Trump's Tariffs

 

Recently Trump announced his "reciprocal" tariffs. Large colorful boards smell poorly thought populism. Same rate for all goods with differentiations only per country does not make it any better. These tariffs are just for show. Now the question is what they will cost the countries in question and the US.

It's not that all tariffs are bad, and they cannot be used to help local manufacturing. However, in order to actually help local manufacturers tariffs have to be per product, not per country. Before charging any tariffs on this or that, local producers have to contacted to discuss if they could profitably produce this product locally if foreign competition was made more expensive. That is what some countries do to protect certain select local industries from foreign competition. High tariffs on some good and pretty much none on the rest. 

For example, EU mostly use tariffs to protects local farming. EU does not want to be completely dependent on foreign import when it comes to food. If they allow foreign competition to completely drive local farmers out of business, they will be at risk of starvation if something interferes with food imports.

Some overprotective countries like Russia even managed to make people buy morally outdated 70s era Ladas, by using tariffs to make even 10 years old imported cars more expensive than local ones. Measure was very unpopular with drivers even if personnel of Lada factory was happy.

In contrast blanket tariffs on all import will do little beyond raising prices on all import. Some or possibly most of this stuff will still be unprofitable to produce locally, so all tariffs will accomplish will be higher prices on every imported product. 

American lovers of foreign goods will be hit hardest, foreign countries that export to the US might lose some sales due to higher price on their goods in the US, but ultimately most will be able to sell their goods elsewhere. 

Out of countries affected by tariffs, the biggest impact will be felt in Mexico as well as China, Vietnam and other southeast Asian countries, whose economies are design to export into the US. For EU tariffs will be mostly an annoyance that nonetheless breaks trust between EU and the US.

Once again if tariffs against China could be justified with geopolitics: China was sliding further into authoritarianism and bellicose behavior. They exploit smaller countries and try to drive Western influence away. Tariffs could cool their heads a little bit.

Doing the same to EU does nothing but hurt transatlantic alliance. After initial shock EU will get its shit together and prepare measures to do everything without the US. America will lose its unique leadership role in the world. Role that still affords them greater say in any global affair then the entire EU combined.

Unfortunately, in their current form, Trump's tariffs are more of a trouble than they are worth. Which is a missed opportunity. Instead of a cohesive policy that could shore up certain key industries from competition and ensure their continued survival, it instead will mostly become lose/lose situation.