Trump’s New Tariff Formula Seems to be Coming From ChatGPT, Grok or Another AI Chatbot

When President Donald Trump yesterday unveiled his new tariff policy, it was met with an immediate chorus of skepticism. The proposed system, which imposes a blanket 10% tariff on imports and adjusts rates based on trade deficits, drew sharp criticism from economists.

But what has raised even more eyebrows is the simplicity of the formula, which bears a striking resemblance to suggestions made by AI-driven chatbots. Now, experts are asking: could artificial intelligence have influenced the creation of this controversial policy?

A Surprising Formula Influenced by AI

The crux of Trump’s tariff policy lies in a formula that divides a country’s trade deficit with the U.S. by the total exports from that country to the U.S. This number is then halved to produce what the administration calls a “discounted reciprocal tariff.”

The simplicity of this method is what caught the attention of economists and industry experts alike, who argue that such an oversimplified approach may have severe unintended consequences.

James Surowiecki, contributing writer for Fast Company and The Atlantic, was quick to point out that this formula could be easily reproduced by simply dividing the trade deficit by exports and halving the result, calling it “extraordinary nonsense.”

The White House later defended its formula, claiming it had refined it for more nuanced application, but many see it just as a more complicated version of what Surowiecki critiqued.

What makes this formula even more interesting is its striking resemblance to recommendations from AI-driven systems. When several popular chatbots, including ChatGPT, Gemini, Grok, and Claude, are asked for a simple solution to balance trade deficits, they return remarkably similar suggestions, often involving a formula like the one now being implemented by the U.S. government.

Whether this was a deliberate choice or a coincidence remains unclear, but the similarity is undeniable. AI’s seemingly growing influence on policy decisions raises a fundamental question: how much influence should AI have over critical aspects of government strategy?

Immediate Economic Repercussions

The economic impact of Trump’s new tariff system has been felt immediately, with major U.S. industries announcing layoffs and price hikes. Retailers and manufacturers, already struggling with supply chain issues, now face the added burden of increased tariffs on imported goods.

The immediate result has been a market sell-off, with significant declines in the stock market, including a notable drop in all major US stock indices and other markets across the globe. Analysts are concerned that this could be just the beginning, with more sectors feeling the pressure as the tariffs take effect.

For consumers, the consequences are stark. Estimates suggest that the new tariffs could add as much as $3,800 to the average household’s annual expenses. As costs rise, particularly for imported electronics and goods, the burden falls squarely on American consumers. While the policy aims to reduce the trade deficit, it remains unclear whether it will achieve its goal without causing widespread economic harm.

Global Reactions: A Growing Trade War?

The U.S. isn’t the only country impacted by these new tariffs. Nations around the world, including China, the European Union, and Canada, have already indicated that they will retaliate, potentially escalating tensions into a full-blown trade war. The World Trade Organization (WTO) has voiced concerns that the tariffs could disrupt the global economy, particularly as countries adjust their trade policies in response.

WTO Director-General Ngozi Okonjo-Iweala stated that these tariffs could lead to a contraction of approximately 1% in global merchandise trade volumes in 2025—a notable decline from earlier projections

This retaliatory stance by international trade partners could undermine the very goal of the tariffs — reducing the U.S. trade deficit. While Trump’s administration maintains that the tariffs are a necessary step to address unfair trade practices, economists warn that these tariffs may not provide the intended economic benefits.

The simplistic approach does not address the deeper structural issues that lead to trade imbalances, such as currency manipulation or national savings rates, economists warn, emphasizing that these tariffs could hurt the very industries they aim to protect.

Is AI Ready for Economic Policy? Probably not

AI has increasingly become a tool for decision-making in various sectors, from finance to healthcare. But as its role grows, there are concerns about its application to complex areas like trade policy. ChatGPT and other AI systems, which are trained on vast datasets, offer solutions based on patterns in historical data, but they lack the nuanced understanding of political, social, and economic realities that human policymakers bring.

AI’s involvement in policy decisions, as seen in the case of Trump’s tariffs, suggests a trend where technology is being leaned on for its simplicity and efficiency. However, the limitations of AI in understanding the complexities of international relations and trade may make it an unreliable guide for economic policy. AI can help inform decisions, but economists caution against relying on it as the primary driver for such critical decisions.

AI chatbots consistently recommend overly simplistic solutions when asked to solve complex trade issues like balancing deficits. Although these models can generate useful insights, leading economists argue that tariffs are not an effective tool for balancing trade deficits, underscoring the risks of simplifying such a complex issue with AI-generated solutions.

Last Updated on April 22, 2025 2:40 pm CEST