Comment by VectorLock

Wow I really just read a .gov website trying to obscure a formula by multiplying 0.25 by 4.

I'm stunned.

https://ustr.gov/issue-areas/reciprocal-tariff-calculations

"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.

Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."

I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise

for reference, the Deputy White House Press Secretary's tweet (providing evidence of (2): https://x.com/KushDesai47/status/1907618136444067901

'Excuse me, we used Greek symbols to calculate this! Checkmate, libs!'

wait seriously? can you provide a source? That is some serious denial of reality by the administration

If anyone needed any more evidence that they don't know what they're doing, what I find interesting is that the various French overseas territories that are part of the EU are tariffed at different rates than the rest of the EU (treating those as separate countries is traditional for any US company, which is sometimes a headache when you want to order something).

Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.

Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?

If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.

That might explain this then:

> Trump Tariffs Hit Antarctic Islands Inhabited by Zero Humans and Many Penguins

https://www.wired.com/story/trump-tariffs-antarctic-islands-...

This is cosmic-level hilarious.

LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.

Jesus Christ.

The Drinking Bleach hoax: https://americandebunk.com/2024/07/01/the-drinking-bleach-ho...

I was wondering if this was the case.

> Parameter Selection

> ... The price elasticity of import demand, ε, was set at 4.

> ... The elasticity of import prices with respect to tariffs, φ, is 0.25. ...

You're reading it wrong because it's nonsense

None of the values are related to their names in any way

Let’s not forget Congress could assert its authority over tariffs at any time. This isn’t just the executive branch unilaterally creating the biggest, most regressive tax hike in our lifetimes, it’s a coordinated GOP operation.

Yes, it's never a good idea to underestimate the intelligence or agency of the enemy.

But in this case: what is the game plan? What are they trying to achieve? Is it simply chaos, so that they can rule in perpetuity?

>Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it?

Politicians are just pretending to be dumb? Why?

>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.

I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.

Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.

In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.

[1] https://en.wikipedia.org/wiki/List_of_dismissals_and_resigna...

>Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades.

Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.

And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.

Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.

Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"

There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.

"But China....next war....China!"

Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.

[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history. He's selling pardons in the open, and operating a literal protection racket, and this is just...an ordinary day now.

Yup.

Penguins are a myth. They are all too identical. Clearly cgi.

Now control the SEC so the privileged won't get investigated for insider trading.

That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals and international investors have a distrust in them. Locals know insider trading is rampant.

Once this kind of corruption is accepted in society, everyone will need corruption in order to stay ahead.

I hope you’re right as I’m betting on the short as well. Made a crap load on TSLQ a while back.

I went from a low risk investor to betting on US doing stupid stuff and stated making real money. Cognitive dissonance investment I think.

Elon Musk directly benefits from this also, so...

Many people including doctors and health professionals apply restrictions to their diet including avoiding complex carbs or proteins, or reducing their salt or sugar intake while talking about balance diets. No complaints.

But when I decide to reduce all foods by at least 10%, lower my protein and carbs by 25%, pledge I'll remove at least 30% of metals from my diet and will be doing a 4 day fast twice a week in order to become an olympic level athlete by next year, people say I don't know what I'm doing!

How can people possibly be against nuanced thoughtful dieting yet be against my sudden do it all at once approach? It's totally inconsistent, what idiots everyone else is.

Here in the EU, you'd generally just pay VAT of imports. And to be clear, we pay the same VAT on internal goods.

To make it convenient for consumers, large foreign platforms would automatically handle VAT at point of sale, reducing friction and thereby pushing more import.

Some specific things had tariffs - e.g., nuclear reactors, and chinese electric cars - but it was by no means the norm, and I don't think citizens liked this. The Chinese car tariff in particular feels like German automotive lobbying, stifling competition. Tesla, pre-DOGE, also showed that we would have an unsatiable hunger for import of competitive cars, it's just that an F150 isn't a competitive car in EU.

Now, because if the trade war, we end up with blanket retaliatory tariffs and a strong push for buying local products, killing imports, that just wasn't there before. US and China was already in a trade war, so I guess that was the current state of affairs there.

Well because they are applying them in a blanket fashion with no warning basically everywhere.

Tarrifs are a tool. They have both positive and negative consequences. It seems like the manner they are being applied are just random and will get most of the negative consequences with very little of the positive.

Why? Because the US is smarter than the others. By having open trade, we've benefited greatly. Now you could argue that other countries have benefited more, and that made me true but the benefits of free trade are that the pie keeps growing. So other countries getting a bigger slice is not shrinking our slice.

For what it's worth, I bought a $2000 robotic hand from US a year ago, and paid about €400 in VAT and €32 (so like 2%) in import duties / tariffs.

Obviously VAT isn't a "trade barrier", if anything it's a "consumption barrier" and it's the same for every business that EU citizens give money to (i.e. if I bought a robot hand that cost $2000 to make from an EU company, I'd likewise be paying €400 VAT on top of that).

It would help if people answer than downvote. Both these kind of questions and economic answers are getting buried.

