President Trump's New Tariffs and the Tariff Formula

SOURCE www.npr.org
President Trump announced new tariffs on various countries, claiming they are reciprocal, but in reality, they are not. The tariffs are based on a formula to raise prices and close the trade deficit. The administration revealed their calculations, which include assumptions about how tariffs will affect prices and consumer behavior.

Key Points

  • Tariffs not truly reciprocal as claimed
  • Formula based on raising prices to reduce demand for foreign products and close trade deficit
  • Assumptions about tariff impact on prices and consumer behavior are crucial in the formula

Pros

  • Tariffs aimed at raising prices and closing the trade deficit
  • Administration's calculations provide transparency on the tariff decision-making process

Cons

  • Tariffs may have broader economic consequences
  • Formula assumes only a quarter of tariffs will be passed onto consumers, contrary to some economists' views