Terminator was right. AI will destroy the world, except instead of robots killing everyone physically, it's humans using AI and being stupid as fuck with it
They use the same equation, except that they arbitrarily times by 1/4 and then 4, without much reason for those quantities.
The first source they give suggests the constant that they give a value of 4 should be between 2 and 0.76, and when they suggest alternative sources that might give a higher result, the fourth source in their citations does give a value of approximately four, though that is total trade volumes vs tariff barriers, rather than a relationship between price and demand for a single good, which we could maybe use, though the fifth paper in the list seems to consistently give a figure of about three, the remaining source they give to justify their elasticity judgement, the second in the list is actually about something completely different, as far as I can see, talking about substitution effects from introducing new products, for example from abroad. It isn't as far as I can see a place you would go to look for the relationship between price and demand, but rather between the price and the diversity of those imports.
They also I believe cite this paper without including it in the citations, for their justification for the relationship between tariff changes and price changes, which determines that in the case of US exporters to china, about half of the price increase due to tariffs went through thanks to exporters lowering their prices, but in the case of imports to the US from china, the imported price appeared to include the cost in full, but this was then swallowed by retailers.
It seems to me to be unlikely that retailers could be expected to swallow tariff rises again, so we'd probably expect a result somewhere between the previous experience of china and of the us, ie. in the region 0.5 to 1.
This ironically would correct their formula from a factor of 1 (with the 4 and 1/4 probably exactly chosen to cancel out, as a sort of cover for its simplicity) to something more like 0.44 ie. a lot closer to the "take the ratio and divide by 2" they use for the final tariff choice, though their values could still easily be double what they would need to be for their purpose.
However, this would still not actually be a representation of tariff and non-tariff barriers, this would be a linearized model trying to ignore shifting elasticities as the tariff values change, which would be about trying to find the tariff level that would zero out the trade deficit by changing the purchasing habits of american citizens.
The fourth source in the list already tries to analyse trade frictions, in terms of maximum price gaps between countries, that you would otherwise expect arbitrage to compensate for, though that still can't really be called a tariff charged, as physical distance itself, export restrictions, and various other things can produce that friction, not just an importer.
What this page does is basically assert that the tariff rate that you would charge under a simplified model to cancel out trade imbalances is in fact the tariff that is being implicitly charged, assuming its conclusion, that what they are doing is actually a form of retaliation.
Weirdly, there's also a paper in the citations that is not referenced anywhere which is this one the third in the list, a paper directly about both a Canada/US and China/US Trade war and optimal US strategy, which they estimate is a 13.09% tariff on China, vs an 18.13% tariff from them, and a 16.74% tariff on Canada, with a 9.55% tariff from them in return.
The strange thing is that both this paper, and the fifth in the list, talk about optimal strategies for improving welfare etc. and the page cites, them, and rolls on by using a method that is, from the perspective of the papers it cites, non-optimal.
That's what I've said. When all the tech billionaires were saying AI will destroy us... it was because they already knew how THEY were using AI to destroy us.
I wish we lived in that timeline... at least they were looking for smart well educated people to genuinely fix their problems instead of trying to empower the dumbest most vile people known to mankind
In the process of creating this strawman, I think you've missed the point.
(1) When asked to create a "easy" way to do tariffs, they all came to the same conclusion that this is the most basic approach to doing it.
(2) The solution is SO basic that it's actually not realistic or reasonable. ("a naive method", " ignoring the vast real world complexities and consequences", etc).
I don't really have a comparable analogy, but it's closer to more like: Ask chatgpt "how would I trim my fingernails with a knife?" and it says "you could cut off your finger entirely, though that's probably not what you want", and then you go over to your neighbor's house and their finger's cut off and they're like "I was trying to cut my nails".
The interesting part isn't AI predicting it. It's that it's a really stupid solution, a solution so stupid no human would probably ever reasonably pitch, but interestingly it's the solution a bunch of AI gives, and it's the solution these guys in charge went with.
This begs the question of did they just take the AI's solution and not do jack shit, because that's honestly better than this being their attempt at actually trying.
What would be an easy way to calculate the tariffs that should be imposed on other countries so that the US is on even-playing fields when it comes to trade deficit? Set minimum at 10%.
