First, The Financial Times:
Trade economists have poured scorn on the crude methodology used by Donald Trump to calculate the list of “reciprocal” global tariffs imposed by his administration.
Under the US president’s plan set out on Wednesday night, a baseline tariff of 10 per cent will be levied on all imports from all countries excluding Canada and Mexico, while countries with larger trade deficits with the US were hit with much higher numbers.
The formula used to calculate the tariffs, released by the US trade representative, took the US’s trade deficit in goods with each country as a proxy for alleged unfair practices, then divided it by the amount of goods imported into the US from that country.
That last part is what doesn't make sense to actual economist, the article goes on to say.
Then there's The Wall Street Journal:
Capital Economics estimated that the import taxes outlined by President Trump Wednesday afternoon are likely to annually generate about that much in customs duties.
The tariffs will raise a maximum of $835 billion, the firm's economists calculate. But “assuming such high tariffs lead to a marked decline in imports, the increase in revenues will probably end up closer to $700 billion,” they wrote in a note to clients. That is equivalent to 2.3% of the country's gross domestic product, they wrote.
Meanwhile, the economists say that since imports account for about 10% of consumption, the roughly 25% effective tariff rate that they calculate will add about 2.5% to consumer prices, lifting inflation to above 4% by the end of the year.
And remember, as we said yesterday, conservative economists have insisted for years that consumers pay the tariffs. So we will be paying the $700 billion - and what will we gain from it?
Inflation above 4% by the end of the year.
