As the FT has reported this morning:
Donald Trump hit dozens of US trading partners with tariffs while formalising recent deals with others, including the UK and EU, as he plunged the global economy into a new era of mercantile competition.
Crucial exporters to the US such as Taiwan, the world's most important semiconductor exporter, will incur steep new levies. Trump also raised tariffs on Canada, an ally and major trading partner, to 35 per cent. India was hit with a rate of 25 per cent and Switzerland with 39 per cent.
They added:
The US president's executive order on Thursday announcing the tariffs said they were designed to reduce America's trade deficit with many countries, which it described as an “unusual and extraordinary threat to the national security and economy of the United States”.
The rates are quite extraordinary and essentially without precedent in the post-1945 era:
As I have said, time and again, tariffs cannot have a good outcome. They will create inflation in the USA. They will harm those in the lowest incomes in that country the most, as they are a regressive sales tax. Other countries will not pay them. The American people will pay them, and we already know the tax cuts are going to the wealthy.
The ramifications are already serious. They will create a disorganised reduction in world trade, when we need an organised one to tackle the impact of climate change. And the downturn they must create will be widespread. You simply cannot make this big a change to trading conditions and not get a reaction, in my opinion, and I am not alone.
So, T (for tariff) Day is, and it is most likely going to be recorded in history as the day when the neoliberal bubble began to burst, as Trump turned it on itself as he signalled the start of the economic march to fascism.
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Heard someone from Lesotho describing the effects on their garment factories. One, hitherto employing 1000 workers, now closed. They admitted their own government was partly to blame, but Trump’s 50% tariffs haven’t helped. US consumers are going to pay heavily for their jeans (as, presumably, will we in the UK in due course). I don’t know where US cotton is going to be made up into garments now but it won’t be in Lesotho, whose people are desperately poor.
Not that it will make a huge amount of difference, however, I will continue my protest by refusing to buy US or US-owned goods or services. When Musk took over Twitter, I stopped my subscription straight-away, I never use Amazon (even if it is the cheapest option), in my professional capacity we elected to use non-US-based/owned server hosting, ERP systems, etc. I don’t miss any of it personally… and we have not suffered in the professional sense (quite the opposite in fact).
I think the biggest threat to Trump and his idiocy is to begin a quiet revolution of just not buying US goods or services. Collectively, particularly in the social media, online purchasing, etc., sphere, it will have a significant impact. Combined with the increased costs US citizens will face, maybe they will finally waken-up and realise that his proclaimed MAGA agenda is nothing of the sort. It is simply to enable him to accumulate more wealth and put him beyond the law.
Lesotho garment production was the last Bush deciding pure aid was not “working”. So let’s stimulate their economy by making garments for the US market.
A GOP President does something positive the latest one kills it.
US steel companies are bumping up their prices due to tariffs. The knock on effect of tariffs on US inflation will be huge.
What garbage will King Donald spout to explain away the inevitable US economic downturn?
There are likely to be massive ” tariff exemptions” when for example, the price of Brazilian coffee goes up 50% especially as it supplies 30% of US coffee imports.
Coffee prices are worrying me – not least because a) I like it, a lot (Colombian, please, by prefernce) and b) none of the increase will benefit local producers.
Try sail-shipped coffee – fewer middlemen, better for everyone.
https://www.shippedbysail.org/coffee
The shop is closed right now…..
A couple of points worth adding, Richard.
First, note the reference to ‘threat to national security’ in Trump’s blurb, which is relevant to the International Emergency Economic Powers Act (IEEPA), which vest powers in the President. That’s the claim that enables him to sign and Executive Order to bring in the tariffs, otherwise tariffs are the legal domain of Congress.
Second, and related to the last point, the US Court of International Trade (on which expert judges sit) has already found that Trump doesn’t have the authority to levy tariffs under emergency powers as the trade relations in question can in no way be deemed a ‘threat to national security’.
As might be expected, Trump and his cronies appealed that decision and it’s now being heard by 11 judges and the Federal Court of Appeals and things did not go well for Trump’s lawyers yesterday, with judges pointing out that no other President has ever used the IEEPA for such purposes and there are, in fact, no references to tariffs in that Act.
So, we can expect Trump to lose with the Appeals Court and this will then go all the way to the Supreme Court. I don’t think it too far fetched to suggest that if the Court finds in favour of Trump on this issue we can well and truly say the US Supreme Court has gone the same way as the same in Russia, Belarus, etc. as to find in his favour on this issue – which is basically black and white (Trump/Presidents simply do not have the power to levy tariffs) – will signal the demise an independent judiciary in the US.
Agreed, entirely, and thank you.
[…] hit until today, assuming Trump can make them stick, which I suspect Trump will succeed in doing, although I draw attention to Ivan Horrock's comment on this made earlier […]
The strategy is benefiting American as Trump is using tariffs as a negotiating tool and is generally getting what he wants. There is some method to the madness.
Not when these deals fall apart