The New Tariff Conversation

[Moriarte]

Never having checked the statistics myself I've decided to dig deeper into Trump's proclamation that USA have been treated unfairly in international trade irt tariffs. For that I took to "WTO Tariff and Trade Data" (https://ttd.wto.org/en), which aggregates bilateral trade and calculates tariff averages for each side. That way it is clearly seen, whether on macro level one nation is "taxing" the other at a higher average rate through the use of tariffs. Furthermore, there is depth & specifics of each individual product category having a different rate of tariff applied to them. The trade-weighted average is the indicator I chose in order to gauge whether any select country currently maintains higher average trade-weighted rates (of tariffs) on their counterparts in bilateral trade on an aggregate level. Whether status quo situation is fair or unfair is also a point of discussion, feel free to pursue it. Or maybe you feel that fairness doesn't have to connect with international trade in this particular instance? Whichever it is - do let us know.

First the summary, the data under the spoiler.

Partners	Trade Weighted Average MFN Applied by USA	Trade Weighted Average MFN Applied by Partner
USA - China	2.4%	4.9%
USA - Canada	1.9%	3.9%
USA - Mexico	3.4%	5.7%
USA - EU	1.4%	1.7%

Spoiler Data :

The historical framework was that USA being a developed country, a founder and negotiation leader of GATT (1947) and then WTO (1995) allowed tariff leeway towards allies & developing countries joining the trade organisation in the form of higher comparative tariffs applied in the direction of goods imported from the USA. D. Trump and his administration want to change the framework going forward. They advocate for equality in tariffs. International trade partners of USA, on the contrary, are advocating for keeping preferential system of tariffs skewed towards them. They resist movement towards equality by enabling reciprocal responses, reinforcing the status quo.

The point of this thread is to come closer to the realisation of what will happen, but, of course, it is important to explore what can happen or what needs to happen.

 

[Thorgalaeg]

Trump considers VAT a tariff, so I would take anything he advocates for very seriously.

 

[Gorbles]

D. Trump and his administration want to change the framework going forward. They advocate for equality in tariffs.

Believing this is to believe in claims with no evidence behind them. Your data is trying to prove a conclusion you've already reached.

 

[Valka D'Ur]

I will be the first to admit that my understanding of this sort of thing is minimal (math-challenged here).

But the latest "you tariffed me so I'm gonna tariff you" tantrum happened because Premier Doug Ford is coming closer to carrying out his threat to shut off the electricity that the U.S. gets from Canada.

And at this point, so help me, I almost hope he does it, just to see how far the Americans go with finally doing something about him. I know what it's like to subsist in early May with the utilities shut off. Ford is making these threats in March. So if May isn't fun, March really won't be. Guaranteed, it should make them much angrier than the people of Kentucky got after Canada started boycotting their liquor.

 

[Snowygerry]

What happened here is a typical good cop-bad cop play imho., provincial premier imposes sanctions, national president (?) cancels them, Trump who rules alone, was forced to show his hand prematurely, he will always be put at disadvantage in this manner.

 

[Valka D'Ur]

If you're referring to Ford, he is a premier, not a governor.

Unless referring to the new Prime Minister, Mark Carney (who used to be the governor of the Bank of Canada), "governor" has become a 4-letter word in Canada.

 

[Moriarte]

Believing this is to believe in claims with no evidence behind them. Your data is trying to prove a conclusion you've already reached.

I am merely demonstrating WTO data, which is, in my opinion, the source of evidence to Trump administration. You can present own data/reinterpretation of WTO data so we can come to some other conclusion, such as that Trump doesn't want to achieve what he voices. Or that he doesn't, indeed, push for changing the framework, or that he tries to push American tariffs beyond the point of equality, on average or in particular industries. For myself, I am yet to gather enough information to come to a conclusion about what is going to happen in the aftermath of all this. There seems to be both reluctance on Trump's part to change course and the reluctance of partners to yield to his demands.

