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Tariffs – Trump Blinks Again
On Thursday President Trump pulled back on tariffs because a sell-off in treasuries threatened to develop into a serious economic catastrophe.
Tariffs were reduced to 10% for most countries but China. (10% is still a lot higher than they were before Trump started his tariff onslaught.) The tariffs on products from China were raised to a total of 145%.
The high China tariffs would inevitably lead to a steep raise of U.S. prices for consumer electronics which, at least partially, are nowadays coming from China. For big U.S. companies, foremost Apple, this would have entailed large losses.
So Trump blinked again:
US excludes smartphones, computers from Trump's reciprocal tariffs – Reuters, Apr 12 2025
The Trump administration has granted tariff exclusions for smartphones, computers and other electronics imports supplied largely by China, sparing them from much of President Donald Trump's steep 125% duties.
In a notice to shippers, the U.S. Customs and Border Protection agency published a list of tariff codes that will be excluded from the duties. The exclusions are retroactively to 12:01 a.m. on April 5.
The U.S. CBP listed 20 product categories, including the very broad 8471 code for all computers, laptops and disc drives and automatic data processing. It also included semiconductor devices, equipment, memory chips and flat panel displays.
The notice did not provide an explanation for the Trump administration's move, but the late-night exclusion provides welcome relief to major U.s. technology firms, including Apple Dell Technologies and countless other importers.
The full list of the new tariff exceptions is here.
This is a curious way to 1. undermining U.S. manufacturing and 2. to increase the trade imbalance.
High price, high technology products can now be imported from China with low tariffs applied to them while low tech intermediate goods from China, which U.S. producers need for their products, will have super high tariffs on them.
If this stands it will lead to more low tech production of intermediate goods within the U.S. while the high tech production will stay and expand in China.
China had retaliated to the U.S. tariffs by applying a 125% tariff on all U.S. products. It is unlikely to exempt specific categories from that. At rates above 100% trade between China and the U.S. will within a short timeframe come to a complete halt.
The U.S. has now exempted some 22% in value of its previous imports from China from tariffs while China keeps tariffs on all U.S. products high. The trade between the two countries will thereby become more unbalanced than ever before.
The U.S. will continue to import 22% of its previous imports from China while its exports to China will shrink to zero. The absolute trade imbalance will thereby be higher than it was before Trump started his tariff war.
All this is a curious way of acknowledging defeat in the war. The rolling of heads will start tomorrow.
I have a friend who used to ask “If you’re so smart, how come you aren’t rich?”
Posted by: BroncoBilly | Apr 13 2025 1:46 utc | 101
This is exactly the capitalist, especially US-type dehumanised mindset that should be rejected and merits only – disgust.
Individuals with such convictions are typically not swayed by facts, reason or evidence, and usually do not understand, among other, the relevance of history, context and individual circumstances.
Contrary to the western imposed belief that being rich is the measure of “being smart” and by implication a worthy human, material wealth is not the measure of all things and certainly not of human value and “smartness”.
To be rich is the main goal only in the US/Western culture, with all the tragic consequences we are witnessing today.
On another note, I want to point out karlofi’s
‘”Bloodbath” and the President’s Ass: Why Trump Started and Curtailed the Trade War: Did the U.S. President Achieve What He Wanted?’
A Russian POV.
In the second half he quotes an engineer working in industry, “RalfB, who’s a brand new Gym rat”, whose comment is worthy of everyone’s attention. I cite it here:
RalfB wrote:
The culture of skilled labor, seeded by the medieval guilds and fully developed by the Industrial Revolution, was what made the West unstoppable for over two centuries. The RoW, while being colonized, enslaved, and generally ruthlessly screwed, at first didn’t realize what the white man’s advantage was; they erroneously thought it was the clever wheeling-dealing or having a more modern military.
Japan was the first to catch on; the Meiji statesmen at first tried to emulate the Western political system, with a parliament and everything, and financial institutions, because that’s what the Western propaganda said were the roots of their success. But eventually they realized it was industry, and started to modernize their own. It took them several generations, not to build the factories, but to develop a proper working class, with the right ethics: the culture of skilled laborers. But the Japanese eventually got it right, and even exceeded the standards of the West, which was already floundering under the weight of its parasites all that time.
