Optimal Tariff Pricing: The Mistake of USA Increase Its Tariff Using Reciprocal Tariff Calculation Formula

Abstract

Trump imposed high tariffs which caused substantial losses for almost all countries. He even claimed he made this decision based on Theory of Protecting High-Quality Industries. Furthermore, he uses a formula to improve it. This study uses the value the Office of the United States Trade Representative give and put in Reciprocal Tariff Calculation Formula to prove his formula is a hoax. Also, this study critically examines the U.S. policy of tariff increases, arguing that it represents a strategic misstep when evaluated through the lens of the Reciprocal Tariff Calculation Formula. By applying this formula, which quantifies the impact of tariffs on trade volumes, domestic welfare, and retaliatory responses, the study reveals that the U.S. tariff hikes not only disrupt global supply chains but also generate negative spillover effects on its own economy. The analysis demonstrates that rather than achieving intended goals such as trade balance correction or domestic industry protection, the increased tariffs trigger a cycle of retaliation, leading to reduced trade efficiency, elevated consumer prices, and diminished overall economic welfare. Through theoretical modeling and empirical data, this research highlights the importance of reciprocal tariff calculations in assessing the long - term viability of trade policies. It concludes that the U.S. tariff - raising strategy contradicts the principles of mutually beneficial trade and underscores the need for a more collaborative and data - driven approach to international trade policy - making.