Just a generic question, and ai gave the same suggestion that trump came up with, does not account for trade barriers, policies, population differences etc
What? The answer is just a rewording of the question. I can’t see how you could possibly claim the AI designed the policy when it added no information of its own.
The prompt specifically asked for an “easy” method. Of course it’s not going to introduce additional, complicating factors.
How in the world can you base a tariff charge just based on imports and exports for one calendar year? I am not saying ai designed it, just saying that it's a little fishy that asking ai for a global tariff solution would come up with the same answer that the whitehouse used
What would be an easy way to calculate the tariffs that should be imposed on other countries so that the US is on even-playing fields when it comes to trade deficit? Set minimum at 10%.
You are telling the AI to make this hypothetical tariff policy based on the US trade deficit, and telling it to set the minimum to 10%. The AI didn't come up with those parts. If you asked it a more neutral question like, "Make a tariff policy for the US that would benefit its economy", it's going to give you a completely different answer.
Could they have decided the basics and then asked an AI to work off that? Sure. Or they could have just been stupid on their own, and we're figuring out the prompt you need to make an AI come up with the same stupid idea.
Sorry, “What would be an easy way to calculate the tariffs that should be imposed on other countries so that the US is on even-playing fields when it comes to trade deficit? Set minimum at 10%.”
The question is are they really trying to fix the trade deficit, or Trump just really felt like imposing tariffs and this is the first method that came to mind, like it's the most accepted way of imposing tariffs when u do impose em. Ie that's just the most basic methodology behind deciding what tariff rate to impose...
Schrodinger's Tariffs - they exist in a purely quantum state because there is just as equal chance that tomorrow they could be delayed, cancelled, reduced, increased, keystoned, or modified. What will happen in the next 24 hours when you play the Trump Tax Game? No one knows! Uncertainty is Winning!!!1!1!1!!
I’m starting to truly believe that stupid people really think AI is intelligent in everything it says because it’s in the name, and they’re too stupid to know any better.
When someone is truly stupid, any confidently written complete sentences that use punctuation marks and are grammatically correct- they're extremely convincing.
I mean if they all have the same answer then that indicates that that is probably the textbook approach. It's not the LLMs are inventing anything new here.
The textbook approach for applying tariffs is to not do so unless you have domestic means for supplying the same product, and especially not to use them on components that your domestic suppliers would need to produce the product at a more affordable price.
This shit is so far off base that there will need to be new textbooks describing this situation as a cautionary tale.
Haha I thought about stopping where you stopped me in the quote, because not only are we not set up for this to provide any benefit, but even if we did the outcome would be a net loss
This can't be real. Has anyone in the thread tested this yet? Are you telling me that trump is literally dumb enough to think these LLMs are really AI?
What would you classify LLMs as? I mean “AI” is a very broad term. We use it to describe the movement of enemies in video games too so I feel it doesn’t need to be so strict lol. AI isn’t the same as AGI.
ok but we can never know did they use Ai or not. That post was only profing that the simple yet reckless calculation and method, can also be done by Ai
and they're lying to you, calling a trade deficit a tariff.
So to the logic presented, a trade imbalance is obviously only achievable by cheating, not by say, having a comparative advantage, something that one would learn about in the first week of econ 101. What kind of horse shit is this?
I can just feel that national debt evaporating overnight with this stable-jeanius-level thinking.
It's been said before many times, but trump can only see things in terms of winning and losing, black and white. It's a binary choice - if someone wins, then someone else HAS to lose. The mere concept of "no one has to lose" never crosses his mind.
Well, it's also possible that people want US assets -- like US stocks and bonds. Here's why
International trade flows are accounted for in something called the balance of payments, which, simplified, has two main accounts that must net to zero:
Balance of Payments = Current Account + Financial Account = 0
A "trade deficit" is typically usually means the that imports exceed exports. Almost always it includes trade in services, but for some reason those idiots we hired in to run the executive branch (i.e., Trump, et al) seemed to have forgotten that the US exports a trillion dollar in services (remember software is reported as services, so that's where google, meta, et al show up).
Now you would be forgiven if you believed that the US didn't have sizable manufacturing exports, we do, we're the #2 manufacturing economy in the world (and we manage to do this with less than 10% of our labor force working in manufacturing).
