BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade >deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it
was all just a back-of-the-envelope calculation. “Instead, for every >country, they just took our trade deficit with that country and divided
it by the country's exports to us,” the former financial columnist for
The New Yorker posted on X. “What extraordinary nonsense this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the >“unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times >higher than the actual average, trade-weighted tariff charged by the EU
of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked
for. Nonsense.
What is remarkable is that the formula that the administration published >ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for
the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary
pain". Trump has known about tariffs and prices all along. As have the
rest of us. Trump is the one that has been lying to his people about
them for vote begging purposes, though.
--
“We need to acknowledge he let us down. He went down a path he shouldn’t >have, and we shouldn’t have followed him. We shouldn’t have listened to >him, and we can’t let that happen ever again”.
-- Nikki Haley
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade >deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it
was all just a back-of-the-envelope calculation. “Instead, for every >country, they just took our trade deficit with that country and divided
it by the country's exports to us,” the former financial columnist for
The New Yorker posted on X. “What extraordinary nonsense this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the >“unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times >higher than the actual average, trade-weighted tariff charged by the EU
of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked
for. Nonsense.
What is remarkable is that the formula that the administration published >ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for
the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary
pain". Trump has known about tariffs and prices all along. As have the
rest of us. Trump is the one that has been lying to his people about
them for vote begging purposes, though.
--
“We need to acknowledge he let us down. He went down a path he shouldn’t >have, and we shouldn’t have followed him. We shouldn’t have listened to >him, and we can’t let that happen ever again”.
-- Nikki Haley
In article <vso543$2t1bh$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade
deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it
was all just a back-of-the-envelope calculation. “Instead, for every
country, they just took our trade deficit with that country and divided
it by the country's exports to us,” the former financial columnist for
The New Yorker posted on X. “What extraordinary nonsense this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided >> it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the
“unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times
higher than the actual average, trade-weighted tariff charged by the EU
of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was
being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six
research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked
for. Nonsense.
What is remarkable is that the formula that the administration published
ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for
the imports. It could be higher, depending.
By the way, where are you getting 1/4? And how is that number used in the tariff calculation?
On 04/04/2025 15.37, bmoore wrote:
In article <vso543$2t1bh$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade
deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it
was all just a back-of-the-envelope calculation. “Instead, for every
country, they just took our trade deficit with that country and divided
it by the country's exports to us,” the former financial columnist for >>> The New Yorker posted on X. “What extraordinary nonsense this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided >>> it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the
“unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times >>> higher than the actual average, trade-weighted tariff charged by the EU
of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >>> being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >>> research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked
for. Nonsense.
What is remarkable is that the formula that the administration published >>> ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for
the imports. It could be higher, depending.
By the way, where are you getting 1/4? And how is that number used in the tariff calculation?
Sorry. It comes from here
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
There's two "elasticity" parameters in the equation. One is phi. That
tells you how big a proportion of the change in tariffs (dt) go into
prices of imports. This is the one above. If you put in 10% duties,
import prices are increased by dt * phi = 2.5%. This dependency is
assumed, and I guess the actual value for phi comes from some paper the >writer has chosen to rely on.
The second "elasticity" is the epsilon. That tells you how much demand
will drop for a given price increase. If import prices increase by 2.5%,
then demand for imports will drop by epsilon * 2.5%. In this case,
epsilon is chosen to be 4, so with a 2.5% increase in prices, you're
left with a 10% decrease in demand.
So, a 10% increase in tariffs leaves you with a (dt*phi) * epsilon
decrease in demand for the imports in percentages. In value this
decrease (dm) is
dm = (dt * phi * epsilon)/100 * m,
where m is the total imports from a country (and I really should have >replaced percentages with real numbers here instead of putting in the >division by 100. But I began with percentages ...).
If you're given the trade deficit, and want to know what tariffs wipe
the deficit out, then you simply equate the change in imports dm above
with the deficit and solve for dt.
The Trump administration (Navarro?) has chosen the values for phi and
epsilon as 1/4 and 4, so they conveniently cancel each other out. And
solving for the tariffs amounts to country-wise deficit divided by
imports from that country.
Stocks are a-plummeting ...
