Commentary by Stephen Macaulay
All of a sudden, the tariffs on smartphones, computers, semiconductors, and other electronics made in China received exemptions — not free passes. (There’s still the 20% tariff on Chinese goods predicated on the fentanyl issue.)
A few things need to be thought about in the context of a message that came from the US Customs and Border Protection agency.
Why did Donald Trump do this? Is it because of his admiration for Xi Jinping? Unlikely.
Rather, it is probably because he knows that people care more about iPhones than they do about him and were the full-blown tariffs — as in 145% -- applied to them, people wouldn’t get angry at Tim Cook.
They’d blame Trump.
Second, note how this is seemingly a knee-jerk reaction.
Also notice how this retraction was not done by Trump with a flourish of a Sharpie. No, it came in a bulletin.
He certainly couldn’t be seen admitting that maybe the tariffs on iPhones would be le unpalatable to the American public.
(How much? The Wall Street Journal cited numbers from a research firm that calculate the parts of a 256 GB iPhone Pro costs Apple $550. So tariffs are applied to that number, not the number you find at an Apple store. In the case of that phone, the price is $1,099. So if Apple wants to recoup the money it is paying for tariffs, that gets added to the $1,099. Let’s say it is the 145% (the aforementioned 20% plus the remainder that will show up a few sentences from now): $550 + 145% = $797.50. Add that to the current $1,099 retail price and you get $1,896.50. And it should be noted that on April 10 the Consumer Price Index showed the price of a dozen eggs reached a new high, $6.23. Remember when Trump was running and said he would reduce prices?)
On April 2, so-called “Liberation Day” (liberation from what? 401(k)s?), a 34% tariff was announced on Chinese goods imported to the US. So what did the Chinese do a couple days later? They applied 34% tariffs on US goods. What did Trump do? He increased the tariff on China to 84% on April 8.
Trump in his executive order on that: “In my judgment, this modification is necessary and appropriate to effectively address the threat to the national security and economy of the United States.”
Protecting national security is core to what a president should be doing.
So how does that square with this, from an executive order signed on April 4 about protecting TikTok:
“During this period, the Department of Justice shall take no action to enforce the Protecting Americans from Foreign Adversary Controlled Applications Act (the “Act”) (Public Law 118-50, Div. H) or impose any penalties against any entity for any noncompliance with the Act, including for distributing, maintaining, or updating (or enabling the distribution, maintenance, or updating) of any foreign adversary controlled application as defined in the Act.”
Ah, maybe protecting the public from a “foreign adversary controlled” app is overrated.
Back to the tariffs.
What did China do in response to Trump raising the stakes?
It increased the duty on US goods to. . .84%.
What did Trump do? He raised the tariff on China to 125%. (With the other 20% tariff that gets to 145%.)
The explanation for this one:
“In my judgment, this modification is necessary and appropriate to effectively address the threat to US national and economic security posed by the PRC’s contribution to the conditions reflected in large and persistent trade deficits, including PRC industrial policies that have produced systemic excess manufacturing capacity in the PRC and suppressed US domestic manufacturing capacity, which conditions are made worse by the PRC’s recent actions.”
The ”large and persistent trade deficits” come from American companies buying lots of stuff from China that they sell in the American market.
The “industrial policies that have produced systemic excess manufacturing capacity in the PRC” “suppressed US domestic manufacturing capacity” only because US manufacturing companies didn’t — and don’t — have the same kind of support from their government to build factories.
The Trump Administration talks a lot about reducing regulations on companies. In some cases this is good, as it can facilitate getting things done with no red tape tripping them up. In other cases, the old phrase about “the fox guarding the hen house” comes to mind. Let’s face it, not all corporate managers are good actors.
But for the good ones: Just imagine how much time is being wasted by people at American companies right now trying to figure out their supply chains — only to have Trump swerve and remove some tariffs while adding others.
Business runs on facts and numbers, not on whims.
Funny thing: Nowhere does Team Trump indicate how many manufacturing jobs are going to be made in the US as a result of the president’s tariffs.
Nowhere is it pointed out that it takes years to build, equip and launch factories, so all of the talk about “temporary pain” is nonsense: Years of pain.
In addition to which: If companies build new factories in the US you can be absolutely sure that they are going to apply Industry 4.0 principles to it, which means AI, lots of automation. . .and not a whole lot of people.
Again, something that doesn’t get pointed out.
And then there’s this from Commerce Secretary Howard Lutnick on ABC’s This Week on the subject of the suspension of the tariffs on the silicon-based products from China:
“We need to have these things made in America. We can’t be reliant on Southeast Asia for all the things that operate for us. So what he’s doing is he’s saying they’re exempt from the reciprocal tariffs, but they’re included in the semiconductor tariffs, which are coming probably in a month or two… . So this is not like a permanent sort of exemption.”
Again, look at this: The tariffs are (mainly gone) from these products — but then they are likely to be back. When are they going to be back? Well, it might be one month or it might be two. Or maybe it will be next week
Trump has a persona of being a good businessman.
Anyone who ran a business like this would hear two words: “You’re fired!”
Macaulay is pundit-at-large for The Hustings.