My understanding so far based on buried comments is: other countries have tariffs on individual products they're historically good at manufacturing and they want to retain it. e.g. Milk in the Nordics, Cars in Japan and EU, Bikes in India, etc.

keyword: "selective to retain"

US is applying it across the board blindly, not to retain something that's existing, but what appears to be a blind hope of starting everything from scratch.

Buried comments say "strategy" is lacking, because these tariffs also apply on the very raw materials needed to start from scratch. The policy does not intelligently select and separate items by their current or future use to the US industry.

There is a prediction that this blunt hammer will not yield to a more productive situation, in couple of years it would only have to be quietly rolled back and strategic thinking would have to be re-applied.

The counter-counter argument is, maybe a real strategy is being worked upon, and this blunt hammer is just a leverage tool. But so far there are no concrete signals of strategic thinking, so it's currently perceived as "let's keep turning one knob after another". The lack of accompanying software updates, calculations, projections, personnel planning, etc all contribute to the notion that there is no strategy.

And at this point, it devolves into emotion and personality, which is better to stay away from.

The United States maintains the world's most powerful corporations and attracts exceptional talent, yet appears to be hastening toward what some consider an inevitable conflict—one that exists largely in political rhetoric rather than reality. Setting an ambitious four-year timeline to rebuild manufacturing capabilities seems impractical. More concerning is how this approach risks dismantling the global governance system that took generations to establish, while alienating allies who could be valuable partners rather than burdens. The potential costs of such a strategy are immense, explaining why many observers question whether there's a coherent strategy behind these actions.

> What's amazing me is the lack of consistent thinking by the commenters here.

I feel your "consistency" is based on a facile model where big percentages correspond to badness and that's everything.

An analogy:

1. Roommate Trump who falsely claims you're in a common-law marriage: "You're running a trade-deficit with your grocery store, so every time you buy groceries from them I'm going to punish you by taking 25% of the cost. If you don't like it, you should work there part-time to reduce the deficit. You're about equal in paying friends for food versus them paying you for food, but they need you more than you need them, so to make you hustle I'm still taking 15% from any money that goes out. Finally, you have an extreme trade-surplus with your regular employer because they just send you checks, hurray!... That'll be 10%, because reasons."

2. Critics: "That idiot is insane. That's not how any of this works. Find a divorce lawyer ASAP."

3. You: "You guys aren't consistent thinkers! I mean, why aren't you complaining about how Mrs. Johnson adds a 100% cost onto Mr. Johnson's purchases of cigarettes, as a way to get him to quit? 100% is a much bigger number, so obviously Mrs. Johnson's the real villain here, and you don't seem to care!"

____________

If you're so certain Trump has a coherent and non-dumb strategy, please describe how it's supposed to work and why you expect the results to be good things.

Well, why only consider just goods and not consider services? US is mostly exporting services while other countries are exporting goods.

Why not consider US prints dollars which are used for global trade? That means other countries are subsidizing US inflation and US economy.

Why not consider the massive investments other countries have made in the US economy when buying shares, bonds, securities?

What if they impose tarrifs on US financial and IT services? What if Amazon cloud and Netflix start costing 30% more?

What if they quit using dollars for trade?

What if they start selling US stock and securities? What if they start selling US dollars?

>Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.

>So why no complaints about them?

Because that's not true.

> Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.

Source?

Can you provide an example, especially for the EU?

From what I read, the average tariff applied by the EU is under 1%. Other comments say Trump has just divided imports by exports to calculate his tariff rates.

>Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.

This has been persistently claimed but I have yet to see evidence on this. In most cases it's including VAT which doesn't make sense since local manufacturers pay that as well.

If the US doesn't apply non tariff barriers and the EU, for example, does, why us the EU flooded by Chinese cars and smartphones and the US isn't?

It's not really inconsistent as as far as I'm aware the US is the only country in the world with a universal baseline tariff on all imports. Other countries have tariffs that seek to protect certain industries and balance this with trade agreements that cover other goods or certain countries.

For example Japan wants to protect its farmers so has tariffs on rice. But that is not a simple tariff on all rice imports. There are various rules and a tariff free allowance. The largest importer of tariff free rice to Japan is the US.

I think there's a few things wrong with Trump's go to of tariffs as weapons:

- America seems to want total freedom to trade on its terms, not as partners. E.g. expecting countries to import American goods that do no satisfy customer demand or local laws.

- Trump's unpredictability will mean that companies will be hesitant to make large investments if they think the policy will change on a whim. US policy is largely controlled by a single, unpredictable, vindictive and fragile ego. That's not a good environment to build a stable and healthy company.

- The hyperbole such as calling international trade raping & pillaging. This is voluntary trade we're talking about.

- The main issue is that it's not solving the real problems of the average American. Globalization has big issues, it's kept some countries in poverty and contributed to declining living standards especially in western manufacturing. However it is just one factor amongst many that are causing hardship for small town America. A reversing of globalisation does not solve massive wealth inequality, it does not intrinsically solve low wages or abandoned factory towns. At the same time that Trump installs tariffs he's making it easier for the wealthy to concentrate ownership of assets, increase inequality, reduce employment laws and erase social protections. 14 billionaires with elite projection are not working to benefit the average American, they're working to benefit their own average.