For 3 months now, we have been reading another portion of statements, news, decrees, and actions from Trump every day. April 2 was no exception. Like a thunderbolt from a clear sky, a heavy fist of tariffs fell on the whole world with the aim of making America great again.
A great businessman, who declared bankruptcy six times, imposed tariffs of 34% for China, 37% for Liechtenstein, 32% for Taiwan, 49% for Cambodia, and so on.
It is assumed that the table shows the percentage that the USA considers as import customs duties of those countries against which the USA imposes customs tariffs. That is, it is believed that China imposed tariffs of 67%, Trump divided the figure by two and set it at 34%.
That is, the logic is presented this way: you imposed a 50% tariff on us, so we will impose a 25% tariff on you.
Is this really the case? Did the US government sit down and calculate each individual import tariff of foreign states? Did they study what tariffs each country imposes on goods exported from the USA? We would like to think so. But no.
A bunch of competent workers from the new government applied a rather simple formula:
| Imports to the USA – Exports from the USA | / Exports from the USA x 100%
Let's take Vietnam:
Imports to the USA — 136.6
Exports from the USA — 13.1
Deficit = 123.5
123.5/136.6 = 90%
These geniuses received a protective tariff from Vietnam of 90%.
Although this is not true. Many textile industry enterprises have moved their production here to save on labor costs, producing goods for American companies for the American consumer, and importing textiles, sneakers, and other items into the USA.
The truth is that such a structural imbalance of $123 billion deficit is not caused by Vietnam imposing a 90% tariff on the Jeep Grand Cherokee, assembled somewhere in Alabama. The truth is that the average resident of Vietnam, living on $1 a day, does not give a damn about a Cherokee for $100,000. US goods are simply not needed by Vietnam in the same quantity to balance the volume of necessary goods for the USA that Vietnam produces.
The market quickly realized the idiocy that Lutnik and Trump came up with, and it collapsed at a rate of $125B per minute during Trump's 17-minute speech, $2 trillion of added value on the stock market was destroyed, SP500 slipped from +1.7% to -4% in post-market.
The only hope that the market has right now is that the idiots who made such a decision will reconsider.
Otherwise, the USA faces recession, increased inflation, as the government imposes average tariffs of 27% against the current 2.7%. This figure exceeded the tariff levels that the USA adopted to combat the Great Depression in 1930. It is recommended to read about that policy. It is considered one of the key factors that led to the Great Depression (not the main cause of the crisis, but one of them).
Is this the very art of the deal of the great Trump?
