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A top economist said President Donald Trump's administration got his formula "very wrong" and grossly miscalculated levies on other countries when he learned that it used his research to justify its sweeping tariffs.
Brent Neiman, a University of Chicago economics professor who co-wrote the research touted by the White House with three other renowned economists, reacted to the situation in a New York Times op-ed published on Monday (April 7), claiming Trump's tariffs should've been roughly four times less if his study was followed correctly.
"How on earth did it calculate such huge rates?" Neiman said when revealing his initial reaction to Trump's tariff rates announcement.
“The next day it got personal. The Office of the U.S. Trade Representative released its methodology and cited an academic paper produced by four economists, including me, seemingly in support of its numbers,” he added.
“But it got it wrong. Very wrong,” Neiman wrote. “I disagree fundamentally with the government’s trade policy and approach. But even taking it at face value, our findings suggest the calculated tariffs should be dramatically smaller — perhaps one-fourth as large.”
Neiman, who worked as a treasury official during former President Joe Biden's administration, claims that the Trump administration incorrectly implemented a 25% rate into its formula when deciding on the tariffs.
“Where does 25% come from? Is it related to our work? I don’t know,” he wrote. “Had the trade office instead used a value closer to the 95 percent number from our work, as I believe it should have done, the computed tariffs would have been as little as one-fourth of what they are.”
Neiman added that the "biggest mistake" was leveraging reciprocal tariffs in an effort to eliminate trade deficits to some of the United States' major trading partners.
“The office said it calculated its reciprocal tariffs at a level that would theoretically eliminate trade deficits with ‘each of our trading partners,’ one by one. Is that a reasonable goal?” he wrote.
“It is not. Trade imbalances between two countries can emerge for many reasons that have nothing to do with protectionism. Americans spend more on clothing made in Sri Lanka than Sri Lankans spend on American pharmaceuticals and gas turbines. So what? That pattern reflects differences in natural resources, comparative advantage and development levels.”
“The deficit numbers don’t suggest, let alone prove, unfair competition,” he added.
Last Wednesday (April 2), Trump announced that the U.S. would impose trade barriers on American exports as part of sweeping "reciprocal" tariffs on other countries, which he dubbed "Liberation Day."
"For decades, our country has been looted, pillaged, raped and plundered by nations near and far. ... Foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories and foreign scavengers have torn apart our once beautiful American dream," Trump said via Yahoo! News.
"But it is not going to happen anymore," he continued. "Reciprocal — that means they do it to us, and we do it to them. Very simple. Can't get any simpler than that."
The United States stock market experienced a significant downturn as the tariffs and trade wars were initiated, seeing the largest decline since the 2020 stock market crash influenced by the COVID-19 pandemic during Trump's first of two non-consecutive presidential terms. Trump said he has no plans to back away from his sweeping tariff plans in a post shared on his Truth Social account Monday morning, claiming there would be "NO INFLATION" following an ensuing stock market downturn.
"Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place," Trump wrote. "This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They’ve made enough, for decades, taking advantage of the Good OL’ USA! Our past “leaders” are to blame for allowing this, and so much else, to happen to our Country. MAKE AMERICA GREAT AGAIN!"
"The United States has a chance to do something that should have been done DECADES AGO," he wrote in a followup post. "Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!). Be Strong, Courageous, and Patient, and GREATNESS will be the result!"
Trump's Truth Social comments came as two of his biggest supporters, billionaires Elon Musk and Bill Ackman, both appeared to publicly differ from the tariff decision in post shared on social media.