>25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
Harley Davidson moved some of its production to Thailand in 2018 to avoid a 31% tariff the EU had on US manufactured motorcycles, announced in 2024 it was moving more production there, and prior to today had plans to sell the Thailand produced bikes back into the US, as the US had a 0% tariff on bikes. Not surprisingly Thailand has a 60% tariff on imported motorcycles.
This tariff jumping is real. I guess we will see how it works out for the US.
It's just going to be a game of whack-a-mole as production and dumping shift to the less taxed countries. In the end, manufacturing won't shift to the US while labor costs are too high for factory workers. And the only way to remedy that is tanking the currency.
It's obviously the only real end game to this policy. Asia needs to divest itself off US bonds, which China has been slowly doing the background of late. No matter how it plays out, it's looking like higher interest rates, inflation, and foreclosures for everyday citizens and SMEs are going to be on the cards for the US, and it's going to take something akin to religious faith for people to tolerate the hardship on the way to this promised renewed prosperity.
Bessent didn't sound too sure in that interview. Given how many members of the cabinet lie on camera flagrantly multiple times a week and how even the numbers on their little poster were total BS pulled from thin air, I'm not gonna give him benefit of the doubt.
This underscores the difficulty companies have trying to navigate through this. Even if Trump doesn't change his mind tomorrow, as he's liable to, he's only around for another four years and for most companies that's not enough time to justify a supply chain overhaul.
10% tariffs on the Heard Island and McDonald Islands which are uninhabited, and can be reached only by sea, which from Australia takes two weeks by vessel.
And also 10% on Svalbard and Jan Mayen which is also uninhabited. That will teach them not to ripoff the USA!
Both Svalbard and Jan Mayen are inhabited. Jan Mayen only by about 35 people, though. Svalbard has both Norwegian and Russian settlements, but of course entirely too small to have impact on US trade.
Svalbard imports a lot of snowmobiles though, given their population. From what I know a substantial fraction, if not most, are from Polaris so made in the US[1].
What's the actual strategy behind the current US administration slapping tariffs on everything? Feels like they're handing them out like Halloween candy. Is there a long game here, or is it just managed chaos and alienating trade partners for short term optics?
They claim that they are "reciprocal" tariffs, and their chart shows them at exactly half the tariffs they claim are imposed by the target or 10%, whichever is higher. But it is suspicious that the column on their infographic showing the foreign tariffs has fine print indicating that includes other non-tariff things that you can't easily calculated as a neat rate the way tariffs are. And, some people running the numbers have determined that the quoted foreign "tariff" amounts are consistently the US trade deficit in goods with the target country divided by that country's exports to the US, with a minimum of 10%.
So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
A rebirth of mercantilism. Peter Navarro is a huge fan of it, and in his heterodox fever dreams, laments that most of the world abandoned it several centuries ago. In his mind, a net surplus of currency is every bit as important as having a strong military. People like Lighthizer have drunk the coloured sugar-water.
Kill people's savings, might happen. Discretionary spending is about to get clobbered. Restaurants may be at the top of that list, and travel.
I rather doubt Walmart is going to increase the price of only Chinese made goods 25%. I think everything goes up 25% and they pocket the margin as long as they can get away with it.
It doesn't work because it's basically illegal to be poor in America, or rather to live like a poor person in a developing country. Because of theories about gentrification and such we just banned everything like SROs, company dorms, etc.
It worked for a little while in the 2000s because earlier flight from cities had left a lot of empty housing open to gentrify, but none of that is left.
There's a few classes of people left like supercommuters and people who live in RVs in the Amazon warehouse parking lot, but not going to run a big factory like that.
Well yeah, that's just some weird French place we bought and turned into a slave labor camp.
But memes about suicide nets aside, Chinese factory workers are there by their own choice, because it's better than their alternatives, and we've eliminated such choices by simply making it illegal to have the low cost of living it requires.
This was done to make the poor underclass go away (homeless people) but it also makes this type of working class (factory workers) go away. Luckily for us, we have a service economy with email jobs for them to work instead.
I mean, I was just thinking about the civil law system.
The problems I described are mostly in blue states, although Texas has different problems that somehow result in basically the same issues. Like Houston doesn't have zoning, but still ends up with sprawl due to other restrictions.
Unless you’re dealing with wills and stuff, and real property the civil law system isn’t really affecting people that much because you have to have some compatibility with the other 49 states. Even divorce is not as unique as it was. But yeah, it still is a disadvantage to incorporate here.
