Economists Find Math Error Inflating Trump's 'Liberation Day' Tariff Formula

In April 2025, economists including analysts at the American Enterprise Institute identified an error in the formula the Trump administration used to calculate country-specific tariff rates. The formula assumed an elasticity value of about 0.25 for how import prices respond to tariffs, when the appropriate figure based on the underlying research was closer to 1.0, inflating the resulting tariff rates roughly fourfold.

When economists recalculated the tariffs using the corrected elasticity figure, no country's rate exceeded about 14%, and most fell to the administration's 10% baseline. Vietnam, for example, would have faced a 12.2% tariff rather than the 46% the administration announced. The administration also drew criticism for basing its calculation on retail-price sensitivity rather than import-price sensitivity, a methodological choice most trade economists said was unsound regardless of the elasticity error.

Administration officials dismissed the criticism as technical and stood by the broader tariff strategy. The episode fed a recurring pattern in which sweeping economic claims from the White House did not hold up under expert scrutiny, with real consequences for import costs borne by U.S. businesses and consumers.