Reference News website reported on April 9 that the US "New York Times" website published an article titled "The Trump administration cited my research results to justify tariffs, but they got it completely wrong" on April 7. The author was Brent Neiman, a former official of the US Department of Treasury under the Biden administration. The following are excerpts from the article: When I saw the White House announce the tariff policy, my first question was: how did they calculate such high tax rates? After all, "reciprocal tariffs" should mean that we treat other countries in the same way as they treat us. The tariffs of other countries on American goods are far from reaching the level announced by the White House. The next day, the matter involved me personally. The Office of the United States Trade Representative announced the method of tariff calculation and cited an academic paper co-authored by four economists including myself, seemingly to support their data. However, they were wrong, and very wrong. I fundamentally disagree with the current government's trade policies and guidelines. But even at face value, the tariff rate derived from our research results should be much lower than the rate announced by the White House - perhaps only one-fourth. Let us look at the biggest mistake first. The Office of the United States Trade Representative claimed that theoretically, the calculated reciprocal tariff rate could gradually eliminate the trade deficit with "each of our trading partners". Is this goal reasonable? It is not. The trade imbalance between two countries may result from many factors unrelated to trade protectionism. This trade pattern reflects the differences in natural resources, comparative advantages, and development levels between the two countries. The trade deficit data does not indicate, let alone prove, the existence of unfair competition. Can the reciprocal tariff achieve its goal? No, it cannot. The tariff formula of the US government assumes that the US tariff on one country will not affect the import of goods from other countries, while ignoring any impact of US tariffs on US exports. Such assumptions may apply to actions against smaller trading partners, but not to the comprehensive tariff measures announced last week. These tariff measures will obviously invite retaliation and gradually push up the US dollar exchange rate. Both of these factors are likely to suppress US exports. Do the calculated tariff rates seem correct? They are not. The part of the US government's formula directly related to our research is how much the additional costs generated by tariffs will affect the prices of US imported goods. This so-called "pass-through rate" is not a simple number, but depends on the practices of import and export enterprises. Alberto Cavallo, Gita Gopinath, Jenny Tong (phonetic), and I studied the tariffs imposed by the US on Chinese goods in 2018 and 2019. We found that if the US imposed a 20% tariff, nearly 19 percentage points of the new cost would be borne by US importers. This means that the pass-through rate reached about 95%. In short, the increase in the price of US imported goods is almost consistent with the increase in the tariff rate. The Office of the United States Trade Representative cited our research results but proposed a different number from the paper and analyzed a low pass-through rate. Then, the Trump administration plugged the 25% pass-through rate into its formula. Where did 25% come from? Does this number have anything to do with our research results? I don't know. (Compiled/translated by Liu Ziyan) Original source: https://www.toutiao.com/article/7491191921210114623/ Disclaimer: This article represents the views of the author alone. Please express your attitude by clicking the "upvote/downvote" button below.