I'm on the side of free trade and dont think there is a single policy. The strongest arguments I can think of are:
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
Im talking about trade deficits, not budget deficits. Im not convinced trade deficits are a bad thing to begin with, but that is a whole sperate can of worms.
My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
> the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue
Not the debt, the deficit. The debt is the card balance. The deficit are new swipes. Nothing in the current policy package is about deficit (let alone debt) reduction.
(Valid on trade deficits. I guess we can run trade surpluses if we give up dollar hegemony. That, of course, means no more deficits.)
> My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
Let me see if I am following. The tariffs are ostensibly about spurring domestic industry so that American companies can flourish and we don’t have to pay tariffs on imports of foreign goods in the long term. Is that right? If so, then long term, aren’t we hoping that the “tariff funds” are small? But they are simultaneously supposed to supplement revenue to pay down debt too?
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
Yeah that’s not going to work. America is about to find out that the era of bully pulpit is over. Why work with a recalcitrant and quite frankly obnoxious US when you can cut bilateral EU/Asian deals?
Trump is using century-old misinformation about tariffs to raise tax revenue to pay for tax cuts on the wealthy. In reality, it's an added tax on all spending that accelerates inflation.
Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
It's a bit difficult to nail down direct citations for what is basic knowledge of how tariffs work in reality. It's covered in AP/college macroecon and U.S. history classes.
Wikipedia's articles on Smoot–Hawley and the Tariff of Abominations both have sections on their effects.
In short, we'll see a brief rise in the domestic economy, then a sharp recession. One of the reasons SE Asia, BRICS, and the EU have been so active to disconnect themselves from the U.S. is they don't want to get caught up in the U.S. economic failure like they did in the 1930s.
Category error to think there's a strategy. Trump doesn't even know what a tariff is. People try to project a strategy because it's probably too discomfiting to believe that the greatest superpower the world has ever known elected a complete nimrod king.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.
Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.
FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.
That's the short term view.
In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.
(c) Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.
Even the Americans, the State Department has (had?) people whose job is to help with nation building and they'd learned that if you copy-paste the US model you're basically just setting up a dictatorship in advance, the "President" will seize power, whoops.
It's impressive they got to forty odd Presidents with only one civil war so far, but it's just luck and it didn't last.
It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
Politically it's going to be just like how most everyone fell into line fervently supporting the Iraq War when the corpo media told them to. Then after the unavoidable truth finally seeped in, equivocation and rationalization from "I didn't really support it" to "we were misled". With a lot more visible economic pain, of course.
Then that anger from having been "tricked" will be used as raw energy to drive the next con, and so forth. A broken clock is at least right twice a day, but these low information voters will sabotage themselves every single time.
> but these low information voters will sabotage themselves every single time.
It is generally not cool to blame the voters. There was a ton of misinformation preceding the Iraq war as you point out, but even then there was a massive popular opposition to it. Hundreds of thousands protested against the war before the invasion in New York and Washington DC. Some polls showed that 5% of all Americans participated in a rally or a protest in the weeks leading up to and following the invasion. And despite that popular opposition, among politicians there was a bipartisan support and just a handful of MPs opposed to it. Meaning the public was never really given a choice. In short, the Iraq war was the fault of the politicians and the politicians alone, the voters came nowhere near it.
Yes, I went to a few of those protests. Despite the popularity of opposition, there were still plenty of people arguing in support of attacking Iraq. In fact I'd say that most people were in support of it. "They hate us for our freedom", "fight them over there instead of here", and general reflexive arguments supplicating to power. That's the dynamic I'm talking about.
Whether invading Iraq would have still happened without that popular support is besides the point. The point is there was full-throated support from many people, who would reflexively reject dissent while parroting corpo media talking points, and who then only came to see what a poor idea it had been over time.
The more I think about Trumpian strategies the more I suspect that he got some friends together (or they came to him) and decided they'll short everything, then he'll do this for a while. He and those friends would be able to 'generate billions' that way, by legal insider trading (since we learned that anything he does "in an official capacity" is legal and he can pardon anyone who ever got caught).
Last term he did some tax on bauxite that had a similar effect of costing billions to a whole industry that processes or buys aluminum, but one of the few bauxite mines in the US, run by a Trump ally of some kind, made bank.
What a massive and moronic blow to our soft power.