South Korea was next; then eventually China, which has just arrived. Iran and then India are not quite there yet, but getting very close. I am an engineer, working in industry; we order a lot of modules and parts from subsuppliers around the world. Twenty years ago Chinese products had a well deserved reputation of being cheap and shoddy. Ten years ago, the bad rep was still there, but the products were mostly solid, if not stellar. Now they make parts and equipment better than the Germans, not to even mention the US; quite on par with Japanese products. Twenty years; a full generation.
But the whole process, from the start, took more; two or three generations; same as in Japan. First to build up the infrastructure, and teaching cadres for technical education. Then to turn out the first, raw cohort of industrial workers, while at the same time developing the know-how, mostly by copying others and learning by painful trial-and-error. Finally, to build the attitudes and the culture of skilled labor, which is what made the difference between the “Chinese crap” of twenty-years ago, and their cutting-edge tech of today.
The United States, and the rest of the West including Germany, meanwhile destroyed their culture of skilled labor, for profit. The destruction is complete; just as we mistrusted Chinese products recently, now (in my industry, and elsewhere) we are coming to realize that German industrial products are shoddy, and not to be trusted. And Germany is the best of the lot, they still retain some old-timers who know what they are doing. American companies fired the lot of them, demolished the facilities, and salted the ground.
All manufacturing in the West is just coasting now; producing minor variations of products that were designed by previous generation’s designers, on legacy production lines that have been running for decades. That is why they were so utterly unable to accelerate ammunition production. The old production lines, at Rheinmetall and elsewhere, are still limping along, but establishing new ones is not feasible—no one knows how to build them, or get them running properly. Other industries are in the same bind, churning out the same-old widgets—as financialists disdainfully refer to industrial products—using trivially upgraded legacy designs and production lines. The only real innovation comes from abroad, mostly in the form of faster chip designs.
That is why Trump’s ambition of reviving American industry with nothing but financial leverage is a pipe dream. There is no know-how anymore, no cadre of industrial workers, and the culture of skilled labor that made the West has been canceled and erased. By my estimate it would take one generation to start churning out crude, failure-prone lemons, and yet another generation to bring industry to world standards. Not the kind of timeframe Mr. Deal-artist is used to be working in.
A case in point is the ongoing attempt to transplant chip manufacturing from Taiwan to the US. The factories have largely been built, at exorbitant expense, and only because Taiwanese engineers were on hand to supervise the construction. But there are no engineers and no tech-aware managers in the US to run these factories, so Taiwanese cadres were transplanted—essentially by making them an offer they couldn’t refuse—to manage these factories. But the production is still no-go, because in all the third of a billion of Americans, there is not enough skilled workers capable of working in these production lines, despite the promise of exorbitant pay. Now they are at the stage of importing slaves—er, I meant coerced-volunteer production line workers—also from Taiwan, to work in these “American” chip factories. Money is being poured in by the bucketful, but I will wager a guess: once they get the production running, the chips coming out will be so substandard, that nobody will be buying them. For years.
And that is the absolute best the US can do, with all the government and finance leverage you can get, and workforce imported wholesale. In less strategic fields the situation will be much worse. And it will be made much worse yet by the impending reverse brain drain: all the foreigners doing science and STEM education in the US, all the Chinese, Russians, Indians, Persians, and Germans whose foreign names figure on most engineering textbooks and on most STEM research papers, will soon pack up and go home, because they were here only for the living conditions—and living conditions in the US are going to hell in a basket.
There are practically no top-level American-born STEM researchers left, and the few adequate exceptions have been recruited to work on classified military projects, where foreigners are barred. And we can judge their level of know-how by observing how these projects are spectacularly failing, from the F-35 boondoggle to the hypersonics development clusterfuck, to the pratfall of Boeing orbital vehicles.
Posted by: JB | Apr 13 2025 10:56 utc | 151
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