4/11/25, 2:58 PM Trump’s tariff math is crazy, says ‘Wisdom of Crowds’ author – POLITICO
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NEWS TRADE
Trump’s tariff math is crazy, says ‘Wisdom of
Crowds’ author
James Surowiecki challenges the White House’s rationale for punishing Europe, China,
India and Japan with reciprocal tariffs.
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Trump said he was being “kind” by cutting the tariff rate almost in half. | Brendan Smialowski/AFP via Getty Images
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4/11/25, 2:58 PM Trump’s tariff math is crazy, says ‘Wisdom of Crowds’ author – POLITICO
APRIL 3, 2025 1:39 PM CET
BY JAKOB WEIZMAN AND GIOVANNA COI
BRUSSELS — As Donald Trump unveiled his list of tariffs on American trading
partners in a bold attempt to reduce the United States' trade deficit, many are
questioning how the duties were calculated.
It didn’t take long before someone cracked the code on how the White House decided
to overturn the global trade order.
The White House claimed to base its decision on tariff rates and nontariff barriers, but
economic journalist James Surowiecki reckons it was all just a back-of-the-envelope
calculation. “Instead, for every country, they just took our trade deficit with that
country and divided it by the country's exports to us,” the former financial columnist
for The New Yorker posted on X. “What extraordinary nonsense this is.”
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4/11/25, 2:58 PM Trump’s tariff math is crazy, says ‘Wisdom of Crowds’ author – POLITICO
That approach meant Trump and his advisers simply took the U.S. trade deficit with
the European Union — $235.6 billion in 2024 — and divided it by the bloc’s exports to
the U.S., which totaled $605.8 billion.
The result was 39 percent, which the administration interpreted as the “unfair” trade
advantage the EU holds over the U.S. From there, the White House proposed a 20
percent tariff, framing it as a corrective measure to level the playing field.
Trump, speaking in the White House Rose Garden on Wednesday, said he was being
“kind” by cutting the tariff rate almost in half.
Make-your-own-tariff: US edition
How did the Trump administration calculate the reciprocal tariffs targeting its largest trading partners? It's
simple math: Divide the trade deficit with that country in 2024 by the total imports, which according to the White
House would yield the tariff these countries charge to U.S. goods. Then, divide this figure roughly by half and
you'll get a reciprocal tariff ready to deploy.
U.S. deficit/U.S. U.S. reciprocal
Country Imports U.S. deficit imports tariff
China $438.9B $295.4B 67% 34%
EU $605.8B $235.6B 39% 20%
Vietnam $136.6B $123.5B 90% 46%
Taiwan $116.3B $73.9B 64% 32%
Japan $148.2B $68.5B 46% 24%
S. Korea $131.5B $66.0B 50% 25%
India $87.4B $45.7B 52% 26%
Thailand $63.3B $45.6B 72% 36%
Switzerland $63.4B $38.5B 61% 31%
Malaysia $52.5B $24.8B 47% 24%
Source: U.S. Census Bureau
Giovanna Coi/POLITICO
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4/11/25, 2:58 PM Trump’s tariff math is crazy, says ‘Wisdom of Crowds’ author – POLITICO
The White House responded with a formula featuring Greek letters and six research
references to underscore the credibility of its momentous economic decision.
Incidentally, that formula describes the same calculation detailed by Surowiecki in his
analysis.
Washington claimed its reciprocal tariffs, masterminded by the Council of Economic
Advisers, were based on a formula accounting for trade barriers, import elasticities
and tariff pass-through rates — aiming to set tariffs high enough to eliminate bilateral
trade deficits. It also considered value-added tax as a trade barrier — even though this
is paid on products and services sold in a country regardless of where the company
selling them is from.
The White House’s calculated figure of 39 percent is more than 10 times higher than the
actual average, trade-weighted tariff charged by the EU of 2.7 percent, according to the
World Trade Organization.
The calculations by Surowiecki, best known as the author of bestselling book “The
Wisdom of Crowds,” were a big talking point on Thursday in Europe. Politicians and
officials are themselves trying to crowdsource a response to Trump’s tariffs that,
according to European Commission President Ursula von der Leyen, include a threat
to retaliate while remaining willing to negotiate.
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4/11/25, 2:58 PM Trump’s tariff math is crazy, says ‘Wisdom of Crowds’ author – POLITICO
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