On Wednesday evening, US President Donald Trump announced rates for various countries-part to an absurd amount. It is difficult to explain how he gets these figures. US Finance journalist James Surowiecki describes the calculation of the rates as “extraordinary nonsense”.
With the announced rates, Trump wants to “make America rich again”, as he says. His idea is actually that simple, “but I’m glad that nobody came up with the idea. Because it’s my idea now,” explains the American president. In the meantime, the office of the American trade officer has published the formula with which the rates are calculated and economists and economists sharply criticize them. The American financial journalist James Surowiecki also finds clear words: the formula is “extraordinary nonsense”.
The greater the question, the higher the rates
The absurd thing about the formula is: the countries from which the United States imports the most products are those that are also imposed on the highest rates. This means that the higher the demand for a foreign product, the higher the rates on it. Economists criticize this sharply. That should be considerably upward the prices in the US. The rates cost around $ 5,000 a year of each American budget, warns an expert for the CNN.
The US government is not impressed by this criticism. The White House says: “The brave trade measures of President Trump ensure praise.”
Trump’s customs formula
As previously assumed, the customs formula is not based on how high the rates of a country are on input from the US. Instead, the US trade shortage is the basis of the formula. The import of a country minus is exported.
The second part of the customs formula is the export from a country to the US. The customs height of the respective country is now calculated from the trade deficit and export. Because he was “friendly”, these calculated rates were still halved, Trump explains. Instead of about 39 percent, for example, Trump occupies the European Union (EU) “only” with rates of 20 percent.
The import from Switzerland must be taxed at 31 percent. This shows that Trump does not create rammed “mutually” – that is, mutual rates. Because there are no rates in Switzerland for goods introduced from the US.
Services are ignored
It also ensures that in the formula only the trade deficit for goods and not that also for services takes place. “It’s worse than I thought,” says Surowiecki on this fact. Because services export the United States more than importing. This is because huge companies such as Google or Netflix are located in the United States. “These exports do not count for Trump,” says Surowiecki.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
