Trump tariff formula misrepresents global trade economics, experts say
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(WASHINGTON) — When President Donald Trump announced his controversial tariffs on virtually every trading partner in the world, he repeatedly called them “reciprocal” — a response, he said, to those nations that had hit the U.S. with tariffs and hurt the American economy.
But Trump’s claim is misleading not only because some of the nations hit with tariffs haven’t levied any against the U.S., but also because the math apparently used by the administration to come up the tariffs doesn’t hold up, according to several economic experts.
The White House’s list of tariffs issued against each location includes different tariff rates. In announcing the tariffs at the Rose Garden on Wednesday, Trump claimed the numbers were calculated based on “the combined rate of all their tariffs, non-monetary barriers and other forms of cheating.” Trump added that he was being “kind,” and divided that number in half and called it a “discount.”
The calculations for almost all of the tariffs was determined by dividing trade deficit of each nation with the value of its imports, according to economic experts’ analysis. That number was then divided in half for Trump’s “discount” for the final tariff percentage, experts said.
“Before yesterday, 99% of trade economists had never seen a formula like this before,” Oren Ziv, an assistant professor of economics at Michigan State University, told ABC News Friday.
Several economic experts and journalists blasted the formula soon after the speech, including James Surowiecki, a financial news journalist and author, who explained it in a post on X.
“So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is,” he said in his post.
The White House later put out an explanation of its calculations that said it was using the trade deficit and import figures.
“This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing. Tariffs work through direct reductions of imports,” the White House said in a statement.
National Economic Council Director Kevin Hassett told Fox News on Thursday about the administration’s thinking behind their policy.
“So what happened was that the U.S. Trade Representative looked at where the trade deficits were and adjusted the tariffs in order to respond to the national emergency that I think we all agree about,” he said.
Ziv said this logic does not fit with any modern definition of trade deficits.
“When economists study trade deficiency, they don’t find any evidence for this rationale,” he said.
Ziv noted that trade deficits are more related to the markets rather than exports and imports and manufacturing.
Ziv said the formula is not very likely to yield the results that the administration is seeking.
“Since World War II, most industrial countries have followed a consistent set of rules of trade policies. Essentially, they learned that trade wars don’t help anyone,” he said.
(WASHINGTON) — For the first time in U.S. history, military aircraft were used this past week to deport scores of undocumented migrants from the United States. Middle schools, Trump administration officials say, are now seen as places to target for immigration enforcement operations. And, according to President Trump’s “border czar,” every undocumented immigrant should worry they could be arrested at any time, even if they have no criminal record.
The “border czar,” Tom Homan, says it’s all part of the Trump administration’s effort to send a “clear” message: “There’s consequences [for] entering the country illegally,” he told ABC “This Week” co-anchor Martha Raddatz on Sunday.
“If we don’t show there’s consequences, you’re never going to fix the border problem,” he said.
More than 11 million undocumented immigrants are currently estimated to be living in the U.S. President Donald Trump has promised to take unprecedented action to remove as many of them as possible and stem the flow of more migrants coming to the southern border.
In his first several days in office, Trump declared a national emergency at the border, announced an end to the so-called practice of “catch and release” — when migrants claiming asylum are given court dates and then released pending those proceedings — and sought to overturn the long-held Constitutional right of birthright citizenship, a move that immediately faced legal challenges and was at least temporarily blocked by a federal judge.
As for the millions of undocumented immigrants already in the country, Homan said the administration will deport “as many as we can,” starting with threats to public safety threats and national security, Homan said.According to estimates released by House Republicans last year, based on government data, hundreds of thousands of undocumented migrants in the country are convicted criminals or have charges pending against them. Government statistics indicate that in the past four years, hundreds of migrants were caught along the southern border with names matching known or suspected terrorists on a government watchlist. And Homan has said more than 2 million people were detected along the border but never captured, so authorities don’t know who they are or what threat some of them could pose.
According to statistics released by the Department of Homeland Security last year, a tiny fraction of those who reached U.S. borders in the prior three years had any kind of criminal record, and the vast majority of them involved nonviolent crimes, such as driving under the influence or previously entering the country illegally.
Homan told ABC News that the Trump administration is only “in the beginning stages” of carrying out its mass deportation plan, making public safety threats and national security threats a “priority,” but “as that aperture opens, there’ll be more arrests nationwide.”
And he warned that there will be “collateral arrests,” especially in the so-called “sanctuary cities” that he says are resistant to helping Immigration and Customs Enforcement officials locate and arrest undocumented immigrants already in local custody for other crimes.