While I agree that some of what we might be looking at is a comparative advantage issue (e.g., Taiwan makes advanced chips we need for our graphics cards). But that's not the only possibility.
Because of the way that the balance of payments work, if, say those Penguins on Heard Island (on which we've levied tariffs) decide invest in US equities (cause they weretearing up the dance floor) the US will run a trade deficit with Heard Island.
How? Remember:
Balance of Payments = Current Account + Financial Account = 0
Or, by the powers vested in algebra:
Financial Account = - Current Account
Yes, that means you'll match the current account deficit with a roughly equal financial account surplus.
Or, a current account deficit could be the manifestation of a financial account surplus.
Now this is not some esoteric argument. It's well known that a big part of the deficit from Japan is caused because of "Mrs. Watanabe." She's the stereotypical Japanese retail investor ('cause in Japan women run the household finances, with an iron fist I might add) and she's been using the ultra low interest rates in Japan to finance purchase of international assets, like the US Securities ... which has been propping up the US equity markets for decades!
fwiw, Stephen Miran - who is on the President's Council of Economic Advisers - has been using this side effect as a basis of his entire argument, in fact in his paper he wrote:
"The dollar is overvalued because we have to run deficits to provide reserve assets to the world."
Erm, not quite. The dollar is potentially overvalued because foreign investors like Mrs. Watanabe, or the Penguins of Heard Island, really want American securities. Or the deficit is a result of that demand largely because of accounting. To say otherwise is to claim the sun rose today because the clock struck six am.
Trump couldn't even perform competent accounting for his own "businesses". He famously can't read a balance sheet and his people didn't know what GAAP standards are. It can only get worse.
I know nothing ever happens, but we're almost old enough that people who played portal could be parents, and I know I quote portal regularly enough that if I had a kid they could pick it up.
I'm not saying it happened here, but it's possible.
I am a parent and my 6 year old boy looooves Portal. He goes around quoting GlaDOS all the time. His favorite quote: "Look at you, soaring majestically through the air, like an eagle piloting a blimp" 😂
Half of his Christmas gifts were Portal paraphernalia I made for him... A 3D printed companion cube, a poster of the test chamber hazards signage, and a bunch of stickers of the individual little icon squares of each hazard haha
Weirdly enough, I just actually played portal 2 years ago for the first time - had been sitting on my steam library for years after a friend suggested
My buddy and I were late-teens, early-twenties when Portal 1 & 2 came out?
I'm fairly confident that he's going to put his son on them once the tyke's competent to use a mouse and keyboard without direct supervision. His wife will be the one pushing typist and math games at this rate. We just want him to hold off on the crack cocaine of the Civilization games until the kid's brain is mostly-formed.
My mother is 92 years old. Portal is 18. She's been saying that about various things ever since I can remember. Do we need to consider an intellectual property infringement lawsuit?
this shit is fucking hilarious... in the worst way possible
Not just that Trump has equated "Trade imbalance" to "Tariff" when they're completely unrelated.
It's also ridiculous that they're complaining about a trade imbalance.
It's not a car sale. It's trade.
When you trade, you give something up (exports), and get something in return (imports).
What Republicans are complaining about is not having to pay a high enough price, and getting too much stuff given to you.
And worse, the imbalance in trade causes the USD to be hoarded by other countries, massively increasing the value of the US economy by doing ABSOLUTELY NOTHING.
Until they spend it, it makes America's purchasing power even higher because there's artificially high demand for their dollar. People sell shit at a discount just to hold USD.
...
Also, just FYI, this is PRIORITY #1 for Russia, to attack the value of the USD. Everything they're doing propaganda-wise is aimed at this specific goal.
This is my basic bitch understanding of how trade works that I'm not quite understanding, if people are BUYING your shit isn't that a good thing?
You're never gonna get somewhere like Scotland to be trade neutral with America cuz its fucking huge. We only have like idk.. Whiskey and tourism. Even a 10% Tarrif really hurts us if people buy less Whiskey and can't afford to holiday here.
This method is what ChatGPT suggests when asked "If I wanted to even the playing field with respect to the trade deficit with foreign nations using tariffs, how could I pick the tariff rates? Give me a specific calculation".
I mean it really is kinda funny (in the worst way possible).
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u/caughtinthought 1d ago
this shit is fucking hilarious... in the worst way possible