April 12, 2025
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.
Posted by b on April 12, 2025 at 15:56 UTC | Permalink