The American Enterprise Institute’s (AEI) analysis said that the president’s tariff formula « makes no economic sense. »
As President Donald Trump’s tariffs spark alarm and criticism from across the political spectrum, analysts at conservative think tank the American Enterprise Institute (AEI) believe the formula used to calculate the import levies is « based on an error. »
Newsweek reached out to the White House for comment on Saturday.Why It Matters
Trump’s tariff move sent Wall Street and the global economy into a tailspin when he announced on Wednesday that the United States would impose a 10 percent « baseline » tariff on virtually all imports. He also singled out roughly 60 countries for what he described as « discounted reciprocal tariffs », with some being set at more than 40 percent.
He explained that the « reciprocal » tariffs were based on tariffs those countries imposed on the U.S. The numbers Trump cited, however, were inaccurate and the White House clarified later on that the formula it used was based on just two variables: the U.S.’s trade deficit with a foreign country divided by that country’s exports to the U.S.
Trump then halved that number to arrive at his « discounted reciprocal tariff », which he said he was doing to be « kind. »What to Know
The reported Friday, citing two sources who requested anonymity to discuss internal deliberations, that the final tariff rates Trump displayed on a chart he held up during a widely televised Rose Garden speech were set just three hours before the address.
Trump’s decision to use his simplified formula also scuttled weeks of efforts by government officials across federal agencies, who had deliberated over how to set the tariffs while taking into account a wide range of tariff and non-tariff barriers and global trade practices, the newspaper’s report said.
On Friday, AEI released a report on the formula, which criticized the tariffs and said the purported formula was incorrect.
