Deriving the Trump tariffs

Ronald Davies

Economics Bulletin, 2025, vol. 45, issue 2, 1056 - 1059

Abstract: On April 2, 2025, President Donald Trump announced a wide-ranging set of "reciprocal tariffs" against many of its trading partners. The calculation of these tariffs have elicited a largely negative reaction in part due to the simple formula used to calculate them. In this note, I provide a model which, under the proper assumptions, does indeed result in the administration's formula. I, however, leave it to the reader to judge whether these assumptions are reasonable.

Keywords: Tariffs; Global Supply Chains; Passthrough (search for similar items in EconPapers)
JEL-codes: F1 F2 (search for similar items in EconPapers)
Date: 2025-06-30
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