Duties, here is the formula (wrong) used by Trump to calculate them and because it will not help the US economy

Donald Trump has imposed « mutual » duties towards the European Union of 20%. But how was this percentage calculated? The formula takes into account the commercial deficit of 2024. Deficit that in the case of the European Union was worth 235.6 billion dollars, according to the Usus Bureau data. This value has been divided by the total imports of the United States from the EU (605.8 billion): the result is 0.39, or 39%. This percentage was divided by two: It is the « discount » you are talking about Trump. So you reach 19.5% then rounded up to 20%. And this is the duty imposed on all imports from the European Union and therefore also from Italy.

« Trump accused the EU of imposing duties of 39%, but it is a completely invented number. Think that the commercial deficit towards a country is necessarily caused by commercial barriers imposed by this country has no economic foundation », he explains Tommaso Monacelli, full professor of macroeconomics at the Bocconi University of Milan.

Trump’s populist strategy

«All the reasoning under the basis of the commercial war started by Trump is a populist operation behind which There is very little economic logic and a lot of propaganda. So the American president and his councilors believe that if the EU sells in the United States more than they buy it must necessarily be the result of some incorrect practice, which in reality does not exist « , adds Monacelli. Commercial deficits as well as surplus are not intrinsically good or bad, recalls the economist: « The United States have a strong commercial deficit because they have a very sustained internal demand and a limited quota of savings Compared to investments. They have a great ability to easily transform savings into investments. And this, for example, is a strong point of the American economy. Vice versa The EU does not have this ability».

Because duties will not reduce the US commercial deficit

The contradiction is that Trump deludes himself to use duties as a tool to break down the US commercial deficitbut risks getting exactly the opposite. «Its protectionist policy will bring more inflation and greater interest rates. So a stronger dollar and this will eventually increase the commercial deficit », underlines Monacelli. « If it is true that duties can have a small protective effect for some sectors, meeting what were the requests of a slice of the Trumpian electorate, this takes place at the expense of exports. And a contraction of exports, combined with the growing uncertainty generated by the commercial war can become a Boomerang very dangerous for the American economy»Explains Bocconi’s teacher. If they really want to reduce their commercial deficit, the United States should increase savings and above all to reduce tax expansion. « But the promises of cutting the taxes made by Trump in the election campaign go exactly in the opposite direction, » recalls Monacelli.

The opportunities for Europe

This situation of great uncertainty and the consequent escape of capital from the USA, according to Monacelli, represent a great opportunity for Europe. « The European Union can draw enormous advantages and precisely for this reason it must not end in turn inside the protectionist barriers – concludes the economist -. But he must react by strengthening commercial agreements with other areas of the world. As Francesco Giavazzi on the Corriere della Seraa greater diversification of commercial outlets, incentives for innovation and a flexible monetary policy, would allow the European Union to compensate for the negative repercussions of the US duties, much more than they cannot do too drastic protectionist countermeasures « .