In article <vsouj4$3n3k1$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
On 04/04/2025 15.37, bmoore wrote:
In article <vso543$2t1bh$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American >>>>> trading partners in a bold attempt to reduce the United States' trade >>>>> deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White >>>>> House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it >>>>> was all just a back-of-the-envelope calculation. “Instead, for every >>>>> country, they just took our trade deficit with that country and divided >>>>> it by the country's exports to us,” the former financial columnist for >>>>> The New Yorker posted on X. “What extraordinary nonsense this is.” >>>>>
That approach meant Trump and his advisers simply took the U.S. trade >>>>> deficit with the European Union — $235.6 billion in 2024 — and divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion. >>>>>
The result was 39 percent, which the administration interpreted as the >>>>> “unfair” trade advantage the EU holds over the U.S. From there, the >>>>> White House proposed a 20 percent tariff, framing it as a corrective >>>>> measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times >>>>> higher than the actual average, trade-weighted tariff charged by the EU >>>>> of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >>>>> being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >>>>> research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked >>>>> for. Nonsense.
What is remarkable is that the formula that the administration published >>>>> ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for >>>>> the imports. It could be higher, depending.
By the way, where are you getting 1/4? And how is that number used in the tariff calculation?
Sorry. It comes from here
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
There's two "elasticity" parameters in the equation. One is phi. That
tells you how big a proportion of the change in tariffs (dt) go into
prices of imports. This is the one above. If you put in 10% duties,
import prices are increased by dt * phi = 2.5%. This dependency is
assumed, and I guess the actual value for phi comes from some paper the
writer has chosen to rely on.
The second "elasticity" is the epsilon. That tells you how much demand
will drop for a given price increase. If import prices increase by 2.5%, >>> then demand for imports will drop by epsilon * 2.5%. In this case,
epsilon is chosen to be 4, so with a 2.5% increase in prices, you're
left with a 10% decrease in demand.
So, a 10% increase in tariffs leaves you with a (dt*phi) * epsilon
decrease in demand for the imports in percentages. In value this
decrease (dm) is
dm = (dt * phi * epsilon)/100 * m,
where m is the total imports from a country (and I really should have
replaced percentages with real numbers here instead of putting in the
division by 100. But I began with percentages ...).
If you're given the trade deficit, and want to know what tariffs wipe
the deficit out, then you simply equate the change in imports dm above
with the deficit and solve for dt.
The Trump administration (Navarro?) has chosen the values for phi and
epsilon as 1/4 and 4, so they conveniently cancel each other out. And
solving for the tariffs amounts to country-wise deficit divided by
imports from that country.
OK, so the epsilon and phi values chosen aren't really that unreasonable, the
article seems to say.
Stocks are a-plummeting ...
Because to suddenly crank up tariffs, i.e. suddenly change the status quo is scary to the business world.
Yes, exactly. Investment has a low tolerance for uncertainty.
So very much money has come out of the US stock markets. Where it has
gone at this stage is uncertain--could be simply "on the sidelines" in
liquid accounts.
We'll need to see how this plays out.
The entire exercise seems pointless and is simply an ego stroke for
Trump, who fancies himself a wheeler-dealer. And to be honest, he is
that, but like with most other personal attributes, its effectiveness is
wildly exaggerated.
Also, why is zero trade deficit such a big deal?
To me, it's simply an artificial position "on the table". What he
probably wants is just a better deal with each trading partner than the >status quo.
It's to be part of his legacy, you understand.
If our citizens want what they got and they don't want what we got,
that's life.
That's true in purist, absolute terms, but in between there are
increments, and is somewhat flexible. The best case is to alter the
balance, not flip it, which is impossible if we like what they've got
and they don't like what we've got.
To get a clear picture, and not simply to bash Trump (he's already doing
a fine job himself, and doesn't need anyone's help) you need to consider
that adjustments can be made and in theory, either party could improve
its position relative to its counterpart.
So I guess that shaking the box, *JUDICIOUSLY*, and in a sequenced and >controlled manner, could be of benefit, but shaking the box violently,
for all partners, all at once seems like very poor policy.
IMO Trump just wants to boast that he achieved a zero trade deficit, because it sounds good.
Yes. Legacy, see?
A better
solution would be for American businesses to make stuff that we want more than the foreign version.
That's probably not realistic, b. The best one could hope for is to move
the balance point in your favor, somewhat.
Did you note that he fired a military guy yesterday, and will of course >replace him with another, more to his liking?
Lessee...
Is ignoring some court orders, has changed out the chairman of the joint >chiefs of staff, has gotten a simpatico sec of defense.
Has said, right out, that he's looking to retain power after 2028.
Whaddaya think, b?
