Trump’s tariff formula ‘misleading’, say economists

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KARACHI: Experts say the Trump administration’s method of calculating this is “so raw and misleading” mutual prices.

In a more than nine minutes long video descriptions released on April 4, foreign outlet ‘CBC News’ broke the method of targeting countries at mutual rates by the United States. “I wonder if it was not really,” said Dastmot College Economics Professor Douglas Arun.

On Wednesday (April 3), US President Donald Trump celebrated the ‘Liberation Day’, announcing global and mutual rates against almost every country. Trump pulled out a major chart with three columns: prices received from countries, the United States, and mutual rates received by the United States.

According to the list, prices received by the United States include currency manipulation and trade barriers that face US goods in other countries. But the original calculation shows that the method is discretion.

The office of the United States Trade Representative has released the following formula to calculate the revenue: trade deficit (difference between imports and exports) is distributed by flexibility, passage and import production.

Epsylin (flexible) keeps in mind how sensitive consumers are at higher prices, while PHI (pass Throw) calculates how prices are likely to rise. Both factors were kept at 4 and 0.25. When the multiplication, they cancel each other equally. Easy shape shows: US trade deficit with the country that is divided by US imports from the country.

The United States then offers a ‘discounted rate’ by dividing the tariff percentage by 2. According to the list, Pakistan has imposed 58 % of US goods on US goods. The discounted rate is 29 %.

Experts have identified flaws in this calculation. In the video, Arun added that the formula is not measuring the taxes of other countries. “It is not measuring non -tariff measures. It is not even measuring currency manipulation. It is only taking the trade deficit as an IPSO facto reflection of these items.”

In an opide published by The New York Times, titled ‘Trump White House cited my research to justify prices. On Monday, he misunderstood all this, ‘Brent Neman, a Treasury administration of the Biden administration, who wrote a joint trade with the Trump White House, said, “Mutual rates, finally, do not treat us with the same levels of treatment, and we should be treated with non -trends.”

On the procedure adopted by the US White House, he added, “I do not basically agree with the government’s trade policy and point of view. But even with importance to its price, our results show that the revenue of the calculation should be dramatically small.

“Let’s start with the biggest mistake. The office said it has calculated its mutual rates at a level that will ideologically eliminate the trade deficit with” every business partners “. Is that a reasonable purpose?

“It is not so. Trade imbalance between the two countries can emerge for many reasons for many reasons that have nothing to do with protection. The US spends more on Sri Lanka’s clothing, more than that Sri Lanka’s US pharmaceuticals and gas turbines do not have any differences, so that they are not able to do so. No

“There are some reasonable arguments in favor of reducing the trade deficit, such as reducing the risks from our debt. But these arguments do not apply to the country by the country. Mr Solo also certainly run a chronic surplus with his students, and these imbalances do not show anything about hair care or commercial barriers to higher education, nor will he talk to his financial health.

Regardless of whether the current view of the United States can work, Neman said, “Once again, the administration’s formula assumes that a prices on one country will not affect imports from anyone else and will not ignore the implications of exports. These assumptions can increase the cost of a small business with a small business. , Both factors will probably depress US exports.

“Let’s keep walking. Not only will we provide the government its purpose, but we will also ignore the flaws in its tariff formula. Do the calculations look right again?

‘Guess what? They don’t. The government’s formula uses four different numbers to calculate revenue, including imports and exports for each commercial partner. The part that is directly related to our research is estimated at how much import prices change in response to the additional costs imposed by taxes.

“The price of this term, known as the passage rate, is unclear and depends on how companies behave. If foreign exporters reduce prices to fully eliminate revenue, the import prices do not change, if it is worth 100 percent, if it is worth 100 percent, it can be equal to 100 percent.

“Alberto Kyolo, Gata Gopi Nath, Jenny Tang and I studied the prices on Chinese exports in 2018 and 2019. (This is the ‘Caulovit El’ reference in the government’s procedure.) We have found that about 95 % of domestic importers are the reason for paying about 19 %.

“The administration’s commercial office cited our work, but it has mentioned a different results of the dissertation, which has received a lower rate for two retailers for prices.

“If the Trade Office instead used the price near 95 percent of our work, as I believe it should have been, the revenue revenue would have been less in one -fourth of them.

“As a result of the selection of these and other procedures, the average tariff rate will be brought to their highest level in 100 years on Wednesday. Their breadth is targeting major economies like China and Europe, and also to small developing and emerging markets, including Jordan and Zambia.

“I would strictly prefer that the policy and procedures be completely abolished. But except it, the administration should divide its results by four.”

In his conversation with the news, Macro Economic Ammar Habib Khan said such calculations were used only for the latest taxes, adding that “this is not really a tax formula”.

Khan explained, “It basically proves a high trade deficit to a crime. The trade deficit with the US country, mostly tariffs – which means that countries will want to reduce their trade deficit with the United States and import more than the United States.”

The fear of inflation

There are concerns that these taxes can affect US consumer prices. Khan sees it as an opportunity for Pakistan.

“The United States is Pakistan’s largest export textile, and cannot be more affected – since relatively Space, revenue on Pakistan is lower than other regional rivals. Exporters [here] Get the opportunity to raise your market share in the United States by taking the market share of these countries [been hit by] High taxes including Vietnam, Cambodia, Sri Lanka and Bangladesh. In view of the relatively beneficial position, Pakistan should strengthen its trade relations with the United States.

According to Khan, “Pakistan and the United States will discuss the lower prices. Pakistan should ideally consider importing more than the United States and reducing its trade deficit with the United States, thus reducing imports from China in this process, whether it is soyabyan or RLNG.”