UPDATE: Donald Trump Takes Office as the 47th US President
- Thread starter DC_Dude
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Crickets.
Remember fuckyou appeared and was bragging he's bitcoin rich and praising Trump.
Remember xcactor praising Trump and shitting on democrats?
Remember ^spiderman^ saying Kamala would've been bad for black men and how Elon Musk being a businessman was good for the government?
Remember Mrfreddygoodbitch pledging his undying love for Trump cause he credited Trump for him getting a stimulus check?
Was it that BKF1 dude that said he made more money under Trump.
Name name names.
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Man at this point, somebody needs to start a thread on how to weather the storm in a recession.
The formula used by the administration to calculate tariffs made other nations’ tariffs appear four times larger than they actually are. President
@realDonaldTrump
is not an economist and therefore relies on his advisors to do these calculations so he can determine policy. The global economy is being taken down because of bad math. This short piece by
@AEI
explains it succinctly. A must read. The President’s advisors need to acknowledge their error before April 9th and make a course correction before the President makes a big mistake based on bad math.
President Trump’s Tariff Formula Makes No Economic Sense. It’s Also Based on an Error.
By Kevin Corinth | Stan Veuger
AEIdeas
April 04, 2025
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President Trump on Wednesday announced tariffs on practically every foreign country (and some non-countries), ranging from a 10 percent minimum all the way up to 50 percent. The economic fallout has been dramatic, with the stock market losing nine percent of its value (based on the S&P 500 index at the time of writing) and forecasted probabilities of a recession rising.
President Trump described the tariffs as reciprocal, equal to half of the rate of tariffs and non-tariff trade barriers imposed by other countries. However, they are nothing of the sort. The tariff the United States is placing on other countries is equal to the US trade deficit divided by US imports from a given country, divided by two, or 10 percent, whichever rate is higher. So even if the United States has no trade deficit (or a trade surplus) with a country, they still receive a minimum tariff of 10 percent.
As an example, if the US imports $100 million worth of goods and services while exporting $50 million to a country, then the Trump Administration alleges that country levies a 50 percent tariff on the United States (the difference between $100 million and $50 million, divided by $100 million). The “reciprocal” tariff put into effect by President Trump on Wednesday would be half of that, 25 percent.
The formula for the tariffs, originally credited to the Council of Economic Advisers and published by the Office of the United States Trade Representative, does not make economic sense. The trade deficit with a given country is not determined only by tariffs and non-tariff trade barriers, but also by international capital flows, supply chains, comparative advantage, geography, etc.
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. As a result, the “reciprocal” tariffs imposed by President Trump are highly inflated as well.
Though in effect the formula for the tariff placed on the United States by another country is equal to the trade deficit divided by imports, the formula published by the Office of the US Trade Representative has two additional terms in the denominator that just so happen to cancel out: (1) the elasticity of import demand with respect to import prices, ε, and (2) the elasticity of import prices with respect to tariffs, φ.
The idea is that as tariffs rise, the change in the trade deficit will depend on the responsiveness of import demand to tariffs, which depends on how import demand responds to import prices and how import prices respond to tariffs. The Trump Administration assumes an elasticity of import demand with respect to import prices of four, and an elasticity of import prices with respect to tariffs of 0.25, the product of which is one and is the reason they cancel out in the Administration’s formula.
However, the elasticity of import prices with respect to tariffs should be about one (actually 0.945), not 0.25 as the Trump Administration states. 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 article they cite by Alberto Cavallo and his coauthors makes this distinction clear. The authors state that “tariffs [are] passed through almost fully to US import prices,” while finding “more mixed evidence regarding retail price increases.” It is inconsistent to multiply the elasticity of import demand with respect to import prices by the elasticity of retail prices with respect to tariffs.
Correcting the Trump Administration’s error would reduce the tariffs assumed to be applied by each country to the United States to about a fourth of their stated level, and as a result, cut the tariffs announced by President Trump on Wednesday by the same fraction, subject to the 10 percent tariff floor. As shown in Table 1, the tariff rate would not exceed 14 percent for any country. For all but a few countries, the tariff would be exactly 10 percent, the floor imposed by the Trump Administration.
Now, our view is that the formula the administration relied on has no foundation in either economic theory or trade law. But if we are going to pretend that it is a sound basis for US trade policy, we should at least be allowed to expect that the relevant White House officials do their calculations carefully. Hopefully they will correct their mistake soon: the resulting trade liberalization would provide a much-needed boost to the economy and may yet help us stave off a recession.
Table 1. President Trump’s Tariffs Announced April 2, 2025, actual and with corrected formula
Source: Annex I, https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/. Note: Countries with an announced tariff of 10% are not included in the table. Their tariffs would not change.
Country (Announced) Tariff (Corrected) Tariff Lesotho 50% 13.2% Cambodia 49% 13.0% Laos 48% 12.7% Madagascar 47% 12.4% Vietnam 46% 12.2% Myanmar (Burma) 44% 11.6% Sri Lanka 44% 11.6% Falkland Islands 41% 10.8% Syria 41% 10.8% Mauritius 40% 10.6% Iraq 39% 10.3% Guyana 38% 10.1% Bangladesh 37% 10.0% Botswana 37% 10.0% Liechtenstein 37% 10.0% Serbia 37% 10.0% Thailand 36% 10.0% Bosnia and Herzegovina 35% 10.0% China 34% 10.0% North Macedonia 33% 10.0% Angola 32% 10.0% Fiji 32% 10.0% Indonesia 32% 10.0% Taiwan 32% 10.0% Libya 31% 10.0% Moldova 31% 10.0% Switzerland 31% 10.0% Algeria 30% 10.0% Nauru 30% 10.0% South Africa 30% 10.0% Pakistan 29% 10.0% Tunisia 28% 10.0% Kazakhstan 27% 10.0% India 26% 10.0% South Korea 25% 10.0% Brunei 24% 10.0% Japan 24% 10.0% Malaysia 24% 10.0% Vanuatu 22% 10.0% Cote d’Ivoire 21% 10.0% Namibia 21% 10.0% European Union 20% 10.0% Jordan 20% 10.0% Nicaragua 18% 10.0% Zimbabwe 18% 10.0% Israel 17% 10.0% Malawi 17% 10.0% Philippines 17% 10.0% Zambia 17% 10.0% Mozambique 16% 10.0% Norway 15% 10.0% Venezuela 15% 10.0% Nigeria 14% 10.0% Chad 13% 10.0% Equatorial Guinea 13% 10.0% Cameroon 11% 10.0% Democratic Republic of the Congo 11% 10.0%
FUCK THESE BILLIONAIRES
What's crazy is that once again, he would be fine if he had just done nothing. He could have coasted on the coattails of Biden's actually successful economy, and everyone that matters to him would have given him credit for it. Instead, he's torpedoing the one thing that people (falsely) believed he was good at.
It's just like his pandemic response, except at least that was a crisis no one could have predicted or controlled. No one with any sense thinks this is a good idea.
If he would have actually planned it instead of implementing with only a ‘concept of a plan’ then it wouldn’t have been as bad.
This mofo basically said, let’s just dismantle the government, tank people’s money, and we’ll figure it out later (if at all).
Also this. They clearly are just throwing stuff at the wall and then trying to adjust as they learn how stupid throwing stuff at the wall is.
Too little, too late. I don't think he can fix this by hitting pause. He might mitigate some damage, but trust is over.
This muthafucka
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