‘Willing sycophants’ came up with simplistic formula that has thrown global economy into disarray
www.theguardian.com
Waving a big chart as a prop in the White House Rose Garden, Donald Trump suggested his
new tariff plan was simple: “Reciprocal – that means they do it to us, and we do it to them. Very simple. Can’t get simpler than that.”
Perhaps a bit too simple. The method used to calculate the most important numbers in international trade, politics and economics has left some of the world’s leading experts shocked.
For each country, the White House looked up its trade in goods deficit for 2024, then divided that by the total value of imports. Trump, to be “kind”, said he would, however, offer a discount, so halved that figure. The calculation was even distilled into a formula.
For example, take the
figures for China:
- Goods trade deficit: $291.9bn
- Total goods imports: $438.9bn
- Those figures divided = 0.67, or 67%
- And halved = 34%
For countries without a large deficit, the White House applied a 10% baseline, ensuring tariffs would be applied regardless. This was the case for the UK, which the
US Census Bureau reckons had an almost-$12bn surplus in 2024.
“[It is] quite an extraordinary calculation after months of work behind the scenes,” said Jim Reid, the global head of macro research at Deutsche Bank. “[It] didn’t add much confidence on there being an in-depth strategic implementation plan.”
