"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
>It explains why they singled out Reunion from France, it has a separate ccTLD
It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
This is is why it has a separate ccTLD by the way.
This blue sky thread is just an incredible example of motivated reasoning.
> It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
Yes, obviously, it's ISO 3166-1 but that's a batshit way of assigning tariffs. To the point I suspect it's a LLM.
Norfolk Island? The island with 3000 people, which in the context of international trade is a speck at the side of Australia. Or the uninhabited Heard Island and McDonald Islands with zero trade?
If Reunion and Norfolk Island are to be considered separately from their mainlands, where are the tariffs for Easter Island (Chile)? It has more people than Norfolk and probably more trade, it's 3700ish km from the administrative region it belongs, so it geographically distinct like Reunion.
Anyone (with a pulse) tasked with calculating the tariffs would see this and think "I have to remove these outliers". So the two options are:
A. Someone took the ISO 3166-1 codes and brainlessly calculated their batshit formula without noticing that HM doesn't produce anything. They did not instead do the more natural thing, go from highest imports to lowest which would've eliminated HM and most anomalies. They didn't even check their work.
B. They asked an LLM, which calculated this in the most naive way possible one-shot.
I dunno governor, this looks like vibecoded Excel spreadsheets.
>If Reunion and Norfolk Island are to be considered separately from their mainlands, where are the tariffs for Easter Island (Chile)?
Easter Island's mailing address says Chile. Norfolk Island mailing address does not include Australia, nor does Reunion include French.
>They asked an LLM, which calculated this in the most naive way possible one-shot.
Whats the connection between LLMs and domain name endings or whatever again? Like why does using them necessitate the use of LLMs?
Let's think through it from the ground up... How would you expect them to come up with a list of countries? Are they supposed to just get a group of people together and compile a list of countries they can think of by memory? Clearly they will refer to some standardized list.
Its worse than that. Its like saying you must have used chat gpt because you answered that 2+2= 4 and gasp so do the LLMs! Nevermind that its just the obvious answer to the question.
Lets see the prompt. The prompt further down in the thread that reproduces it was asking how to use tariffs to balance trade deficits with a 10% minimum. Is there any other answer then set the rate such that the deficit goes away or 10%, whichever is greater? No. That's just the answer to the question and is why ALL LLMs give the same answer.
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
Are you implying there is a very small chance that if someone posted in 2018 reddit "We should tariff Algeria at 35% because X", the LLM that the administration may have used would have agreed with random redditor?
It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to. This level of hyperbole is why reading about anything to do with the two of them is really exhausting.
People are saying they literally used the trade deficit and the formula they published that they claim doesn’t do this multiplies that value by 4 and then 0.25. Yeah… that is what we are dealing with.
> Elon and Trump are sitting in the whitehouse asking Grok what to
Not perhaps Elon or Trump themselves (doubt Trump can actually use a computer), but it could very well be one of the teens like the so-called "Big Balls" that apparently have their hands in everything.
> This level of hyperbole is why reading about anything to do with the two of them is really exhausting
Almost as exhausting as their daily actions / tweets / rants.
>It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to.
A similar approach to a close-ended question.
The original screenshot doesnt show the prompt. The one reproducing it asks for a tariff policy to eliminate trade deficits with a 10% minimum. Umm... hello? There is only one answer to that. The greater value between 10% and a rate based on the deficit. Of course the Trump policy and all 4 LLM answers agree. The answer is determined by the question.
Its like accusing little Timmy of cheating on his math homework because he said 2+2=4 and -- GASP -- so do all the LLMs!
Wow. So they came up with zero-effort estimates of the tariff rate which would balance the trade deficit. The method is like something you'd be asked to criticise in A level economics.
Then they incorrectly labelled these numbers as reciprocal tarrifs implying this is what other countries charge the US.
The worst of it is that all of this misinformation will be happily accepted as truth by so many people. It's now going to be almost impossible to have people realise the truth, especially those people who support Trump. Ugh.
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
[0] https://ustr.gov/issue-areas/reciprocal-tariff-calculations