Trump’s tariff claims are even stupider than anyone thought

The White House released a list of countries and the tariff rates they charged the US. It was clearly wrong as NZ has an average tariff of around 1.7% on US imports and the list said 20%. I thought it was because they were including our GST of 15%. That would have been very dumb, but the truth is even dumber.

The rate listed for each country has nothing to do with tariffs. It is simply the trade deficit for that country divided by the level of exports.

A trade deficit between countries can (and usually is) nothing to do with tariffs. It is just supply and demand. You run trade surpluses with some countries and deficits with another. It isn’t even really a country to country thing. It simply reflects decisions by individual businesses in a country about where they buy goods and services from, and sell them to.

It is astonishing that the US White House released a document that is just patently false. You can’t just call a trade deficit a tariff. Well you can, but it doesn’t change reality. It’s like claiming that the inflation rate is actually the unemployment rate! These are in no way reciprocal tariffs.

As a tool for policy making, it is incredibly flawed. The geniuses have said that the trade deficit with Cambodia is 97% of total exports, so there must be a tariff of half that or 49%. Now Cambodia doesn’t have a trade surplus with the US because it has tariffs (I suspect they have none) on US imports. It is a very poor country and just can’t afford many US imports.

And just to prove that they are morons who can’t even do basic research, they have announced the following tariffs:

• A 10% tariff on Heard Island and McDonald Islands, which has been unpopulated since 1877
• A 10% tariff on the British Indian Ocean Territory whose only population is military staff who work on a US airbase there!

I’m glad that New Zealand never ended up doing a free trade agreement with the US, because it would now be worthless. Trump has reneged on every single trade agreement the US has signed. The Australia-US FTA is now defunct.

The best response by countries impacted by these US tariffs, is to increase trade between ourselves. We should be talking to China, Japan, Korea, Canada, EU etc and saying hey let’s reduce any remaining tariffs between us, so that our exporters can divest from the US.