In article <vsp7rp$okr$1@dont-email.me>, Sawfish <sawfish666@gmail.com> wrote:
On 4/4/25 10:00 AM, bmoore wrote:
In article <vsouj4$3n3k1$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
On 04/04/2025 15.37, bmoore wrote:
In article <vso543$2t1bh$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American >>>>>> trading partners in a bold attempt to reduce the United States' trade >>>>>> deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White >>>>>> House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it >>>>>> was all just a back-of-the-envelope calculation. “Instead, for every >>>>>> country, they just took our trade deficit with that country and divided >>>>>> it by the country's exports to us,” the former financial columnist for >>>>>> The New Yorker posted on X. “What extraordinary nonsense this is.” >>>>>>
That approach meant Trump and his advisers simply took the U.S. trade >>>>>> deficit with the European Union — $235.6 billion in 2024 — and divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion. >>>>>>
The result was 39 percent, which the administration interpreted as the >>>>>> “unfair” trade advantage the EU holds over the U.S. From there, the >>>>>> White House proposed a 20 percent tariff, framing it as a corrective >>>>>> measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times
higher than the actual average, trade-weighted tariff charged by the EU >>>>>> of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >>>>>> being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >>>>>> research references to underscore the credibility of its momentous >>>>>> economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked >>>>>> for. Nonsense.
What is remarkable is that the formula that the administration published >>>>>> ASSUMES that import levies seep into prices. They assume 1/4. A 10% >>>>>> tariff increase would translate into a roughly 2.5% price increase for >>>>>> the imports. It could be higher, depending.
By the way, where are you getting 1/4? And how is that number used in the tariff calculation?
Sorry. It comes from here
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
There's two "elasticity" parameters in the equation. One is phi. That
tells you how big a proportion of the change in tariffs (dt) go into
prices of imports. This is the one above. If you put in 10% duties,
import prices are increased by dt * phi = 2.5%. This dependency is
assumed, and I guess the actual value for phi comes from some paper the >>>> writer has chosen to rely on.
The second "elasticity" is the epsilon. That tells you how much demand >>>> will drop for a given price increase. If import prices increase by 2.5%, >>>> then demand for imports will drop by epsilon * 2.5%. In this case,
epsilon is chosen to be 4, so with a 2.5% increase in prices, you're
left with a 10% decrease in demand.
So, a 10% increase in tariffs leaves you with a (dt*phi) * epsilon
decrease in demand for the imports in percentages. In value this
decrease (dm) is
dm = (dt * phi * epsilon)/100 * m,
where m is the total imports from a country (and I really should have
replaced percentages with real numbers here instead of putting in the
division by 100. But I began with percentages ...).
If you're given the trade deficit, and want to know what tariffs wipe
the deficit out, then you simply equate the change in imports dm above >>>> with the deficit and solve for dt.
The Trump administration (Navarro?) has chosen the values for phi and
epsilon as 1/4 and 4, so they conveniently cancel each other out. And
solving for the tariffs amounts to country-wise deficit divided by
imports from that country.
OK, so the epsilon and phi values chosen aren't really that unreasonable, the
article seems to say.
Stocks are a-plummeting ...
Because to suddenly crank up tariffs, i.e. suddenly change the status quo is scary to the business world.
Yes, exactly. Investment has a low tolerance for uncertainty.
So very much money has come out of the US stock markets. Where it has
gone at this stage is uncertain--could be simply "on the sidelines" in
liquid accounts.
We'll need to see how this plays out.
The entire exercise seems pointless and is simply an ego stroke for
Trump, who fancies himself a wheeler-dealer. And to be honest, he is
that, but like with most other personal attributes, its effectiveness is
wildly exaggerated.
Also, why is zero trade deficit such a big deal?
To me, it's simply an artificial position "on the table". What he
probably wants is just a better deal with each trading partner than the
status quo.
It's to be part of his legacy, you understand.
If our citizens want what they got and they don't want what we got,
that's life.
That's true in purist, absolute terms, but in between there are
increments, and is somewhat flexible. The best case is to alter the
balance, not flip it, which is impossible if we like what they've got
and they don't like what we've got.
To get a clear picture, and not simply to bash Trump (he's already doing
a fine job himself, and doesn't need anyone's help) you need to consider
that adjustments can be made and in theory, either party could improve
its position relative to its counterpart.
So I guess that shaking the box, *JUDICIOUSLY*, and in a sequenced and
controlled manner, could be of benefit, but shaking the box violently,
for all partners, all at once seems like very poor policy.