 

[Gorbles]

I am merely demonstrating WTO data, which is, in my opinion, the source of evidence to Trump administration. You can present own data/reinterpretation of WTO data so we can come to some other conclusion, such as that Trump doesn't want to achieve what he voices. Or that he doesn't, indeed, push for changing the framework, or that he tries to push American tariffs beyond the point of equality, on average or in particular industries. For myself, I am yet to gather enough information to come to a conclusion about what is going to happen in the aftermath of all this. There seems to be both reluctance on Trump's part to change course and the reluctance of partners to yield to his demands.

If you were merely demonstrating data you would not be providing claims of your own. And yet you are:

International trade partners of USA, on the contrary, are advocating for keeping preferential system of tariffs skewed towards them.

As I said: you have already come to a conclusion. That the US is pushing for "equality" and that the US' trade partners are not.

 

[Moriarte]

As I said: you have already come to a conclusion. That the US is pushing for "equality" and that the US' trade partners are not.

And again, I am demonstrating what the Trump administration is voicing. It is important to show what the positions of sides are. Someone else (maybe even you) can demostrate what the opposing position is and what it is based on. Then we can decide which cause is more hounorable and which events are likely. My own position is neither here nor there for this discussion.

If you think Trump is lying when he says he wants equality of tariffs - do say so. That would at least be a productive direction to explore and it would delineate your position.

 

[amadeus]

If the rates are different and the other countries want a continuation of the status quo, they cannot by definition want an equal tariff.

 

[Gorbles]

And again, I am demonstrating what the Trump administration is voicing.

Do you agree with what the Trump administration is voicing, which you are posting seemingly unaltered, not in quotes? It's funny to ask me to say something when you have apparently said something, but are now claiming that you didn't actually say it. If you didn't, then why not quote the Trump administration directly? Why make it seem like it was, in fact, your argument?

This is all semantics anyway, it's just funny.

That would at least be a productive direction to explore and it would delineate your position.

I think Trump will say whatever he wants to say to get whatever short-term reaction he either wants personally, or has been told will be beneficial by those around him. I don't think he cares about any fairness - I think he just wants to be credited with anything positive wrt. the US (whether merely optics, or an actual positive development).

I also think you have already reached a conclusion, despite your unwillingness to publicly commit to it. In my opinion it's pretty clear from how you demonstrate the positions you're choosing to demonstrate (as well as what you choose to demonstrate).

 

[EnglishEdward]

International trade partners of USA, on the contrary, are advocating for keeping preferential system of tariffs skewed towards them.
They resist movement towards equality by enabling reciprocal responses, reinforcing the status quo.

Many only do this when they can not exclude goods by non tariff i.e. dubious regulatory measures.

 

[Moriarte]

If you didn't, then why not quote the Trump administration directly?

No problem. I was presuming you would come into conversation about tariffs intimately familiar with Trump's position, but if you aren't, here it is:

Start @ 4 minutes, in 60 seconds you will know the rough sketch of Trump's stance on tariffs. He was rambling about tariff equality as he sees it in many of his rock concerts and interviews for at least a year now. More or less, his position can be found at the end of my opening post. Where I specifically mentioned that equality of Tariffs is Trump's position.

They advocate for equality in tariffs.

Do you agree with what the Trump administration is voicing, which you are posting seemingly unaltered, not in quotes?

Sure, since you are curious, my position is this: whatever was done up until today is objective reality. If Trump wants to adjust objective reality - he will have to find arguments and interest his partners to move towards nominal equality by offering something in return. Trying to force his will in an uncompromising way will not work as effectively as offering some carrots. I do allow the thought that I am missing something and Trump has some levers to pull to extort successfully, time will tell.

I think Trump will say whatever he wants to say to get whatever short-term reaction he either wants personally, or has been told will be beneficial by those around him. I don't think he cares about any fairness - I think he just wants to be credited with anything positive wrt. the US (whether merely optics, or an actual positive development).

