Did Trump Team Manipulate Tariff Formula To Achieve Higher Rates? Experts Weigh In As They Think 'Whole Thing Was Rigged'

The White House’s recent tariff calculations are reportedly based on an error that inflated the rates by approximately four times, according to a conservative think tank.

What Happened: The White House used incorrect values in its tariff formula, leading to a significant overestimation of the rates, finds the American Enterprise Institute (AEI). The AEI scholars, Stan Veuger and Kevin Corinth, discovered that the White House used retail price changes instead of import price changes in its calculations. This error resulted in a fourfold increase in the tariff rates, Fortune reported.

Veuger criticized the lack of professionalism, stating, “It’s pretty bush league.” He and Corinth argued that the incorrect formula has no basis in economic theory or trade law. "For such a big policy you'd expect a much higher level of professionalism,” Veuger told the publication.

The White House estimated the import price elasticity at 0.25, whereas the correct value should have been 0.945, stated the AEI.

The White House did not immediately respond to Benzinga’s request for comment.

Another AEI economist, Derek Scissors, suggested on CNBC that the administration intentionally manipulated the math to achieve higher tariffs. "This whole thing was rigged," indicated Scissors.

Following the announcement of the new tariff regime by President Donald Trump, global markets experienced significant downturns. The scholars hope that the White House will correct the mistake and lower the tariff rates, potentially boosting the economy and helping to prevent a recession.

SEE ALSO: Donald Trump Predicts A Market Boom With $6-7 Trillion In Inflows After The Selloff; Elon Musk, Mark Zuckerberg, And Jensen Huang Lost $34 Billion In A Single Day; Eric Trump Suggested Buying Bitcoin

Why It Matters: The White House faced controversy for using a simplistic formula to calculate "reciprocal tariffs." They took the U.S. trade deficit with a foreign country, divided it by that country's exports to the U.S., then halved the result to set the tariff rate. They defended the calculations, stating that using retail prices was justified as consumers base their purchasing decisions on these prices.

However, Veuger and Corinth, referencing research by Alberto Cavallo, Harvard Business School professor, contended that the calculations misunderstood the distinction between retail prices and import prices.

This isn’t the first time the Trump administration’s tariff calculations have been criticized. Earlier this month, Wedbush analyst Dan Ives compared the administration’s tariff calculations to a high school economics project, suggesting they were overly simplistic and failed to consider complex economic factors.

The recent findings by AEI scholars further underscore the concerns about the administration’s approach to tariffs and their potential impact on the global economy.

• READ MORE: Kevin O’Leary Doesn’t Believe Tariffs Will Lead To A Recession, Says ‘Trump Likes To Actually Let You Watch Sausage Being Made’ – Benzinga

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.