The conservative American Enterprise Institute, whose entire reason to exist is to hate on taxes in all forms, has found their moment. They spent much of last year warning people that Trump’s tariffs will be “the biggest tax hike since at least the 1980s,” and how calamitous this policy will be (other less partisan think tanks backed their math up). Now that they have been proven right, they are parsing more details of Trump’s plan to drag the globe into another Great Depression, and they confirmed a cataclysmically colossal fuck up in Trump’s own stupid math. Per AEI (emphasis mine):
However, the elasticity of import prices with respect to tariffs should be about one (actually 0.945), not 0.25 as the Trump Administration states. Their mistake is that they base the elasticity on the response of retail prices to tariffs, as opposed to import prices as they should have done.
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Correcting the Trump Administration’s error would reduce the tariffs assumed to be applied by each country to the United States to about a fourth of their stated level, and as a result, cut the tariffs announced by President Trump on Wednesday by the same fraction, subject to the 10 percent tariff floor. As shown in Table 1, the tariff rate would not exceed 14 percent for any country. For all but a few countries, the tariff would be exactly 10 percent, the floor imposed by the Trump Administration.
To put this gargantuan fuck-up in some perspective, Trump slapped 20 percent tariffs across the board and another 25 percent on steel, aluminum and cars from the European Union, while tomorrow, a 104 percent tariff will go into effect on China. Alberto Cavallo, the Harvard Business School professor Trump and company cite to get their elasticity figure, kicked off this investigation by saying they read his work wrong, and that “it is not entirely clear how they use our findings.” Trump’s Secretary of Agriculture Brooke Rollins was asked about this AEI analysis, and she said they were “just wrong on this” before admitting she had not read their fairly short article detailing this colossal fuck up.
You literally cannot find anyone outside Trump’s group of extreme sycophants who can make any rhyme or reason out of his illogic. In all my years of being active in politics, I don’t think I have ever seen someone more isolated on a policy than Trump is on these tariffs. Us lefties seemingly had more conservative support in 2020 for the Green New Deal than Trump has for his trade war in his own party.
So just to recap: people who have proven beyond a shadow of a doubt that they don’t know what tariffs are or what they do decided to declare that trade deficits are now tariffs, and then the stupid babybrained math they made up to get to their policy of shattering the global economy was wrong on their own terms by a few orders of magnitude. If Trump simply imposed reciprocal tariffs for the actual tariffs other countries put on us, or if he and Peter Navarro simply understood the difference between the words retail and import, junk bond spreads would not be suggesting we are at similar risk levels to March 2020. But no, the second Trump administration is the coup de grâce of mankind’s inherent stupidity. Even on their own distorted terms where they make up the rules to benefit their illogic, Trump and company still prove themselves to be a bunch of hopeless idiots who know less than nothing about how anything works.
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