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| <title>Trump Tariff’s Effect on Inflation and Responses</title> | |
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| <h1>Trump Tariff’s Effect on Inflation and Responses</h1> | |
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| <h2>Introduction</h2> | |
| <p>Tariffs, particularly those implemented by the Trump administration, have been a contentious topic. This website aims to analyze the impact of these tariffs on consumer costs and inflation, and to explore potential responses from targeted countries.</p> | |
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| <h2>Tariffs and Consumer Costs</h2> | |
| <p>Tariffs primarily increase costs for consumers. While proponents argue that tariffs can subsidize income tax, the reality is that the revenue generated from tariffs is insufficient to cover the income tax burden. This assertion is supported by the data and calculations presented below.</p> | |
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| <h2>Weighted vs Value</h2> | |
| <p>Understanding the difference between weighted and value-based calculations is crucial. Weighted calculations are based on the proportion monetarily, while value-based calculations are based on the proportion in the Consumer Price Index (CPI). This distinction helps in accurately measuring the impact of tariffs on inflation.</p> | |
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| <h2>Methods</h2> | |
| <p>The analysis was conducted using USTR Trade Regulations based on 2018 data. CPI categories were categorized with the help of Deepseek, and Python code was used for calculations. The code is available on <a href="https://github.com/BIRD-Laboratories/TrumpTariffs/">GitHub</a>.</p> | |
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| <h2>Targeted Countries' Responses</h2> | |
| <p>Targeted countries like China can respond by increasing automation and gradually devaluing their currency. This strategy not only mitigates the impact of tariffs but also benefits other markets, especially developing countries with limited spending power.</p> | |
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| <h2>Results (29 Nov Version)</h2> | |
| <p>The results from the 29 Nov version of the analysis are summarized in the tables below:</p> | |
| <table class="data-table"> | |
| <tr> | |
| <th>Scenario</th> | |
| <th>Weighted Average Tariff Rate (All Countries)</th> | |
| <th>Weighted Average Tariff Rate (China Only)</th> | |
| <th>Net Inflation Impact</th> | |
| <th>Total Expected Tax Revenue</th> | |
| <th>Percentage of Tariff Revenue relative to Income Tax Revenue</th> | |
| </tr> | |
| <tr> | |
| <td>Status Quo</td> | |
| <td>6.89%</td> | |
| <td>15.45%</td> | |
| <td>1.0137</td> | |
| <td>$83.45</td> | |
| <td>4.96%</td> | |
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| <td>Trump Tariffs Plan Circa Nov 2024</td> | |
| <td>25.20%</td> | |
| <td>25.45%</td> | |
| <td>1.0788</td> | |
| <td>$308.45</td> | |
| <td>18.32%</td> | |
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| <h2>Detailed Analysis</h2> | |
| <p>The detailed analysis for the 29 Nov version is as follows:</p> | |
| <h3>Status Quo</h3> | |
| <pre> | |
| Enter the total consumption value from China (in dollars): 540 | |
| Enter the total consumption value from Canada (in dollars): 326 | |
| Enter the total consumption value from Mexico (in dollars): 358 | |
| Enter the tariff rate for Canada (as a decimal, e.g., 0.10 for 10%): 0 | |
| Enter the tariff rate for Mexico (as a decimal, e.g., 0.10 for 10%): 0 | |
| Enter the extra tariff rate for China (as a decimal, e.g., 0.05 for 5%): 0 | |
| Enter the total consumption value from USA (in dollars): 14000 | |
| Enter the total income tax revenue (in dollars): 1684 | |
| Extra CPI (Value Adjusted): 1.0137 | |
| Extra CPI (Weight Adjusted): 1.0060 | |
| Total Tariff Revenue: $83.45 | |
| Percentage of Tariff Revenue relative to Income Tax Revenue: 4.96% | |
| </pre> | |
| <h3>Trump Tariffs Plan Circa Nov 2024</h3> | |
| <pre> | |
| Enter the total consumption value from China (in dollars): 540 | |
| Enter the total consumption value from Canada (in dollars): 326 | |
| Enter the total consumption value from Mexico (in dollars): 358 | |
| Enter the tariff rate for Canada (as a decimal, e.g., 0.10 for 10%): 0.25 | |
| Enter the tariff rate for Mexico (as a decimal, e.g., 0.10 for 10%): 0.25 | |
| Enter the extra tariff rate for China (as a decimal, e.g., 0.05 for 5%): 0.1 | |
| Enter the total consumption value from USA (in dollars): 14000 | |
| Enter the total income tax revenue (in dollars): 1684 | |
| Extra CPI (Value Adjusted): 1.0788 | |
| Extra CPI (Weight Adjusted): 1.0220 | |
| Total Tariff Revenue: $308.45 | |
| Percentage of Tariff Revenue relative to Income Tax Revenue: 18.32% | |
| </pre> | |
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| <h2>Context: Why Trump Implemented Tariffs</h2> | |
| <p>The Trump administration implemented tariffs primarily as a tool to address what it perceived as unfair trade practices by major trading partners, particularly China. The administration argued that China was engaging in intellectual property theft, forced technology transfers, and unfair subsidies to its industries. By imposing tariffs, the administration aimed to level the playing field and protect American industries.</p> | |
| <p>However, the implementation of tariffs has had significant economic repercussions. While the administration hoped that tariffs would generate revenue to offset income tax, the data shows that the revenue generated is insufficient. Moreover, tariffs have led to increased costs for consumers, contributing to inflation and reducing purchasing power.</p> | |
| <p>The targeted countries, such as China, have responded by adopting strategies to mitigate the impact of tariffs. These strategies include increasing automation, which reduces labor costs, and gradually devaluing their currency to make their exports more competitive. These responses not only help the targeted countries but also benefit other markets, particularly developing countries with limited spending power.</p> | |
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| <h2>Conclusion</h2> | |
| <p>The data clearly shows that tariffs increase consumer costs and do not effectively subsidize income tax. Targeted countries can mitigate the impact through strategic responses, but the overall effect on inflation remains significant. Further improvements in weighting and categorization could provide more accurate insights.</p> | |
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