Reciprocal tariffs and Donald Trump’s bottomless stupidity
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Donald Trump is announcing a bunch of new tariffs:
President Donald Trump said Sunday that he will announce reciprocal tariffs this week, as well as a 25% blanket tariff on steel and aluminum imports.
“Any steel coming into the United States is going to have a 25% tariff,” Trump told reporters on Air Force One, adding that the same tariff would be applied to aluminum.
“Aluminum, too,” Trump added, when a reporter asked him whether it would also be subject to tariffs.
Trump said he would most likely make a formal announcement Tuesday or Wednesday about reciprocal tariffs on “every country,” while an announcement about steel tariffs would happen Monday. Reciprocal tariffs would go into effect “almost immediately,” he said.
“Very simply it’s if they charge us, we charge them,” he said.
As I mentioned the other day, the stupid person’s central heuristic for all of life’s problems is: “This complicated issue is actually very simple.” Every stupid person believes this, and all of us are stupid some of the time, but Donald Trump is stupid all of the time, which is a problem for everyone else, given that he’s now El Presidente de el Gabacho, which is where you and me are going to spend the rest of our lives.
LGM commenter MacK sent along the following helpful primer:
Has Trump ever actually run any sort of business of was he just a poseur? Because this isn’t simple at all…
I have to question whether Trump has ever even read a tariff schedule, which is the central document from each customs jurisdiction that US customs is now going to have to get its hands on and make sense of – not to mention US customs agents, who would only be familiar with the US tariff schedule but now have to get their hands on something like 130 different jurisdictions schedules.
And having worked with them, I can tell you that they are extremely complicated things. First of all it’s not just that countries don’t charge the same tariff on all imports, not even the United States does not or the EU. Rather there are different rates on different imported products, and often what would seem to be the same product attract a different rate depending on Its condition and level of processing. Then in more complex products there are water content rules, what percentage of the product comes from Country X which gets a low rate for whatever reason, and what percentage does it incorporate from Country Y which doesn’t…
So try and work work out how this is going to operate is hard. They’re about 130 custom jurisdictions in the world, that is to say they’re 166 members of the WTO, but the EU and EEA have a common external tariff, so that’s one set of rates. So, US customs and US customs agents (the private people that specialising clearing goods through customs and making sure the right amount of duty and tariff is paid) are going to be trying to work out on every single item important in the United States how much has to be paid? That is going to bring US ports to a screaming halt.
But it’s not just that. As the British discovered with Brexit manufacturing has changed over the last three decades to what is known as “just in time“ manufacturing, where components arrive just before they are incorporated in the next step of the production. This saves manufacturers an awful lot of money because they don’t have a huge inventory of input components to finance. The problem is the British discovered is that any delays in the port system causes absolute chaos at the manufacturing point. It’s entirely conceivable that this idea of reciprocal tariffs if applied to components coming into the United States will cause so many delays that people will actually be laid off or sent home from factories.
And now let me throw in a new wrinkle, the 25% tariff aluminium and steel is going to result in reciprocal retaliatory tariffs on the United States. [They] will not be initially published in the regular tariff schedule of countries shipping goods in the United States, which means they’ll be yet more delays while someone tries to work out what id actually the tariff rate right now on our equivalent going into country X or country Y.
No, this isn’t simple at all, but it is deeply stupid.
I think I know the answer to the question in the first sentence.
Let me return to the classic dictum:
People say he’s crazy and maybe he is, but you do not know anyone as stupid as Donald Trump. You just don’t.
Fran Lebowitz, after decades of close observation.
More details from MacK:
If you want details, here’s the EU TARIC …
It’s that hair tearingly complex. Customers Brokers and Customs Officers are trained, and they are trained on their own local tariff schedule – they’d really have trouble making sense of another jurisdictions rules – and at least the EU’s is, though complex, somewhat straightforward compared with others… what this means in the US customers broker is only going to be familiar with the US custom schedule, and the same applies to a US customs official… So it’s gonna be great watching them try and look through all sorts of other countries customs schedules.
This is the US https://hts.usitc.gov/download which, if Trump goes through with the reciprocal threat is in fact useless…until you’ve worked out where the import is coming from (see “rules of origin” – that don’t as far as I know exist for reciprocal tariffs, just free trade agreements/areas) and then worked out what that “origins” tariff rate is on that import