“Sanctuary cities lock us out of the jails,” said Homan, who led ICE as acting director in Trump’s first administration.
According to Homan, that creates significant safety concerns: When an undocumented immigrant arrested for a serious crime is released by local authorities, instead of being deported, it “endangers the community.”
Nevertheless, Homan said that’s a time when ICE officers would likely make “collateral arrests.”
“When we find him, he’s going to be with others … [and] if they’re in the country illegally, they’re coming too,” he said.
He emphasized that anyone in the country unlawfully is “on the table.”
“It’s not OK to violate the laws of this country,” he said. “We have millions of people standing in line, taking the test, doing their background investigation, paying the fees that want to come in the right way.”
“So if you’re in the country illegally, you got a problem,” he said.
On Monday, during Trump’s first day in office, acting Homeland Security Secretary Benjamine Huffman issued a directive telling immigration authorities they could conduct operations in so-called “sensitive” areas that he said were off-limits during the Biden administration.
“Criminals will no longer be able to hide in America’s schools and churches to avoid arrest,” he said in a statement.
Others, however, said the administration was simply creating fear within the immigrant community, with the chairman of the U.S. Conference of Catholic Bishops’ Committee on Migration saying that “turning places of care, healing and solace into places of fear and uncertainty … will note make our communities safer.
He said that as they prioritize national security threats and public safety threats, ICE officers might have to even go into schools because “many” members of gangs tied to South and Central America, such as MS-13, are between 14 and 17 years old.
In his interview with ABC News, Homan said that no other law enforcement agency is restricted from entering certain locations to promote public safety in the same way ICE has been.
“Name another agency, another law enforcement agency, that has those type of requirements, that they can’t walk into a school or doctor’s office or a medical campus,” he said. “No other agency is held to those standards.”
“These are well-trained [ICE] officers with a lot of discretion, and when it comes to a sensitive location, there’s still going to be supervisory review,” he said. “But ICE officers should have discretion to decide if a national security threat or a public safety threat [is] in one of these facilities.”
Homan said anyone already in the country unlawfully “should leave,” and those looking to claim asylum should “do it the legal way.”
“Go to the embassy, go to the point of entry,” he said. “You shouldn’t come to this country and ask to get asylum and the first thing you do is break our laws by entering illegally.”
In the meantime, Homan said the Trump administration is using not just the military but the “whole” government, including the Justice Department, to support its mass deportation plan, which allows ICE officers to concentrate on conducting enforcement operations.
But Homan acknowledged that the federal government won’t be able to remove every undocumented immigrant in the U.S., and that his “success is going to be based on what Congress gives us.”
ICE doesn’t currently have enough funding from Congress to detain all of the undocumented immigrants that the Trump administration says it hopes to arrest.
“I’m being realistic,” he said. “We can do what we can with the money we have. We’re going to try to be efficient. But with more money we have, the more we can accomplish.”
“What price [do] you put on national security?” he added. “When you … don’t secure that border, that’s when national security threats enter the country. That’s when sex trafficking goes up. That’s when, you know, that’s when the fentanyl comes in.”
As for what success practically looks like at the end of the Trump administration, Homan said: “Our success every day is taking a public safety threat off the streets or getting a national security threat out of here.”
(WASHINGTON) — President Donald Trump has terminated Secret Service protection for his former national security adviser John Bolton, Bolton said in a post on X Tuesday afternoon.
“Notwithstanding my criticisms of President Biden’s national security policies, he nonetheless made the decision to extend that protection to me in 2021. The Justice Department filed criminal charges against an Iranian Revolutionary Guard official in 2022 for attempting to hire a hit man to target me. That threat remains today,” Bolton wrote. “The American people can judge for themselves which President made the right call.”
The White House has not commented on Bolton’s claims.
Bolton worked as Trump’s national security adviser from 2018 to 2019 and was frequently at odds with the president. After he left office, Bolton was vocal about his criticisms of Trump’s policies, including in a 2020 memoir in which he claimed the president was “stunningly uninformed,” ignorant of basic facts and easily manipulated by foreign adversaries.
At the time of the book’s release, Bolton told ABC News’ Martha Raddatz that Trump was “not fit for office” and didn’t have “the competence to carry out the job.”
Trump has lashed out at Bolton since leaving office in social media posts and interviews.
On Monday, he signed an executive order that called for Bolton to lose any security clearance he might still hold.
The executive order accused Bolton of publishing a memoir that “was rife with sensitive information drawn from his time in government,” with the order adding that the book’s publication “created a grave risk that classified material was publicly exposed.”
