The economist who revealed how Donald Trump calculated his tariffs explained why the government got it "very wrong".
On April 2, 2025, the president dropped what he called the ‘Liberation Day’ tariffs - an aggressive trade policy that includes a baseline 10% tariff on nearly all imports, with even higher “reciprocal” rates targeting specific countries.
Trump claimed it was a long-overdue step toward U.S. economic independence.
“Our taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore,” Trump declared.
But the policy immediately sparked backlash - not just from international leaders and financial markets, but from the very economists whose work was used to justify it.
Brent Neiman, an economist and former acting assistant secretary of the Treasury under Joe Biden, said he was stunned to learn the new tariffs were based on his own research.
“How on earth did they calculate such huge rates,” was Neiman’s first reaction. According to him, foreign tariffs on U.S. goods were “nowhere near” the levels claimed by Trump’s team.
Then came the kicker: “They got it wrong. Very wrong. I disagree fundamentally with the government’s trade policy and approach,” Neiman said in an op-ed for The New York Times.
“Calculations made by myself and others suggest tariffs should be 'dramatically smaller.'”
He wasn’t done. Neiman explained that trade imbalances between countries can happen for all kinds of reasons - including differing resources and levels of economic output. Trying to equalize them with blanket tariffs, he argued, is a misstep.
To make the point crystal clear, he invoked a quote from Nobel Prize-winning economist Robert Solow: “I have a chronic deficit with my barber, who doesn't buy a darned thing from me.”
His advice to the administration?
“I would strongly prefer that the policy and methodology be scrapped entirely,” Neiman wrote. If not, he said they should “divide its results by four.”
Financial journalist James Surowiecki also dismantled the math behind the tariffs, describing it as “extraordinary nonsense.”
“Just figured out where these fake tariff rates come from,” he posted. “They didn't actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us.”
He pointed to an example: “So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is.”
And it gets worse.
“This tweet is correct, but it's actually worse than I thought: in calculating the tariff rate, Trump's people only used the trade deficit in goods. So even though we run a trade surplus in services with the world, those exports don't count as far as Trump is concerned,” Surowiecki added.
But the White House isn’t backing down. Deputy Press Secretary Kush Desai fired back at critics, telling BusinessToday: “No we literally calculated tariff and nontariff barriers.”
Whether or not the math adds up, the fallout has been immediate. Global markets took a nosedive following Trump’s announcement.
The FTSE 100 saw its biggest single-day drop since August, falling 1.5%. Meanwhile, U.S. indexes like the Nasdaq plummeted by as much as 4.5%, wiping trillions off the global market cap.