from UK to usa ahead of tariff concerns in Jan 2025. Not 140+ there simply isn't that amount of gold available in the vaults. Again UK government has about £16billion
@OldBrit From November till end of a March could be 80 billions , last month and April could be 30 or more April -May 30 more . Its take now 9 weeks to see numbers. I don't believe we have exact numbers , Germans want their gold out of USA , they wonder if the gold is there at all.
So if a country were to stop exporting to the u.s. at all thered be no tarriff on them? Or if everyone just doesnt import from the us at all the us puts a 100% tarriff on everyone?
@LeopoldBloom Yeah.. Nah... Even if they are repealed, trump is still in Office and America has proved itself an untrustworthy trading partner.. This Humpty Dumpty isnt going back together any time soon. The Chinese and others are moving fast to fill the cracks and offer sweet deals..😷
@Crazywaterspring The denominator is just total imports. The elasticity of import demand (ε) and elasticity of import prices (φ) are constants; respectively, 4 and ¼, so they cancel each other out and there is no need to even include them in the formula. This is exactly what AI would come up with.
@Roundandroundwego It's not "Americans," professor. Most of us didn't vote for this. Even Twitler's supporters don't know what they voted for. This is just Trump and his inner circle doing this.
