2 ms·
The Trump White House Cited My Research to Justify Tariffs. It Got It All Wrong
- latexr 2y agohttps://archive.ph/20250408122437/https://www.nytimes.com/2025/04/07/opinion/trump-tariff-math-formula.html https://archive.ph/20250408122437/https://www.nytimes.com/20...
- oersted 2y ago> The value of that term, known as the rate of pass-through, isn’t obvious and depends on how companies behave. If foreign exporters cut prices to fully offset the tariffs, leaving import prices unchanged, the pass-through would be zero. Alternatively, it could equal 100 percent if exporters don’t budge, which means import prices would rise in step with the tariffs. > Alberto Cavallo, Gita Gopinath, Jenny Tang and I studied the tariffs placed on Chinese exports in 2018 and 2019. We found that tariffs of, say, 20 percent caused domestic importers to pay nearly 19 percent more. This represents a pass-through into import prices of about 95 percent > The Trump administration then plugs a rate of 25 percent into its formula. Where does 25 percent come from? Is it related to our work? I don’t know. > 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.