Comment by dralley

Just think how many companies moved production from China to Vietnam to avoid China tariffs, and now tariffs on Vietnam are larger than on China.

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.

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.

Those first two islands aren't even thought to have been visited by any human for many years!

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.

Here is what they say anyway:

https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...

https://www.whitehouse.gov/presidential-actions/2025/04/regu...

https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-pr...

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.

People like Navarro believes a non-trivial amount of manufacturing can be coaxed back to the US from China and Vietnam.

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.

4) stimulate demand for us labor

https://www.ft.com/content/fba87dd3-514a-41c2-b2b9-ea597ffbd...

https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...

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.

It's hard to have insight on what the US admin is thinking behind the public facing statements, however this might be of interest:

Why Trump’s tariffs are better than you think — and much worse

subscribe! https://www.crikey.com.au/2025/03/06/donald-trump-tariffs-im...

or read now, maybe subscribe later: https://archive.md/H46RG

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.

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.

Can we please stop acting like Trump and MAGA behave rationally?

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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.

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.

> 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.

https://en.wikipedia.org/wiki/Protests_against_the_Iraq_War

Correction: average tariffs on China prior to today was 42% https://www.piie.com/research/piie-charts/2019/us-china-trad.... This means after today, average tariffs on China will be 76%.

China is already in a Great Depression, and this tariff hike guarantees China to be in 30+ years of economic depression.

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Might cause a global recession, though. And that might be less funny.

Yeah, billions and billions: https://youtu.be/u_aLESDql1U

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.