An economist Donald Trump cited in calculations for his extra-high global tariffs says that the president should get an F- in math.
University of Chicago economics professor Brett Neiman was a Biden-era Treasury official who wrote the research Trump has cited. In a New York Times op-ed on Monday, Neiman described his initial shock at the initial announcement, still unaware that he was a major player.
“My first question, when the White House unveiled its tariff regime, was: How on earth did they calculate such huge rates?”
Neiman’s question was answered the next day, when he said it got “personal.”
“The Office of the U.S. Trade Representative released its methodology and cited an academic paper produced by four economists, including me, seemingly in support of their numbers. But they got it wrong. Very wrong,” he said.
Neiman said that he disagrees “fundamentally” with Trump’s approach to trade policy. But regardless, the calculations are simply off: “Our findings suggest the calculated tariffs should be dramatically smaller—perhaps one-fourth as large.”
There are several problems behind Trump’s approach, said Neiman. For one, the “biggest mistake” is that the White House tried to calculate “reciprocal tariffs” to end trade deficits with U.S. trading partners.
“Is this a reasonable goal?” the economist wrote. “It is not.”
Trade balances are unavoidable and natural, Neiman added. “Americans spend more on clothing made in Sri Lanka than Sri Lankans spend on American pharmaceuticals and gas turbines. So what?”
Not every country has similar natural resources or development levels, he said. “The deficit numbers don’t suggest, let alone prove, unfair competition,” he added.
Neiman also quoted Nobel laureate Robert Solow to further explain his reasoning. Solow once said, “I have a chronic deficit with my barber, who doesn’t buy a darned thing from me.”
Therefore, not only are the numbers far off, but they’re unfair, he said. “Mr. Solow also surely ran a chronic surplus with his students, and these imbalances reveal nothing about trade barriers in hair care or higher education, nor would they speak to his financial health,” wrote Neiman.
Even if Trump was able to eliminate trade deficits, which Neiman said would be “destructive,” he noted that the reciprocal tariffs are destined to fail.
And even if “we grant the government its goal” and “ignore flaws in its tariff formula,” said Neiman, “do the computed tariffs then look right?”
“Guess what? They do not,” he wrote.
Neiman also said that while the administration’s trade office “cites our work,” it “mentions a different result.”
“The Trump administration then plugs a rate of 25 percent into its formula. Where does 25 percent come from? Is it related to our work? I don’t know,” he wrote.
Neiman warned readers about the consequences of Trump’s faulty math: “The reciprocal tariffs have enormous implications for workers, firms, consumers and stock markets around the globe. But the methodology note offers shockingly few details.”
Neiman’s far from the first expert who has critiqued Trump’s strategy. He’s even been slammed by far-right MAGA members like Ben Shapiro, who did a 180 on the president when he called the tariffs “probably unconstitutional” and “pretty crazy.” He also agreed that the president’s math was simply wrong and his vision was “mistaken.”
The tariffs have already begun to tank the economy, with markets plunging to unprecedented lows and both Republican and Democratic representatives bashing the president for his Trumponomics. On Thursday the Dow Jones Industrial Average suffered its worst day since the COVID-19 pandemic.
Source : https://www.thedailybeast.com/economist-trump-cited-on-tariff-math-says-he-got-it-all-wrong/
