Prayerful Ponderings
What is Trump's Tariffs: What He is doing and Why he is Wrong
Why Trump's Tariff Formula is Wrong.

(Disclaimer: This is my own thinking, pulling together facts, news, histories and critical analysis.)
There are three things that I am going to try to explain here.
The first is trump's tariff formula, and what it is and what it means.
The second is the factors that trump's tariff formula does not take into account and therefore why it is wrong.
But the third thing that I'm going to try to explain and am really saying is what it is that Trump is actually trying to do with his tariff wars.
So here we go...
1. Trump's tariff formula and what it means.
Trump's tariff formula determines the tariff rate by dividing the difference between U.S. exports (X) to a country(i) and U.S. imports(M) from that country(i) by the product of elasticity(e), a scaling factor(φ), and the imports from that country(Mi).
Δτ₁ = (Xi - Mi)÷ (e × φ × Mi)
The larger the trade deficit (when mᵢ is greater than xᵢ), the higher the resulting tariff.
This formula simplifies global trade into a zero-sum dynamic, suggesting one country's gain comes at another's expense, and, all things being equal, he's right.
2. Trump's tariff formula - why it is wrong.
The catchphrase, is "all things being equal". Trump believes in meritocracy as a universal ideal. That is that all people in the world can succeed if they work hard enough. And furthermore, that every country in the world has an equal opportunity to increase.
This is only one reason why his formula is wrong. Even if the ideal of meritocracy was real, Trump's formula still would not work because of the huge inequalities that exist in our world.
For example, China and India both have enormous intellectual and manufacturing capacities, both of which America lacks. This is why electronics and clothing from China and India will always cost less than those manufactured in America.
America simply cannot compete with China and India's intellectual and manufacturing capacities.
America's population is 340 million with a growth rate of 0.98%
Both China and India's population dwarfs America at 1.4 billion each. Put another way, both China and India have a population over four times that of American! While China's growth rate is shrinking by 0.1% annually, India's population is still growing by 0.8% annually.
3. What is Trump actually trying to do with his tariff wars.
In very simplest terms, Trump is trying to reset the world economic system, such that the US dollar remains the universal reserve currency. In recent years, there has been enormous pressure to make cryptocurrencies a world standard. The reason for these two conditions goes back to what actually backs a world standard currency.
Up to the First World War, world currencies, were based upon gold as a standard. The First World War, the great depression and the second World War changed all that.
During Truman's presidency, the US dollar emerged as the world reserve currency, which meant that commodities traded worldwide, were priced in US dollars, which was based not on gold, but on the enormous resource and manufacturing capacity America had demonstrated during the Second World War.
This was the introduction of deficit financing, but based upon tangible resources.
By the end of the 1970s, confidence in the u s dollar, had waned in the world markets, so in order to shore up confidence, the United States once again shook up the global markets.
Once again, global markets have lost confidence in the US dollar as a global reserve currency. With debt to earning ratios averaging well above 100% as high as 115% in some cases, it is clear that a reserve currency based upon potential earnings and productivity is no longer feasible nor sustainable for the US.
The world is increasingly looking to cryptocurrencies as a viable alternative albeit with some reservations.
But the world trade organization has legitimatized cryptocurrencies because they are backed by computer capacities.
Cryptocurrencies gain value by a process of computational capacity known as bit mining. Simply put, every computation requires energy. Thus it follows that the more energy you have, the more computational capacity thus the more value.
Cryptocurrencies have already demonstrated that they will outstretch the current US dollar very quickly.
Thus if the US wants to maintain its position as the world reserve currency, it has two problems it has to solve very quickly:
The first is become competitive with China and India in terms of intellectual and manufacturing capacities. One way of doing this is to blockade their products from the world's largest consumer market; the US market.
The second problem is to secure the US place in the energy production which is now tied to computational capacities. In other words, own, produce and keep more computers running than anyone else. Not just phones and laptops; cars, appliances, everything with a chip connected to the internet. The idea is to own the most virtual cyberspace.
That is how the US dollar can make the transition to an internet based currency. If successful, it will remain the world reserve standard.
Every stock exchange in the world is now entirely dependent upon computational capacity and the internet.
So Trump does have a plan, and his plan does make sense, even if it is based on an erroneous formula. Remember that he did not come up with this formula or plan by himself as much as he would like us to think that. He is and has always been the front man.
It remains to be seen however, if he can complete his plan in time. He has four years...