Bolton has denied disclosing any classified information in the book, and though a federal judge was skeptical of that, no charges were ever filed.
(WASHINGTON) — A group of 191 House and Senate Democrats sent a letter to Russell Vought, the newly installed director of the Office of Management and Budget, and Treasury Secretary Scott Bessent, calling on them to reverse course on actions targeting the nation’s consumer financial watchdog agency.
The Consumer Financial Protection Bureau (CFPB) was created by Congress in the wake of the 2008 financial crisis to safeguard Americans against unfair business practices. It has been brought to a virtual standstill after Vought, who last week was named the agency’s acting director, and Elon Musk’s Department of Government Efficiency took control of the agency. Vought has since issued a stop-work order to nearly all CFPB staff.
Democrats, in their letter, are calling for Musk’s DOGE employees, some of whom physically accessed the agency’s federal office and requested access to its industry and consumer data, to be pulled out of the CFPB.
“Your efforts to dismantle the CFPB are dangerous, and we will fight them at every turn. We ask that you remove Mr. Musk’s operatives from the CFPB, restore all internal and external systems and operations, and allow the CFPB to continue to do its job of protecting American consumers,” the Democrats wrote in their letter.
The letter is signed by all Senate Democrats and the two independents — Sen. Angus King, of Maine, and Sen. Bernie Sanders, of Vermont — who caucus with them.
During remarks on Monday from the Oval Office, President Donald Trump said the CFPB was “very important to get rid of” and that the organization was “set up to destroy some very good people.”
When asked if his goal was to completely get rid of the agency, Trump answered in the affirmative.
“I would say yeah, because we’re trying to get rid of waste, fraud and abuse,” Trump said.
Democrats in their letter allege that efforts to sideline the financial watchdog will harm consumers and are potentially illegal.
“The Trump Administration has effectively fired the financial cop on the beat and declared open season for predatory lenders and scam artists working to steal Americans’ money and threaten their financial security,” Democrats said in the letter.
“No matter how badly someone has been cheated and no matter how extensive the scam, the Administration has declared that the financial cops should simply stand by and watch while giant networks of lenders cheat American consumers,” the letter continued. “This is particularly costly for people whose claims of illegal foreclosures, car repossessions, or debanking are currently under investigation by the agency.”
The letter comes as congressional Democrats, who are in the minority in both the House and the Senate, have vowed to use their limited tools to challenge what they say is illegal overreach by the Trump administration and Musk’s Department of Government Efficiency across a number of agencies, including USAID, the Federal Emergency Management Agency, the National Institutes of Health and the CFPB.
The National Treasury Employees Union filed two lawsuits this week against Vought, challenging both the takeover of the CFPB and DOGE’s access to its records.
The letter is led by Sen. Elizabeth Warren, of Massachusetts, who is the top Democrat on the Senate Banking Committee and helped create the CFPB after the 2008 financial crash. In the days since Elon Musk posted “RIP CFPB” on X, Warren has been a vocal defender of the agency.
Since it was established in 2011, the CFPB says it has clawed back nearly $21 billion for American consumers, addressing complaints over everything from bank fees to credit cards to student loans.
On Tuesday, Warren implored Federal Reserve Chairman Jerome Powell, who was appearing before the Senate Banking Committee, to work with Congress to keep Musk’s team out of the Consumer Financial Protection Bureau.
“If the CFPB is not there examining these giant banks to make sure they are following the laws, are not cheating consumers, who is doing that job?” Warren asked Powell during the hearing.
“I can say no other federal regulators,” Powell replied.
“No one. In other words thanks to ‘co-president’ Musk and the CFPB Acting Director Vought, Wall Street banks no longer have to show the bank examiners that they’re not illegally opening accounts people didn’t ask for, like what happened with Wells Fargo, or charging illegal junk fees like Bank of America did,” Warren said.
But some Republicans on the panel pushed back on this line of questioning, saying laws that regulate banks haven’t changed and Elon Musk is simply carrying out the work Trump promised on the campaign.
“There’s been a lot of conversation, both in and out of this hearing room today, conversations about a co-president, referencing Elon Musk, referencing the work that DOGE is doing,” said Alabama Republican Sen. Katie Britt. “I think it’s important to remember that President Trump ran on this. I mean, he said we’re going to look for wasteful spending across our government.”
Democrats, in their letter, say they’ll fight to defend the agency.
“We beat back all prior efforts to gut this agency, and we will fight this latest attack in Congress, the courts, and the public,” the lawmakers wrote. “It will fail.”
