Comment by Danmctree
8 months ago
The numbers appear to be based on the trade deficit alone, not on any differences in import duties etc.
8 months ago
The numbers appear to be based on the trade deficit alone, not on any differences in import duties etc.
That is correct. It was empircally proven here: https://www.ft.com/content/c4f9c7f6-0753-4458-840e-bcde1b74a...
To quote Alex Scaggs of FT:
All countries tested against this theory are correct within 1-2 percent.
you can just read the methodology where they published it here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Now somebody factor in Services and rerun the numbers.
This is interesting. I don't know the details of Trump's tariff policy, but if this is correct, it would follow that the policy should have some mechanism to reduce the tariffs as the trade imbalance is reduced.
Not sure why? It’s an irrational policy not based on any kind of sense. I don’t think I’d expect it to be logically consistent. Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?
It’s all drunk monkeys driving a train… there is no economic theory to expect consistency from.
7 replies →
You're right I think it's MAX(10%,(imports-exports)/imports) as a general tariff plus targeted reciprocal (in some cases, not all)