Trump Tariffs, Day Two

CNBC:

  • Markets plunged the day after President Donald Trump imposed a far-reaching “reciprocal tariff” policy, including a 10% baseline tariff on almost every country on earth.
  • The plan slaps much steeper tariff rates on many countries, including 34% on China, 20% on the European Union, 46% on Vietnam and 32% on Taiwan.
  • Economists and U.S. trade partners are raising questions about how the White House calculated the tariff rates it claimed other countries “charge” the United States.

Apple, in particular, is taking it on the chin, about 9.5% for the day. Amazon and Meta were both down 9%. Nike is down over 13%. From CNBC’s corresponding story on just how the White House computed the “tariff” rates it claims for various countries:

Many observers said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.

Such methodology doesn’t necessarily align with the conventional approach for calculating tariffs and implies the U.S. would have looked at only the trade deficit in goods and ignored trade in services.

“Such methodology doesn’t necessarily align with the conventional approach” is an overlong euphemism for “The president literally doesn’t understand what tariffs are.” James Surowiecki was seemingly the first person to figure out the White House’s nonsensical formula:

Just figured out where these fake tariff rates come from. They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us.

So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us. What extraordinary nonsense this is.

Don’t rack your brain trying to make sense out of the nonsensical.

★ Thursday, 3 April 2025