Norms Impact
Trump tariffs based on massive error, conservative think tank says
A tariff regime built on a claimed fourfold math error turns executive trade power into an opaque algorithm, severing accountability for prices Americans are forced to pay.
Apr 6, 2025
Sources
Summary
Economists at the American Enterprise Institute say the Trump administration’s reciprocal-tariff formula contains a math error that overstates impacts by about a factor of four. The administration publicly tied tariff-setting to a Council of Economic Advisers–linked formula while the Office of the U.S. Trade Representative cited outside academic research to justify key assumptions. The practical result is tariff rates that AEI says are massively higher than what would be required to meet the administration’s stated goals.
Reality Check
A tariff-setting formula that AEI says is wrong by a factor of four concentrates coercive economic power behind a technical screen, and when that screen is flawed, our rights and livelihoods absorb the error. On these facts, it does not read as a clean fit for federal criminal statutes without evidence of knowing falsification or corrupt intent, but it squarely implicates governance norms against arbitrary, unreviewable decision-making in the use of delegated trade authority. When the government cites academic research to justify inputs while applying the wrong level of those inputs, it normalizes policy-by-pretext and makes meaningful oversight—by Congress and the public—harder to exercise.
Media
Detail
<p>Economists Kevin Corinth and Stan Veuger at the American Enterprise Institute said the formula the Trump administration used to set “reciprocal tariffs” includes a math error that inflates the calculated impact by about fourfold.</p><p>After announcing the tariffs the prior Wednesday, the administration released a formula it said was developed with the Council of Economic Advisers to determine the tariff rates. Corinth and Veuger said the formula uses two variables that should not cancel each other out because the administration applied the wrong level for one of them.</p><p>They focused on a variable described as the “elasticity of import prices with respect to tariffs,” meaning how much import prices change when tariffs are imposed. Using what they describe as the correct elasticity measure while keeping the same policy goals, they wrote that the levy on Vietnam would have been 12.2% rather than 46%.</p><p>In support of its approach, the Office of the U.S. Trade Representative cited research on price elasticity by Harvard Business School professor Alberto Cavallo. The White House did not immediately respond to a request for comment on AEI’s assertion.</p>