Are you saying he is a politician in a classical sense? (in a "Yes, minister" sense)

 

[Gorbles]

Sure, since you are curious, my position is this: whatever was done up until today is objective reality. If Trump wants to adjust objective reality - he will have to find arguments and interest his partners to move towards nominal equality by offering something in return. Trying to force his will in an uncompromising way will not work as effectively as offering some carrots. I do allow the thought that I am missing something and Trump has some levers to pull to extort successfully, time will tell.

This is not an answer to my question of whether or not you agree.

Are you saying he is a politician in a classical sense? (in a "Yes, minister" sense)

I disagree with your attempt at flattening optics to rehabilitate his image. But it is more evidence for the thread r.e. your unstated opinions that I have (apparently unsuccessfully) being trying to get you to own.

Why the need to not state things outright? What do you fear?

 

[Moriarte]

This is not an answer to my question of whether or not you agree.

If you re-read my previous answer it is pretty easy to see that my position differs from Trump’s. So it appears that despite insignificance of my opinion I, personally, disagree with his approach. But I see there is indeed nominal difference in aggregate tariffs and US president is determined to try change the status quo. (or die tryin’) That is objective reality too. Until someone trumps this position with solid argumentation supported by many, it will persist. I believe we’re still in the process.

 

[Gorbles]

If you re-read my previous answer it is pretty easy to see that my position differs from Trump’s. So it appears that despite insignificance of my opinion I, personally, disagree with his approach. But I see there is indeed nominal difference in aggregate tariffs and US president is determined to try change the status quo. (or die tryin’) That is objective reality too. Until someone trumps this position with solid argumentation supported by many, it will persist. I believe we’re still in the process.

Oh, I understood your answer r.e. what actions you think he needs to take.

This is different than the question I asked, which was whether or not you agree that he should be doing this at all.

 

[Moriarte]

This is different than the question I asked, which was whether or not you agree that he should be doing this at all.

I am not from USA, as you know, so my opinion doesn't have a great deal of self-interest in the matter. But, placing myself within the imaginary border of USA, I'd say that US of A can benefit from discarding China's tariff preferences, while keeping tariff preferences of Allies. For the bond of free nations and all that jazz. So, there is a case that China, having grown so much since 1995, the founding year of WTO, have built modern infrastructure and technological ecosystem and does in fact now deserve to ascend to the rank of developed countries. Thus, tariffs equality should apply to them with full force, in spirit of the unwritten charter of WTO.

Do you think tariff adjustment should be avoided on principle?

 

[Gorbles]

Do you think tariff adjustment should be avoided on principle?

I don't know enough economics to say "on principle". I also think China is a difference case vs. other international trading partners given the geopolitical climate (nevermind China's progress since the 90s).

I think when it comes to the US' allies, the behaviour is destructive, and not rooted in any actual notion of unfairness other than perception. Which may result in actual "unfairness" at least from Trump's perspectives (as we're seeing with retaliatory tariffs), because the trust has been broken.

 

[Moriarte]

not rooted in any actual notion of unfairness other than perception

I can relate. Power that be is using the low-hanging fruit of tariff inequality to conjure up widely accepted justification for making extra cash on the side.

Trump's impulse may be rooted in something other than unfairness, as you say, but is tariff regulation immoral and detrimental, that is the bigger question. It seems to me, that to some extent, highly specialized countries deserve to have their industries protected, since they are integral parts of the complex economic ecosystem, much bigger than themselves, but have lopsided economies as a result of specialization. Protected industries mean unequal tariff politics with the larger partner country. So, there is at least this stabilization use for tariff framework. It is also evident how economic ecosystems are getting insulated from each other through the use of tariffs. I don't think we are that free we are ready to part with protective measures and their extensions - tariffs. So, the question is how. That should be decided by WTO, sooner or later. With shots fire across the oceans we have accelerated towards that outcome.

 

[JollyRoger]

If we want to become a manufacturing economy, we need to have "unequal" tariffs in our favor and a citizenship willing to have a lower standard of living.