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.
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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.
@BiasForAction There's no reason to reduce the US trade deficit, any more than I need to reduce my deficit with Publix.
If you want to destroy the US economy, across-the-board tariffs are a great way to accomplish that. I predict that sometime next week, Trump will lift the tariffs and announce that they were a resounding success.
@LeopoldBloom thats the real plan crash the stock market buy when its low then remove the "tariffs" before they actually have a consequence. The market "surges" and you sell the stocks purchased low. Its all speculation and is sure to be dangerous.
@LeopoldBloom yes the trade deficit isn’t something to fret over but many politicians do. I hope you are right about next week but I doubt all the tariffs will be eliminated soon. he won’t change the China tariffs nor will China back down on its retaliatory tariffs. The decoupling of the USA and China economies will accelerate.
@BiasForAction When Trump's billionaire backers tell him to remove the tariffs, he will. He will then claim that the tariffs increased investment in factories (even if the agreements were entered into during the Biden administration), and his cult will call him a genius. The problem is that instability is just as bad as a downturn, if not worse. No one is going to invest in increased production facilities if they don't know what the business climate will be next week, much less next year.
@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.
