The formula at the core of President Donald Trump’s tariff announcement that continues to rattle markets is bewildering economists, who say it is based on flawed assumptions.
Economists argue that Trump’s formula relies on a flawed, underestimation of a key metric, resulting in inflated tariff rates for countries.
According to the Office of the United States Trade Representative, the formula underpinning Trump’s sweeping “reciprocal” tariff plan is the country’s trade deficit with the U.S., divided by its exports, then divided by two. Trump also implemented a 10% baseline tariff on almost every country.
However, Trump’s formula for calculating…