Donald Trump unveils new tariffs. Photo: Andrew Leyden/NurPhoto/Shutterst/Shutterstock Editorial
US President Donald Trump has said that new tariffs on goods from around the world reflect the barriers these countries have imposed on US goods. However, as economists have found, the basis for determining the level of duties is not so much the real barriers as the US trade deficit with each country.
On Wednesday, Trump announced new tariff rates for most of his trading partners, stressing that these tariffs are “reciprocal” and reflect the restrictions these countries impose on US exports, including tariffs and non-tariff barriers.
However, as it turned out later, these tariffs were based on a simple mathematical calculation. According to the New York Times, US officials took the US trade deficit with each country and divided it by that country’s exports to the US. The result was then cut by almost half, as Trump claimed to be acting “softer” than previous announcements.
This calculation came under criticism when economist James Surowiecki drew attention to the methodology behind the tariff determination. In his publication, he noted that in fact, the Trump administration did not take into account real barriers or additional non-tariff restrictions as claimed. Instead, they simply used deficit figures, which gives questionable results.
Instead of taking into account complex factors such as the general terms of trade or the domestic policies of each country, tariffs have become a direct reflection of imbalances in bilateral trade.
This has caused widespread criticism among economists who warn that such measures could lead to unpredictable consequences for the global economy and an escalation of the global trade conflict.
