During President Donald Trump’s announcement of the White House’s latest trade policy, he showcased a novelty-sized cardboard sign labeled “Reciprocal Tariffs.” The response was immediate confusion. Trump imposed a 10 percent baseline tariff on all imports into the US, affecting even uninhabited islands, along with extraordinarily high rates on specific countries, allegedly based on “tariffs charged to the USA,” which didn’t align with other estimates. Stock markets have seen a significant downturn, and consumers are bracing for sharp price increases on nearly all goods.
So where did these tariff figures originate? They seemingly stem from an oversimplified calculation recommended by several prominent AI chatbots.
Economist James Surowiecki quickly reverse-engineered a possible explanation for the tariff calculations. He discovered that you could replicate the White House’s figures by taking a specific country’s trade deficit with the US and dividing it by their total exports to the US. By halving that result, you arrive at a usable “discounted reciprocal tariff.” The White House contested this assertion and published their formula in response.
