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Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →In April 2025, the Trump administration’s announced country-specific “reciprocal” tariff calculation was described as a country’s U.S. goods-trade deficit divided by U.S. goods imports from that country, with a 10% global floor. Axios reported that asking ChatGPT how to calculate a tariff to eliminate a bilateral trade imbalance produced the same basic formula. That resemblance does not show that the administration used ChatGPT—or that the formula measures actual foreign trade barriers.
What was the tariff formula?
Axios described the calculation as the U.S. goods-trade deficit with a country divided by U.S. goods imports from that country, subject to a 10% global floor. In simplified form:
Reported rate calculation: bilateral U.S. goods-trade deficit ÷ U.S. goods imports from that country, with a 10% minimum.
That is a ratio based on trade flows. It is not a direct measurement of the foreign country’s tariff rate, and it does not include a measure of the specific tariffs or other barriers that country applies to U.S. exports. Axios reported that a ChatGPT answer to a similar question produced the same formula; its report is not evidence that ChatGPT authored, advised on, or influenced the policy.
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How did the administration describe the policy?
A February 13, 2025 White House memorandum framed the effort as finding equivalent reciprocal tariffs and directed officials to examine trade arrangements and non-tariff measures. The memorandum’s review scope included policies affecting goods trade, such as sanitary rules, technical barriers, government procurement, export subsidies, intellectual-property protection, digital trade barriers, and anticompetitive conduct. That was the stated scope of the review; it is broader than the reported ratio used to calculate country rates.
FactCheck.org reported the USTR’s rationale: persistent trade deficits were treated as the result of a combination of tariff and non-tariff factors, and a tariff level consistent with balancing bilateral trade was used as a proxy for their combined effect. The distinction matters: the administration presented the policy as reciprocal, while the reported calculation relied on bilateral goods balances rather than a country-by-country measurement of actual barriers.
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How the EU example illustrates the arithmetic
FactCheck.org reported USTR figures for 2024 showing a U.S. goods-trade deficit with the European Union of $235.6 billion and U.S. goods imports from the EU of $605.8 billion. Dividing the deficit by imports gives about 38.9%, rounded to 39%. The April 2025 announcement chart listed a discounted reciprocal rate of 20% for the EU.
| EU example | Figure | What it represents |
|---|---|---|
| U.S. goods-trade deficit, 2024 | $235.6 billion | USTR figure reported by FactCheck.org |
| U.S. goods imports, 2024 | $605.8 billion | USTR figure reported by FactCheck.org |
| Deficit divided by imports | 38.9%, rounded to 39% | Arithmetic using the reported 2024 figures |
| EU rate on the April 2025 announcement chart | 20% | Announced discounted reciprocal rate reported by FactCheck.org |
FactCheck.org also cited a World Trade Organization EU trade-weighted average tariff of 2.7%; its article did not specify the year for that figure. The article noted that EU value-added tax (VAT) rates are around 20% and vary by country. Neither the WTO tariff figure nor VAT was an input in the U.S. deficit-to-imports calculation. VAT applies to domestic production as well as imports, so comparing its headline rate directly with a tariff rate can mislead.
Why economists questioned what the calculation measures
A bilateral goods deficit by itself does not establish the presence or size of trade barriers. It can also reflect demand, specialization, comparative advantage, and other economic forces. The reported formula therefore cannot tell a reader what tariffs or non-tariff barriers a trading partner actually imposes.
- It used goods trade, not the whole trade relationship. The calculation excluded services, where the United States runs surpluses.
- It did not measure the stated barriers directly. The ratio contained no term for actual foreign tariffs or other barriers on U.S. exports.
- It treated trade as if it would respond in a simplified way. In practice, tariffs can affect exports, domestic prices, and trade with third countries, while companies and consumers change their behavior.
Kimberly Clausing, a nonresident senior fellow at the Peterson Institute for International Economics, told FactCheck.org: “Those listed numbers are simply not tariffs, but some other made-up measure based on a formulaic trade deficit calculation.” Erica York, vice president of federal tax policy at the Tax Foundation, said: “Absolutely none of the factors the White House purports to be looking at, like tariffs, non-tariff barriers, or other unfair practices, factor in to the tariff rate they calculate in any way.” These are the economists’ criticisms of the calculation, not a neutral description of the administration’s stated rationale.
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The ratio can describe a target rate for balancing a bilateral goods account under fixed assumptions. It does not isolate foreign barriers or establish what tariff would actually produce that outcome in a changing economy.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Are those the tariffs in effect now?
No single April 2025 rate should be treated as the current rate for every shipment. The White House recorded modifications to country rates in its July 31, 2025 fact sheet and changes to covered products and exemptions in its September 5, 2025 fact sheet. The USTR’s Presidential Tariff Actions page indexes later actions, agreements, and amendments. A rate for a particular purchase or import depends on the relevant product classification, origin, effective date, and applicable exceptions; the April announcement alone does not establish today’s duty.
- White House: July 31, 2025 tariff modifications
- White House: September 5, 2025 product-scope and exemption changes
- USTR: Presidential Tariff Actions
What the ChatGPT comparison does—and does not—show
The comparison is a pointed observation about how a simple ratio can arise from a simple prompt: Axios said ChatGPT produced the same basic calculation when asked how to eliminate a bilateral trade imbalance with a tariff. But agreement between a chatbot answer and a reported policy formula is not proof of who devised the formula, whether the administration consulted an AI system, or whether the method is economically sound. No controlled comparison of multiple AI systems is established by the cited reporting.
The practical takeaway is to distinguish the policy’s stated aim from the calculation described in reporting. “Reciprocal” referred to the administration’s justification; the reported country-rate arithmetic was a goods-deficit proxy, not a direct audit of another country’s trade barriers.
Quick Recap
Sources
- Axios, April 3, 2025: reporting on the tariff formula and ChatGPT comparison
- White House, February 13, 2025: memorandum on reciprocal trade and tariffs
- FactCheck.org, April 2025: EU arithmetic, USTR rationale, and economist criticisms
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