ZH
Last week we explained that this particular trade war will be all about the deals that Trump announces as he pulls the country and market from the trade war abyss.
That was quick: Thailand to Negotiate With the US on 36% Imposed Tariffs: PM Next: everyone else
Everyone else…. starting with Vietnam, which as we profiled Thursday was slapped with some of the highest reciprocal tariffs… MORE
That is how it ought to be.
Peter Navarro is probably the best explainer of the history of trade, trade tariffs, and how tariffs work to stop countries from stealing from us.
Yesterday, on “Sunday Morning Futures” he explained how the significant numbers are not just the reciprocal percentages. China, for example, uses Vietnam as a proxy. They route their own goods through Vietnam in order to cheat the “country of origin” labels. Other countries do the same thing. This and other schemes are non-tariff barriers that tip the scales in favor of our trade partners. The EU countries’ favorite non-tariff, protectionist barriers are via bogus requirements on things like the ingredients in our livestock feed; finding fault with processing, etc. If producers meet their demands, they move the goal posts. The net effect also increases regulations on the domestic side of production. Our ability to trade fairly is rife with these kinds of non-tariff barriers almost to the point that the tariff percentages are meaningless. What Trump is imposing via tariff percentages is only a first, and very light, salvo against the countries who have been gaming us for nearly a century. The unkindest cut of all is that the biggest trade cheats come from the countries which the generous U.S. tax payer rebuilt after WWII.
…basically, the current state of tariffs and trade deficits (Vietnam – $128B?!!) is something like USAID, in which our entire country’s production and wealth is merely a giant USAID and those we trade with are NGOs.
…and then there’s the commodity dumping!
Let’s get building some silicon founderies so that tiwan doesn’t have them all..