Odaily News Scholars at the American Enterprise Institute (AEI) found that the Trump administration's recently announced tariff policy contained a major miscalculation. The White House mistakenly used retail price elasticity (0.25) in the formula instead of the import price elasticity (0.945) that should have been used, resulting in the tariff rate being overestimated by about four times.
If the correct value is used, Cambodia's 49% tariff rate will be reduced to 13%, Vietnam's 46% will be reduced to 12.2%, and most countries will even be reduced to the 10% minimum tariff set by the White House. This error has caused significant market fluctuations, with US, Asian and European stock markets all falling significantly. Some AEI economists accused the White House of deliberately manipulating the high tariffs expected by Trump.
The White House has argued that using retail prices is reasonable and said the actual tariff rate should be higher.