To justify the tariffs announced by US President Donald Trump on Wednesday, the White House today released a simple formula that applies uniformly to all countries, prompting questions and criticism from economists, including Nobel Prize winner Paul Krugman.
President Donald Trump has denounced alleged "tariffs" that other countries are imposing on the United States. But the figures presented do not correspond to the level of current tariffs.
China imposes a 67 percent tariff on American products, according to the White House. But according to data from the World Trade Organization (WTO), China applied an average tariff of only 2024 percent in 4,9.
The difference is equally large for the European Union (1,7 percent under the WTO, 39 percent under Trump) or even India (6,2 percent versus 52 percent).
The White House claims to be taking into account other trade barriers besides tariffs, citing in particular environmental standards or currency manipulation.
The US Department of Commerce has released a formula with multiple variables expressed in Greek letters. But several of the variables cancel each other out.
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In fact, to calculate so-called "tariffs," the White House divides the trade balance (the difference between imports and exports) by the value of imports—regardless of the country. This calculation does not take into account the specifics of commercial relations with other countries.
"The formula is based on the relative value of the trade surplus with the United States," Deutsche Bank economists confirmed.
"This approach is so flawed that it's hard to know where to start," said Nobel Prize-winning economist Paul Krugman. He particularly points out that the calculations only take into account traded goods, leaving out services.
By applying a formula published by the US administration to 2024 data published by the US Census Bureau, AFP arrived at the figures presented by the US president: the new tariffs announced for each country correspond to that result divided by two.
If the formula yields less than 10 percent or in the case of a trade surplus, the United States uniformly applies the lower rate of 10 percent. This is the case with more than a hundred countries or territories, including the United Kingdom and Australia.
Moreover, the formula is based on simple assumptions about the impact of an increase in the price of imported goods on US domestic demand. This variable is called "elasticity" and is assumed to be the same for every country, regardless of the product.
One of the scientific articles cited by the White House in support of its formula, however, emphasizes that elasticity "varies by product and importer."
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