Economists Quoted on Trump Tariffs Denials

Various reactions regarding the new import duty tariffs to the United States continue to emerge. One of them is that economists deny that their ideas support the imposition of the tariffs. In fact, their names were cited as references in the formulation of those tariffs.

Import duties (BMI) of 10 percent for almost all commodities to the US will take effect starting Saturday (5/4/2025). Beginning Wednesday (9/4/2025), there will be an additional increase of up to 50 percent for commodities from various countries to the US.

In an official statement, President Donald Trump's administration cited the papers of several economists as the basis for tariff calculations. It turns out, the economists stated that their work had been misunderstood.

An economist at Purdue University, Anson Soderbery, was one of the individuals whose name was misused. He was troubled as he had to explain to his colleagues who asked whether he supported mass BMI.

His paper on import elasticity was used as one of the references for Trump's formulation of BMI. However, according to Soderbery, the Trump administration misunderstood his paper.

Massive BMI will not eliminate the trade balance deficit. This is because each industry reacts differently to BMI. "Using a paper to justify universal and uniform tariffs, in my opinion, is somewhat confusing," he said.

He told the Financial Times that there are other ways to reduce the deficit. Mass BMI is certainly not one he recommends.

Harvard Business School economist Alberto Cavallo also said his paper was misused by the Trump administration. If his modeling had been followed correctly, Trump's BMI rates would have been four times lower.

Cavallo's paper, along with three of his colleagues, was published in 2021. The United States Trade Representative (USTR) cited the paper as one of the references for determining BMI tariffs. Cavallo does not know how the USTR or other agencies within the U.S. government referenced their work.

Another paper cited is the work of economist Pau Pujolas from McMaster University in Canada, along with several colleagues. The paper analyzes the 2018 US-China trade war.

The paper is considered to have changed the way we think about trade wars. "Our paper shows that bilateral trade deficits change the way we think about trade wars. I suspect that's why the Trump administration is using this paper," he said.

Pujolas and his colleagues’ paper uses very big data. They conclude that on paper, the US could win the trade war. Unfortunately, the BMI in the first Trump administration was poorly designed. As a result, the US and China both lost the trade war.

Pujolas and his colleagues also said that the US does not need to impose BMI on all exporters. Furthermore, the BMI is only a maximum of 25 percent. Making it higher is a bad idea for the United States.

"That's the difference between our research and the table (of BMI rates) that President Trump showed. Our conclusions are based on complex calculations with computers. We use supercomputers to find the optimum rates," Pujolas said.

Meanwhile, the Trump administration, according to Pujolas, chose a shorter method. Not only Pujolas, the US government also admitted that the basis for calculating the new tariffs was indeed concise. Only dividing the US deficit with its partners and exports to that country.

"We also suggested that the European Union not be subject to tariffs. They (the Trump administration) are imposing them," Pujolas said.

Denial, and confusion, was also expressed by Jack Rossbach of Georgetown University. His paper was cited by USTR as a reference for determining BMI.

"I think the announcement shows that we are in a situation where it is less about specific numbers and more about signals about how the administration expects things to work. If you want continued access to the US market, the administration is telling countries to come to the table one by one and start making offers," he said. (AFP/AP)