A U.S. Department of Commerce document lists Purdue University research as a source for recommending a 24 percent tariff on imported steel.
When Purdue agricultural economics professor Thomas Hertel first saw the Trump Administration’s math, he had to check for himself.
“We quickly re-ran that experiment here and we get the same outcome,” says Hertel.
He created the Global Trade Analysis Project Model, referred to as GTAP, 25 years ago. The free database runs analyses on the impacts of tariffs and today has more than 17,000 users in 170 countries.
The United States Department of Commerce document notes six times, “…according to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University.”
However, Hertel says that’s misleading.
“So generally, the right way to do it is you do the analysis, you reference the source date and model, and that comes back to Purdue University, but you take ownership of the analysis,” says Hertel.
His team’s results might be the same as the Commerce Department’s, but there were some things that were failed to be mentioned including U.S. losses.
“They neglected to report the downstream impact,” says Hertel. “The impacts on steel-using industries, the employment effects there, and the overall welfare effect on the U.S. economy.”
Which overlooks the purpose of the program.
“The purpose of the model is to show not only the effects in the industry where the tariff is leveed, but the effects on related industry,” says Hertel.
He also adds that the Trump Administration’s suggestion that a tariff will restore steel capacity does not reflect the exemptions the U.S. has made to specific countries, including Canada and Brazil, some of the biggest steel traders with the U.S.
“The expansion in U.S. steel and aluminum output is going to be much less than they initially anticipated,” Hertel says.
With China’s lists of tariffs that came out this past week, Hertel says this model is used around the world and he wouldn’t be surprised if China is using it as well.
“People use this for lots of purposes and sometimes, often on our board, we have different countries, different regions represented and they may have competing interests,” says Hertel. “We have no problem with providing them all with the same platform and they can do their analysis and fight things out on a political level.”
Hertel says he has contacted the Commerce Department objecting to the language used in the document.