Trump's trade math baffles economists

Trade experts are raising concerns over the White House’s newly unveiled trade formula, which vastly inflates tariff rates imposed by key US trading partners.

During a Rose Garden presentation, President Donald Trump showcased a chart claiming that China imposes a 67% tariff on US goods, while the European Union and India apply 39% and 52%, respectively.

However, World Trade Organization data contradicts these figures, showing China’s actual average tariff is just 4.9%, the EU’s is 1.7%, and India’s is 6.2%.

The administration’s methodology appears unconventional, incorporating trade deficits, environmental standards, and currency policies while omitting actual tariff levels.

The formula, published by the US trade representative, includes Greek-letter variables to project academic rigor but ultimately does not factor in real-world tariffs.

Trump defended the approach, arguing that trade deficits indicate unfair trade practices. Critics, including Nobel Prize-winning economist Paul Krugman, dismissed the formula as flawed, calling it a misrepresentation of economic principles.

Despite widespread skepticism, Trump vowed to enforce reciprocal tariffs, imposing penalties on nations with trade surpluses while applying a flat 10% tax on those where the US holds an advantage.