> The formula for the tariffs, originally credited to the Council of Economic Advisers and published by the Office of the United States Trade Representative, does not make economic sense.

There is a 2024 paper (40 pages) by Stephen Miran, chair of the Council of Economic Advisers, https://news.ycombinator.com/item?id=43589350

  The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs... Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects.

https://financialpost.com/news/stephen-miran-economist-trump...

> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”

Trying to make economic sense of a political action makes no sense. Trumps's goal is to disrupt global trade.

Trump said he is open to negotiation on these tariffs. The factor of four difference is likely intentional padding. This way, he can:

1.) Shock the market into dropping several hundred points on the S&P and Nasdaq indices, thereby making quite a bit of money on the way down and then back up again. and

2.) Lower tariffs in exchange for patronage from countries or specific businesses that want a port opened in this new trade firewall.

This is what i was thinking of yesterday after folks on HN pointed me to the "official formula" from the govt. I could not understand why the "elasticity" parameters were chosen in such a manner as to cancel out. Now it seems it was chosen deliberately to give "room for maneuvering" when the concerned countries inevitably come to the negotiating table; never mind that the formula itself is not economically sound. It also explains why Trump and his Team keep saying the "economic hardships" will be short-term and will get better soon.

Trump was the emotional vote, and he is governing emotionally.

Most people's thinking here seems to be clouded by political ideologies and anger over their stocks being down. Game theoretically Trump has a long history of basically playing the perfect strategy of extreme unpredictability, willingness to take a loss for the purpose of making a point, but sufficient reliability if a deal is agreed upon that he benefits from the most. He's the one who'll brake the last in a game of racing to the edge of a cliff - always. That's why he will succeed and the US will keep the upper hand geopolitically and economically. But the world will change also - that's actually why he's playing so tough. The cake is being divided anew and China _will_ get a much larger portion. His goal is not to prevent this - because he can't - his goal is to secure an as large as possible piece for himself and the US.

The tariffs are for forcing the entire world to renegotiate anything that he is interested in. And that plan will work. They will ALL negotiate, with him holding the upper hand.

PS: Many of the replies suggest that countries can achieve independence of US companies and the US Dollar. While that is possible they forget a key weakness of democracies. Politicians are elected based on short-term benefits and avoidance of suffering. All those required actions to reach independence require serious long-term efforts that detrimentally impact the comfort of the respective voting population at least short-term. That's why those adjustments probably won't happen. Trump knows that and takes advantage of it. Countries not governed by a democratic system are usually led by an elite who'll be indifferent of pretty much anything we are debating here - they just want to obtain more power and wealth. And they'll be achieving this easier when they cooperate with who is factually the most powerful man on the planet.

>The trade deficit with a given country is not determined only by tariffs and non-tariff trade barriers, but also by international capital flows, supply chains, comparative advantage, geography, etc.

All of those other things, minus geography are influenced by the terrifs. Terrifs make economic incentives to invest in America, for America to gain comparative advantages, etc.