The analysis by the office of the US Trade Representative (USTR) that accompanies President Trump’s tariff announcement on 2 April is so profoundly wrong that one might (almost) feel sorry for the USTR staffers tasked with putting academic lipstick on a wayward pig.

Their central argument is that one can measure how protectionist a country’s trade policies are by the size of its trade surplus in goods with the United States.

Vietnam is judged to be highly protectionist because it exports to the USA much more than it imports. It is a relatively poor developing country with a competitive advantage in low-paying manufactures (such as clothing) which the US largely abandoned decades ago. It also has little appetite for the kinds of goods and services that the US exports. Vietnam’s trade with the US is not the result of protectionism.

The EU, which retains a strong manufacturing sector in Germany, and has a significant surplus with the US, is judged to be more protectionist than the UK, whose competitive advantage is stronger in services. The reality is that despite Brexit, there is little difference between the trade policies of the UK and the EU.

The USA runs a trade deficit because it spends much more than it produces and covers the difference by borrowing from the rest of the world. It’s inevitable that most countries will have trade surpluses with the USA. Does this mean that most countries are more protectionist than the US? Of course not.

In short, it’s completely daft to use bilateral trade deficits to judge how protectionist are countries’ trade policies. The technical formula which USTR used to justify Trump’s “reciprocal” tariffs is just as crazy.

Two of the numbers in the magic formula are USTR’s rough guesses of the effect a trade restriction has on the prices of imports and the effect of a higher price on the demand for imports. USTR then pretends its rough guess of the effects of Trump’s tariffs on bilateral trade will apply universally, and then turns it on its head in a hopeless attempt to justify the different treatment given to various countries.

One of the numbers in USTR’s formula is an estimate that only 25% of a tariff increase gets passed on to the importing country that imposes the tariff. Most economists would regard this as an underestimate – even though 25% is not insignificant. The only source cited is a study that showed a surprisingly low proportion of previous US tariff increases being passed on to retail prices. However, this was not because the tariff increases were absorbed by foreign suppliers – it was because they were absorbed (perhaps only in the short run?) by US importing firms.

President Trump tells the American people that tariffs are a tax on foreigners. However, his own USTR disagrees and assumes that a significant burden falls on American consumers. The study they cite to justify the burden on consumers not being even greater suggests that almost all the rest of the cost falls on American firms.