White House tariff calculations reportedly use AI-generated formulas
The Trump administration's tariff calculations reportedly resemble outputs from generative AI models and use a simplistic formula that economists say oversimplifies international trade, potentially inflating rates and disrupting markets.
What happened
President Donald Trump announced sweeping 'reciprocal tariffs' including a baseline 10 percent rate and higher tariffs for 60+ nations, calculated using a formula based on trade deficits divided by imports and halved.
Observers noted striking similarities between these calculations and outputs from generative AI models like ChatGPT, Claude, Gemini, and Grok, raising concerns about the accuracy and methodology used.
Reported impact
Economists criticized the formula for failing to account for global trade complexities, potentially leading to inflated tariffs that could disrupt international markets, raise consumer costs, and provoke retaliatory measures.
At the time of reporting, trillions of dollars had been wiped off capital markets. US consumers and businesses are likely to face higher costs for imported goods, and widespread job losses are considered likely.
Index analysis
The tariff calculation method oversimplifies the intricate dynamics of international trade, such as elasticity of prices, supply chains, and existing tariff schedules.
The incident highlights risks of using AI in policymaking without proper oversight or expertise, raising concerns about the ethics and role of technology in shaping critical economic decisions.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.