ChatGPTariff?

Bill Statler

US, Thu, 03 Apr 2025 05:49:55 +0200 from Bunny of Doom

Interesting. Three different AIs come up with the same suggested tariff plan that Trump just implemented.

Matthew Sheffield wrote the following post Thu, 03 Apr 2025 04:30:06 +0200

It's starting to look like Trump had Big Balls or some other intern use ChatGPT to come up with his tariff policy. It's not "reciprocal" at all. The numbers are totally made up.

Someone asked a stupid question to an LLM and then ignored the prompt saying it was stupid.

The biggest risk of GenAI has always been the human idiots behind it.

(Screencaps via @krishnanrohit at dead bird)

The image showcases a detailed conversation explaining a method to calculate tariffs based on trade deficits to help level the playing field for the U.S. in international trade. Here's a breakdown of the content: The approach starts with a straightforward <br>(though potentially naïve) formula for determining the tariff rate: Tariff Rate (%) = max(10, (Trade Deficit ÷ Total Imports) × 100) This formula aims to calculate the tariff rate as a percentage based on the trade deficit in relation to the total <br>imports from a specific trading partner. The idea behind this formula is that if the trade deficit exceeds 10% of the total imports from a country, the tariff should rise proportionally. However, the tariff rate will never fall below 10%, ensuring a <br>minimum level. For example, consider the U.S. running a $20 billion deficit on $100 billion worth of imports from a country. According to the formula: (20 billion ÷ 100 billion) × 100 = 20% Thus, the tariff rate would be 20%. If the deficit were lower, <br>say 5%, the tariff would still be set at the minimum of 10% because of the imposed floor. The method assumes the relationship between the trade deficit and the tariff rate is straightforward. In practice, however, trade dynamics are far more complex and <br>influenced by various factors such as retaliatory measures, international trade agreements, and supply chain nuances. Therefore, this method provides a simple, proportional solution but ignores the broader context.

An image of a prompt and response on Google Gemini that reads as follows: Prompt: Okay, let's break down the idea of using tariffs to achieve an ＂even playing field＂ defined as eliminating the US trade deficit. While the goal of balancing trade is <br>understandable, devising an ＂easy way＂ to calculate tariffs to achieve this is extremely complex, and most economists would argue it's not feasible or desirable for several reasons. However, let's outline a highly simplified conceptual approach based only <br>on the numbers, ignoring the vast real-world complexities and consequences: Simplified (and Problematic) Calculation Idea: Identify the Bilateral Deficit: Determine the trade deficit the US has with a specific country (Country X). Deficit_X = Value of <br>Imports from X - Value of Exports to X Target Reduction: The goal is to reduce imports from Country X (or increase their cost to US buyers) by the amount of the deficit, so that the value effectively balances out. Calculate Required Tariff (Ignoring <br>Economics): If you assume, very unrealistically, that a tariff directly reduces the value of imports by a corresponding percentage (which it doesn’t – it increases the price), you could try: Required Reduction % = Deficit_X ÷ Value of Imports from X

An image of a prompt and response from Claude/3.7 Sonnet. Prompt: What would be an easy way to calculate the tariffs that should be imposed on other countries so that the US is on even-playing fields when it comes to trade deficit? Set minimum at 10%. <br>Response: To calculate tariffs that could theoretically level the playing field for trade deficits, I'd suggest a straightforward approach based on the trade imbalance percentage: Calculate the bilateral trade deficit with each trading partner: Trade <br>Deficit = US Imports from Country - US Exports to Country Express this as a percentage of total bilateral trade: Deficit Percentage = (Trade Deficit / Total Bilateral Trade) × 100 Apply a tariff rate that corresponds to this percentage, with your minimum <br>10% floor: Tariff Rate = max(Deficit Percentage, 10%) This creates a proportional response where countries with larger trade surpluses with the US would face higher tariffs. For example: If Country A has a 25% trade surplus with the US (meaning the US has <br>a 25% deficit), apply a 25% tariff If Country B has a 5% trade surplus with the US, apply the minimum 10% tariff This method is relatively simple to calculate and directly ties tariff levels to trade imbalances. However, I should note that economists <br>generally caution that trade deficits alone don’t necessarily indicate unfair trade practices, and tariffs can have complex economic consequences including increased consumer prices and potential retaliation.

Bill Statler

Fri, 04 Apr 2025 04:43:48 +0200 from Bunny of Doom

Snopes verifies this math is exactly what Trump did.

Posts online correctly cracked the formula for Trump's tariffs

Despite a White House spokesman claiming otherwise, the published formula matched what social media users calculated.

Haakon Meland Eriksen (Els Mussols)

Fri, 04 Apr 2025 07:03:07 +0200 from Streams at els Mussols

Another example: The U.S. trade deficit with Norway was $2 billion ($4.6 billion of exports vs. $6.6 billion of imports). Dividing $2 billion into $6.6 billion equals 30% — the number on the White House's chart under "Tariffs charged to the U.S.A."

Thank you for sharing.

Haakon Meland Eriksen (Els Mussols)

Sat, 05 Apr 2025 11:05:10 +0200 from Streams at els Mussols

I just this video from Bloomberg (I think), it put Bangladesh vs USA into the trade difference equation. Bangladesh is a poor country and cannot buy much from the USA. This is not tariffs.

Haakon Meland Eriksen (Els Mussols)

Sat, 05 Apr 2025 11:14:20 +0200 from Streams at els Mussols

The tariff equation explained by the US government itself https://ustr.gov/issue-areas/reciprocal-tariff-calculations

Bill Statler

Sat, 05 Apr 2025 17:38:14 +0200 from Bunny of Doom

Snopes has a good analysis of these calculations:

Posts online correctly cracked the formula for Trump's tariffs

Despite a White House spokesman claiming otherwise, the published formula matched what social media users calculated.

Basically, the fancy formula with Greek letters is obfuscation. Two of the terms in the denominator are 4 and 0.25, so they cancel out. The result is just the trade deficit divided by total imports.

Haakon Meland Eriksen (Els Mussols)

Sat, 05 Apr 2025 11:23:01 +0200 from Streams at els Mussols

The tariffs by country list from the US https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-I.pdf . Bangladesh 37% tariffs.

Ruby Arsenic

Mon, 07 Apr 2025 00:36:37 +0200 from Bunny of Doom

There's a bit more information on the tariff equation at these sources:

AEI (American Enterprise Institute, a conservative think tank) thinks the whole equation is based on a faulty concept, and also says that there's evidence (a journal article) that the factor of 0.25 in the denominator is incorrect, and should be 0.945. A lead author of the journal article has been discussing this on "X".

https://x.com/albertocavallo/status/1907974351967633570