IMO Trump just wants to boast that he achieved a zero trade deficit, because it sounds good.
Yes. Legacy, see?
A better
solution would be for American businesses to make stuff that we want more than the foreign version.
That's probably not realistic, b. The best one could hope for is to move
the balance point in your favor, somewhat.
I still don't understand why trade deficit is such is such an important metric.
In article <vsouj4$3n3k1$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
On 04/04/2025 15.37, bmoore wrote:
In article <vso543$2t1bh$1@dont-email.me>,
Pelle Svanslös <pelle@svans.los> wrote:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade
deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White >>>> House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it >>>> was all just a back-of-the-envelope calculation. “Instead, for every >>>> country, they just took our trade deficit with that country and divided >>>> it by the country's exports to us,” the former financial columnist for >>>> The New Yorker posted on X. “What extraordinary nonsense this is.” >>>>
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided >>>> it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the >>>> “unfair” trade advantage the EU holds over the U.S. From there, the >>>> White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times >>>> higher than the actual average, trade-weighted tariff charged by the EU >>>> of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was >>>> being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six >>>> research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked >>>> for. Nonsense.
What is remarkable is that the formula that the administration published >>>> ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for >>>> the imports. It could be higher, depending.
By the way, where are you getting 1/4? And how is that number used in the tariff calculation?
Sorry. It comes from here
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
There's two "elasticity" parameters in the equation. One is phi. That
tells you how big a proportion of the change in tariffs (dt) go into
prices of imports. This is the one above. If you put in 10% duties,
import prices are increased by dt * phi = 2.5%. This dependency is
assumed, and I guess the actual value for phi comes from some paper the
writer has chosen to rely on.
The second "elasticity" is the epsilon. That tells you how much demand
will drop for a given price increase. If import prices increase by 2.5%,
then demand for imports will drop by epsilon * 2.5%. In this case,
epsilon is chosen to be 4, so with a 2.5% increase in prices, you're
left with a 10% decrease in demand.
So, a 10% increase in tariffs leaves you with a (dt*phi) * epsilon
decrease in demand for the imports in percentages. In value this
decrease (dm) is
dm = (dt * phi * epsilon)/100 * m,
where m is the total imports from a country (and I really should have
replaced percentages with real numbers here instead of putting in the
division by 100. But I began with percentages ...).
If you're given the trade deficit, and want to know what tariffs wipe
the deficit out, then you simply equate the change in imports dm above
with the deficit and solve for dt.
The Trump administration (Navarro?) has chosen the values for phi and
epsilon as 1/4 and 4, so they conveniently cancel each other out. And
solving for the tariffs amounts to country-wise deficit divided by
imports from that country.
OK, so the epsilon and phi values chosen aren't really that unreasonable, the article seems to say.
Pelle Svanslös <pelle@svans.los> writes:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade
deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons
it was all just a back-of-the-envelope calculation. “Instead, for
every country, they just took our trade deficit with that country and
divided it by the country's exports to us,” the former financial
columnist for The New Yorker posted on X. “What extraordinary nonsense
this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided >> it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the
“unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10
times higher than the actual average, trade-weighted tariff charged by
the EU of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he
was being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and
six research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is-
crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he
asked for. Nonsense.
What is remarkable is that the formula that the administration
published ASSUMES that import levies seep into prices. They assume
1/4. A 10% tariff increase would translate into a roughly 2.5% price
increase for the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary
pain". Trump has known about tariffs and prices all along. As have the
rest of us. Trump is the one that has been lying to his people about
them for vote begging purposes, though.
He knows he'll be able to hold on to power easier if he weakens everyone else, that's the Russian way. Meanwhile he and his billionaire buddies
can coordinate shorting the market, and buy it back at a discount once
TT cries uncle.
On 4/6/25 5:29 PM, TT wrote:
jdeluise kirjoitti 4.4.2025 klo 12.29:
Pelle Svanslös <pelle@svans.los> writes:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade
deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White >>>> House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons
it was all just a back-of-the-envelope calculation. “Instead, for
every country, they just took our trade deficit with that country and
divided it by the country's exports to us,” the former financial
columnist for The New Yorker posted on X. “What extraordinary nonsense >>>> this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided >>>> it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the >>>> “unfair” trade advantage the EU holds over the U.S. From there, the >>>> White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10
times higher than the actual average, trade-weighted tariff charged by >>>> the EU of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he
was being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and
six research references to underscore the credibility of its momentous >>>> economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-
is- crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he
asked for. Nonsense.
