Conservative Think Tank Reveals the Massive 'Error' in Trump's Tariff Formula

[BumRushDaShow]

Source: Daily Beast

Updated Apr. 6 2025 10:27PM EDT
Published Apr. 6 2025 6:23PM EDT


The math in President Donald Trump’s tariff formula isn’t adding up—and even conservatives are confused. The American Enterprise Institute, a prominent conservative Washington think tank, said the Trump administration appears to have missed a crucial distinction made in a 2021 paper cited as one of the bases of its tariff formula, causing the final levies to be about four times higher than what they should have been.

“The formula for the tariffs… does not make economic sense,” AEI senior fellows Kevin Corinth and Stan Veuger wrote. “But even if one were to take the Trump Administration’s tariff formula seriously, it makes an error that inflates the tariffs assumed to be levied by foreign countries four-fold.”

Under the Trump administration’s formula, the reciprocal tariff is equal to the U.S. trade deficit divided by U.S. imports from a given country, divided by two. One variable in the formula relates to the “elasticity of import prices with respect to tariffs” and was assigned a value of 0.25.

AEI said, however, that this value should have actually been 0.945. “Their mistake is that they base the elasticity on the response of retail prices to tariffs, as opposed to import prices as they should have done,” the think tank said. “The article they cite by Alberto Cavallo and his coauthors makes this distinction clear.”

Read more: https://www.thedailybeast.com/conservative-think-tank-reveals-the-massive-error-in-trumps-tariff-formula/

[BoRaGard]

1. On the bright side, this won't interfere with Krasnov's gourmet golfing

at taxpayer expense...

[underpants]

2. Bad math huh? This POS's entire business was found to be a fraud

systematic cooking of the books.

He also self appraises his wealth due to how he “feels” his properties are with in a given day.

[sop]

3. I wish a Conservative think tank would reveal a "massive error" in the 2024 election vote count.

[Scrivener7]

4. They needed a think tank to figure that out? It was obvious from his little chart he used to justify this.

I saw it immediately. And I'm no think tank.

[MLWR]

5. There are reasons

why they have earned the moniker "Party of Stupid."

[BattleRow]

14. P.O.S.

Coincidence?

[Bluetus]

23. This is just billionaires trying to give Trump a way to save face.

It has nothing to do with any billshit coefficients pulled out of thin air. They are saying, "OK Trump, you can do your tariff thing at 25% of the level you announced. You can claim victory as the master negotiator, and we won't criticize the drastically scaled-back tariff levels."

[mwb970]

6. They can't even lie well.

[central scrutinizer]

7. Here's an "explanation "

[not fooled]

21. "Reality is what we make it"

paraphrased from one of the loons in chimpy's reign.

We don't need your stinkin' numbers, or facts.

[IronLionZion]

8. Super geniuses don't have time for your formulas or calculations,

they are too busy winning. Bigly

[Ligyron]

9. Sadly ...

[et tu]

16. ron vara agrees nt

[IronLionZion]

20. I want to see Ron Vara and Peter Navarro discuss it together

[et tu]

22. priceless

the dummy is doing all the talking lol

[mdbl]

36. Wish I had thought of this

[bagimin]

32. " I remember old Ron Vara"!

sounds like that old SNL bit.

[RazorbackExpat]

18. Winning like that super genius

Wile E. Coyote

/

[twodogsbarking]

10. Oxymoron alert. Conservative think tank.

[RainCaster]

11. Calculations that factor penguins superiority

Yeah 👍

[et tu]

17. penguin party has a majority lol

[yardwork]

12. Evil morons.

[William Seger]

13. There's a much bigger error underlying the entire premise of basing tarrifs on trade deficits

His MAGAsty King Dunning-Kruger thinks trade deficits mean other countries are cheating us.

[LetMyPeopleVote]

15. John Oliver explains trump's tariff formula

Link to tweet

John Oliver: "[Trump's chart] features an estimate of 'Tariffs Charged to the USA' by other countries that nobody could figure out, until a financial journalist realized it was just how much we export to that country, minus how much we import, divided by how much we import."

[Lonestarblue]

19. Trump, and Republicans, just make up their own facts. They don't like reality because it doesn't support their idiocy.

[patphil]

24. The error was in leving tariff's in the first place.

You encourage US industrial growth by investment and tax incentives. It's a long, slow process that works without disrupting the economy. President Biden knew this.
Trump isn't interested in economic growth. His tariffs are purely there to make money to cover the huge tax break he is planning to give the ultra rich.
Crashing the economy is simply a secondary benefit from his point of view. As he said while the stock market is crashing, now is the time to get rich. He is saying that there will be bargains to be had...cheap stocks that will eventually bounce back when all those new manufacturing job are created.
The question is, where will all the new investment come from? Who's going to risk all those billions it will take to build the factories, and where will the employees come from?

[Pacifist Patriot]

25. They don't make economic sense because they aren't about economics. They are about control.

It's straight out of "Dictators for Dummies."

[Aristus]

26. Conservative Drunk Tank, more likely.

How could these assholes not know that Trump doesn't have the faintest idea what he is doing?

[RobinA]

27. Seriously?

"The math in President Donald Trump’s tariff formula isn’t adding up—and even conservatives are confused."

Do they still think anything about this moron "adds up?" It's like no one anywhere near to power right now can come to grips with the fact that that the President and his appointees don't have a clue what they're doing. Nothing will get better until they get over this delusion that the President MUST be doing things that add up, because....well, he's the President. Read the writing on the wall, so-called leaders. Face reality now, before you confuse us right off the cliff. There is no excuse.

[Exp]

28. All the best and the brightest at Trump Central. nt

[mdbl]

29. He's following a book written by Peter Navarro about tariffs

that sites a fake economist. What do you expect will happen?

[Clouds Passing]

30. Oops somebody doesn't want to get blamed for the mess they made

“But our legacy” says AEI

[Gordcanuck]

31. Tariff tiff not a

calculation error, it’s just another way to waffle the reality. It reminds me of the trope, “if all the world’s economists were laid out end to end they still wouldn’t reach a conclusion.”

[tclambert]

33. So how much should the tariff on the Heard and McDonald Islands be?

Asking for a friend who likes to wear a tuxedo.

[Gordcanuck]

34. Tariff tiff not a

calculation error, it’s just another way to waffle the reality. It reminds me of the trope, “if all the world’s economists were laid out end to end they still wouldn’t reach a conclusion.”

[travelingthrulife]

38. Or lawyers and judges...such wishy-washy law.

[louis-t]

35. Really? Republicans aren't good at math? Who knew?

Peter Navarro, the Harvard educated 'economist', threw out everything he learned in college and decided he knew better than every other economist in the world. He often quotes one of his economic mentors (himself) Ron Vara.

[travelingthrulife]

37. How cute. AEI is pretending it is an error. Pretending that they didn't maliciously

increase other countries tariffs against us by four-fold to allow us to jack up the tax 'we the people' have to pay.

Isn't that how your glorious tax break gets paid for?

This is your monster AEI. Enjoy!