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| Hey, Mom, I told you I'd finish the project in time. Photo by Chip Somodevilla/Getty Images, via Newsweek. |
I had a pretty strong suspicion that there was some bullshit involved when I heard about the chart (at first on the radio) of Trump's proposed "reciprocal tariffs", announced on NPR as
a 10% minimum tariff to apply to goods from all countries. However, certain trading partners will face higher, "reciprocal tariffs" aimed at penalizing them for their trade barriers. Those taxes on imported goods are calculated on a country-by-country basis, and the levels Trump announced for some trading partners are substantial. He said he plans to impose 34% tariffs on China, 20% on the European Union and 24% on Japan, among an array of other trading partners.
and a little more suspicion when I saw the charts Trump put on display for illustration, which seem to be describing something different, or maybe two different things, with the left columns headed "tariffs charged to the U.S.A. including currency manipulation and trade barriers", and the right column headed "U.S.A. discounted reciprocal tariffs" of around half the amount given in the first column, except for a number of countries, such as UK, Brazil, Singapore, Chile, Australia, and Colombia, where the number in both columns was 10%, which looked like a reference to the 10% "minimum tariff" instead. Why were those on the same chart?
But the thing I really wanted to know about was where the numbers in the other cells of the left column came from: how had the administration calculated a single number for "tariffs charged to the U.S.A. including currency manipulation and trade barriers" for each of the 65 countries, 67% for China, 39% for the EU, 90% for poor Vietnam? Not that I would have any ability to imagine other numbers, or even to say whether such numbers exist, but could they say something about how they did it? There are no clues in today's executive order or in the presidential memorandum to which it alludes.
Anyway, I was pleased to see that Dr. Krugman, who is probably as well positioned to talk about these subjects as anybody alive (work in international trade theory is what he won his Nobel for), put up a quick note on the Substack that has replaced his New York Time column that suggests he was wondering exactly the same thing:
So where does this 39 percent number [representing the EU's "tariffs charged to the USA"] come from? I have no idea. Many people speculated that Trump would count value-added taxes as tariffs, even though they aren’t — European producers selling to the EU market pay the same VAT as US producers, so it doesn’t discriminate and therefore isn’t protectionist. But even if you get that wrong, EU VAT rates are in the vicinity of 20 percent, so you still can’t get anywhere close to 39 percent.
You have to wonder whether Elon Musk’s Dunning-Kruger kids are now producing tariff numbers.
Now it seems, as NPR reports it, that's pretty much what happened:
Trump calls the move "reciprocal tariffs," however, the White House acknowledged it would be hard to calculate the actual trade barriers from every country, NPR's Scott Horsley tells Up First. As a result, the Trump administration picked an arbitrary number they thought would be high enough to chip away at each country's trade surplus. Economists say the tariffs will likely mean higher prices and slower growth in the U.S.
Got that? It would be hard to calculate, so they decided they'd just make the numbers up. And it's not like it was totally arbitrary, they were careful to pick numbers that sounded "high enough". Close enough for country music, as we used to say. Everybody's OK with that, right?
It was government by bullshit. They just brought their big charts with the made-up numbers out to the Rose Garden like Trump's hurricane map and read Stephen Miller's statement, with news that is I mean cataclysmic for most of these countries, threatening them all with recession, and lay back in the expectation that everybody would treat it as some kind of real thing. Presumably it's another Trumpy extortion attempt. Hey Vietnam, nice little export economy you have here, shame if anything were to happen to it, why don't you make us an offer? (Except Vietnam did make them an offer, back in February, and ambassador Marc Knapper assured them that Trump's tariffs were not going to be aimed at them in any way. Maybe President Trump wasn't informed of what President Trump was doing.)
I'll have more to say about the whole event later on, but I feel like this thing on its own is so key to the understanding of what the Trumpery is about: they made the numbers up, because they felt getting real ones would be too hard, and admitted it to Scott Horsley, and they still expect to be treated as adults.
Update: The actual calculations are now available from various sources, including good old Atrios, Dean Baker, and The New York Times. And Krugman, with some hard evidence that the formula was created by an Large Language Model generative AI (though Gemini 3.5 is very insistent that it’s a stupid idea). Still insane, but helpful indicators of what kind of insanity.