What is remarkable is that the formula that the administration
published ASSUMES that import levies seep into prices. They assume
1/4. A 10% tariff increase would translate into a roughly 2.5% price
increase for the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary
pain". Trump has known about tariffs and prices all along. As have the >>>> rest of us. Trump is the one that has been lying to his people about
them for vote begging purposes, though.
He knows he'll be able to hold on to power easier if he weakens
everyone else, that's the Russian way. Meanwhile he and his
billionaire buddies can coordinate shorting the market, and buy it
back at a discount once TT cries uncle.
I don't think I'm gonna cry uncle anytime soon. I'm flushed with cash
& bonds. The problem is just when to get in and with how much, I think
I'm gonna ease into the market gradually.
Glad you're back, TT. You are into the US market and it will be good to
hear your perspectives.
As we have discussed before, I have 4 managed stock portfolios; the
contents are broadly diversified. These have slid an aggregate of about
10% in the last week or so.
I do not have to draw any money out of these portfolios except a very
small (>6K per year) required minimum distribution in the main
retirement account. The rest is set up for wealth transfer to our kid,
if all goes reasonably well.
Ultimately this means that we will not sell into a down market unless it makes strategic sense.
The money is coming out, but where will it go in: a) the next month; b)
Not sure if this will be a fun ride though... especially for 100%
stocks people.
the next year?
Really makes one wonder if Trump is crashing the markets on purpose. I
doubt this is gonna bring much tariff revenue
My gut feeling is that revenue is a cover for a complete model change
from GATT to balanced trade.
I think he sees it as his legacy. No shit; I think he's seeing "legacy"
and this drives his "policy" strategies.
and even less businesses to US... who would start building a factory
to US when policy chances every day & tariffs could be gone next week
& latest with next president.
In many ways he acts like a guy who does not think he's going to
relinquish power. The only real precedent I'm aware in the US is his own reluctance on 06 Jan 2020.
It's good to think the unthinkable, just to keep yourself on your toes.
BRUSSELS — As Donald Trump unveiled his list of tariffs on American
trading partners in a bold attempt to reduce the United States' trade deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White
House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons it
was all just a back-of-the-envelope calculation. “Instead, for every country, they just took our trade deficit with that country and divided
it by the country's exports to us,” the former financial columnist for
The New Yorker posted on X. “What extraordinary nonsense this is.”
That approach meant Trump and his advisers simply took the U.S. trade
deficit with the European Union — $235.6 billion in 2024 — and divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the “unfair” trade advantage the EU holds over the U.S. From there, the
White House proposed a 20 percent tariff, framing it as a corrective
measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 times higher than the actual average, trade-weighted tariff charged by the EU
of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he was being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and six research references to underscore the credibility of its momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math-is- crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he asked
for. Nonsense.
What is remarkable is that the formula that the administration published ASSUMES that import levies seep into prices. They assume 1/4. A 10%
tariff increase would translate into a roughly 2.5% price increase for
the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary
pain". Trump has known about tariffs and prices all along. As have the
rest of us. Trump is the one that has been lying to his people about
them for vote begging purposes, though.
On 4/7/25 1:21 PM, TT wrote:
Sawfish kirjoitti 7.4.2025 klo 4.47:
On 4/6/25 5:29 PM, TT wrote:
jdeluise kirjoitti 4.4.2025 klo 12.29:
Pelle Svanslös <pelle@svans.los> writes:
BRUSSELS — As Donald Trump unveiled his list of tariffs on American >>>>>> trading partners in a bold attempt to reduce the United States' trade >>>>>> deficit, many are questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White >>>>>> House decided to overturn the global trade order.
The White House claimed to base its decision on tariff rates and
nontariff barriers, but economic journalist James Surowiecki reckons >>>>>> it was all just a back-of-the-envelope calculation. “Instead, for >>>>>> every country, they just took our trade deficit with that country and >>>>>> divided it by the country's exports to us,” the former financial >>>>>> columnist for The New Yorker posted on X. “What extraordinary
nonsense
this is.”
