Math, grade 7, Ratios and Proportional Relationships 7.RP.A.3: Use proportional relationships to solve multistep ratio and percent problems. Examples: simple interest, tax, markups and markdowns, gratuities and commissions, fees, percent increase and decrease, percent error.
Essential Question: How can basic calculations of percent change influence major world events?
Do Now: Calculate the percent increase or decrease in each of the following equations. x = (28 - 17.9)/28 x = (41.5 - 57.7)/57.7
Class Discussion: Remind students about how to perform basic calculations of increase/decrease factors. Ask them whether this calculation would be more complicated if the quantities were dollars instead of just numbers (answer: no). Ask them whether this calculation would be more complicated if the quantities were billions of dollars instead of just dollars (answer: no). Show students that they just performed the exact same calculations that Donald Trump did in order to decide what tariffs should be put upon Indonesia and Thailand, respectively.
Finally, ask students whether important global trade decisions should be calculated with 7th grade math skills, or if perhaps this is insufficient given the severe consequences that could arise from such a dunning-kruger error.
Direct Instruction: Explain what a Dunning-Kruger error is, if for no other reason than to communicate how absolutely maddening has it is for legitimate experts who have dedicated their lives to nudging fiscal policy in the right direction and then watch as their president makes the worst decision possible on purpose.
Take a moment to explain the difference between an import and an export, so that students understand what these billions of dollars actually mean in the real world. Feel free to call out anyone who has ever questioned whether or not they would ever use this kind of math in the real world. Show them that it's happening right now, and make sure they understand how terrifying that is.
Acknowledge the variables: x: total exports from US to country i m: total imports to US from country i tau (τ): calculated % tariff on all imports to US from country i epsilon (ε): elasticity phi (φ): passthrough
Ask students what they think elasticity and passthrough mean, then show students this passage from ustr.gov:
Parameter Selection To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4. Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25. The recent experience with U.S. tariffs on China has demonstrated that tariff passthrough to retail prices was low (Cavallo et al, 2021).
Ask students if this clarified anything about what elasticity and passthrough mean. Most will say "no", but if anyone points out that multiplying 4 by 0.25 cancels them both out, reward them. That student is correct, because elasticity and passthrough have been arbitrarily assigned so as to make this calculation so simple that even Donald Trump can understand it.
Modeled Learning: Show how to apply these tariffs to popular imports such as raw coffee beans. For example, the USDA report of coffee imports from 2024 (page 6) shows that the vast majority of raw coffee is imported from Brazil.
A simple search with Perplexity.ai tells us that in 2024, imports (m) = $42.3 billion and exports (x) = $49.7 billion, so the reciprocal tariff would be (x-m)/m = (49.7-42.3)/42.3 = 17.5%.
Thus, all coffee imports from Brazil will automatically be 17.5% more expensive.
Be sure to highlight that this is happening to every country in the world, even those with total populations less than 1000.
Higher Order Learning:
Students should consider the following facts:
There is very little territory within the United States that can grow coffee.
Almost all coffee in the world is grown within what is called "The Global South", where the climate is warm and the labor is cheap.
The US exports significantly more (sometimes vastly more) to countries in the Global South than we import from them.
Students should then answer the following questions:
What will this universal tariff calculation do to the price of coffee?
Is there any way that US coffee companies can import the same amount of coffee as before without passing on the cost to consumers? Why or why not?
Do you think this tariff program will equalize imports and exports between the US and other countries? What other impacts could it have, good or bad, across the world?
