Trump’s New Tariff Calculations Resemble ChatGPT’s Approach
Analyzing Trump’s New Trade Policy and Its Implications
When President Donald Trump recently unveiled a new trade policy at the White House, he did so with a striking prop: a large cardboard sign that read “Reciprocal Tariffs.” The announcement was puzzling to many. Trump announced a baseline tariff of 10% on all imports into the United States, which includes even goods from uninhabited territories. Additionally, the tariffs set for specific countries were significantly elevated, allegedly based on the tariffs these countries impose on American goods. However, these claims did not align with various other estimates, leading to confusion about the basis for these tariffs.
Reaction and Economic Impact
Following Trump’s speech, stock markets experienced a significant decline, and consumers braced for sharp increases in prices across a variety of products. This raises the question: Where did the Trump administration derive the figures for these tariffs? It appears that the calculations may stem from a simplified formula recommended by several major AI chatbots, a method that lacks nuance.
Methodology Behind the Tariff Calculations
Economist James Surowiecki dissected the math behind the tariffs and found that it could be replicated by taking a country’s trade deficit with the U.S., dividing that number by total exports to the U.S., and then halving the result. This generated what he termed a "discounted reciprocal tariff." The White House later published its own formula but was criticized for appearing to simply rehash Surowiecki’s approach.
Several users on social media discovered that if they prompted AI chatbots like ChatGPT, Claude, or Gemini with a request for a straightforward method to balance trade deficits, the result was remarkably similar. They consistently suggested a formula involving deficits divided by exports, leading to a potential justification for the tariffs.
Consistency Among AI Responses
When The Verge tested these queries across various chatbot platforms, they found consistent recommendations. Although some users like Grok and Claude suggested halving the resulting figure to make it more reasonable, overall, the suggestions remained largely uniform.
Variations and Cautions from AI
While variations exist in how each platform advised users on applying a baseline tariff, all chatbots cautioned that the approach had its complications. For instance, Gemini provided a thorough explanation outlining the potential pitfalls of such straightforward calculations. It suggested that although this method appears simple, the complexities of real-world economics present many challenges, warning that tariffs may not effectively rectify trade deficits.
Despite uncertainty about whether Trump’s team directly utilized an AI tool for crafting trade policy, it remains essential to understand how these chatbots reached their conclusions. The effects of these tariffs, which are scheduled to take effect soon, will be closely monitored, especially regarding their consequences for international trade and the economy.
Implications for Global Trade
The tariffs, starting on April 5th, 2025, have spurred debate among economists and analysts regarding their potential implications. Many experts argue that relying on tariffs as a solution for trade deficits could backfire, resulting in unintended consequences in global trade dynamics.
In summary, the introduction of these tariffs under Trump’s administration is raising eyebrows both for its methodology and potential economic effects. As the world watches, there is great curiosity about whether this trade policy will achieve its intended goals or simply complicate the existing economic landscape.
