My understanding is they are saying the elasticity of the price (what can be absorbed by tariff increase) comes from the transaction in the retail market it ultimately sells to, yet the "equation" was using elasticity of the import costs.
In other words, Trump's equation thinks that import price will absorb (elasticity) the tariff's impact, but that's not true. It's passed on almost entirely (the 0.945 number, so 0.055 may be absorbed).
So it's using wrong numbers to justify the effective tariffs. IMO, I don't think Trump cares. I think the equation was a "straw-man".
In other words, Trump's equation thinks that import price will absorb (elasticity) the tariff's impact, but that's not true. It's passed on almost entirely (the 0.945 number, so 0.055 may be absorbed).
So it's using wrong numbers to justify the effective tariffs. IMO, I don't think Trump cares. I think the equation was a "straw-man".