That approach meant Trump and his advisers simply took the U.S. trade >>>>>> deficit with the European Union — $235.6 billion in 2024 — and >>>>>> divided
it by the bloc’s exports to the U.S., which totaled $605.8 billion. >>>>>>
The result was 39 percent, which the administration interpreted as >>>>>> the
“unfair” trade advantage the EU holds over the U.S. From there, the >>>>>> White House proposed a 20 percent tariff, framing it as a corrective >>>>>> measure to level the playing field.
The White House’s calculated figure of 39 percent is more than 10 >>>>>> times higher than the actual average, trade-weighted tariff
charged by
the EU of 2.7 percent, according to the World Trade Organization.
Trump, speaking in the White House Rose Garden on Wednesday, said he >>>>>> was being “kind” by cutting the tariff rate almost in half.
The White House responded with a formula featuring Greek letters and >>>>>> six research references to underscore the credibility of its
momentous
economic decision. Incidentally, that formula describes the same
calculation detailed by Surowiecki in his analysis.
https://www.politico.eu/article/donald-trump-us-trade-tariff-math- >>>>>> is- crazy-wisdom-of-crowds-author/
TT was always deriding Papa Joe and "his" economy. He got what he
asked for. Nonsense.
What is remarkable is that the formula that the administration
published ASSUMES that import levies seep into prices. They assume >>>>>> 1/4. A 10% tariff increase would translate into a roughly 2.5% price >>>>>> increase for the imports. It could be higher, depending.
Trump has long denied this. "It's them furriners that pay for the
levies". The tune has since changed to "I don't care" and "temporary >>>>>> pain". Trump has known about tariffs and prices all along. As have >>>>>> the
rest of us. Trump is the one that has been lying to his people about >>>>>> them for vote begging purposes, though.
He knows he'll be able to hold on to power easier if he weakens
everyone else, that's the Russian way. Meanwhile he and his
billionaire buddies can coordinate shorting the market, and buy it
back at a discount once TT cries uncle.
I don't think I'm gonna cry uncle anytime soon. I'm flushed with
cash & bonds. The problem is just when to get in and with how much,
I think I'm gonna ease into the market gradually.
Glad you're back, TT. You are into the US market and it will be good
to hear your perspectives.
Thank you & likewise. :o)
Certainly your opinions on the topic are more grounded to reality.
As we have discussed before, I have 4 managed stock portfolios; the
contents are broadly diversified. These have slid an aggregate of
about 10% in the last week or so.
I do not have to draw any money out of these portfolios except a very
small (>6K per year) required minimum distribution in the main
retirement account. The rest is set up for wealth transfer to our
kid, if all goes reasonably well.
Ultimately this means that we will not sell into a down market unless
it makes strategic sense.
That's how it should be, if it isn't maybe one is being too aggressive.
I'd probably sell some bonds & buy some stocks on sale. Then again if
you have enough money & managers are doing that for you why bother.
Maybe if the market drops significantly more.
I did buy (SP400) and luckily sell some laggards before LIBEEATION DAY
& bought little on Thursday. Bought today some more, pretty happy for
the deals I got in the morning when everything selling in Europe was
-5% ish.
I bought more S&P 400, which is imo relatively cheap currently, down
-30% (in Euros) from the highs. Volatile stuff.
Also bought some NORDIC COUNTRIES etf (xact norden) which I sold
couple years ago and have been cursing my stupidity ever since... now
I got back at roughly same price, and better fund for same theme...
It has 52 companies; 50% Sweden, 29% Denmark (none in Greenland I
hope), 15% Finland, 3% Norway, 3% "others". Really good quality
companies imo with good dividends (accumulating).
Here's 10 largest:
DK 13.36% NOVO NORDISK A/S
SE 7.42% INVESTOR AB CLASS B
SE 6.63% ATLAS COPCO AB CLASS A
SE 4.63% VOLVO AB CLASS B
FI 4.50% NORDEA BANK ABP
DK 3.69% DSV AS
SE 3.07% ASSAA BLOY ABC LASS B
FI 3.03% NOKIA OYJ
FI 2.69% SAMPO OYJ CLASS A
DK 2.56% NOVONESIS AS CLASS B
Viking power! :)))
Note that if "Investor AB" drops enough, it alone is EXCELLENT buy.
Swedish Rockefellers' active ownership & their well diversified fund.
Rivals Nasdaq 100 easily (has actually overperformed it past 25 years)
and I think with less risk.
Maybe I need *you* to manage my portfolios, TT? ;^)
I'd never be able to keep up with this stuff myself. I managed our stuff until about 2016 and realized it wasn't even as good as flipping coin...
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