How Trump calculated the new tariff rates and why they differ by country
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PresidentDonald Trumppromisedtariffsthat would raiseU.S. import taxeshigh enough to mirror what others assess as trade penalties on American goods.Whathes actually imposingis based on far more complicated math.Heres a look at how the White House gotits numbers:Why do the new tariff rates often differ by country?The Trump administration has declared an economic emergency to bypass Congress and impose a 10% tariff on nearly all countries and territories. It has set even higher levies for about 60 nations that it says are the worst offenders.The 10% global tariffs take effect at 12:01 a.m. Saturday. The higher tariffs set for specific countries are due to kick in at one minute past midnight on April 9.Among the so-called worst offenders is China, which Trump argues protect its producers through malicious trade practices in addition to tariffs. Those efforts include actions such as imposing value added taxes on all goods, dumping overproduced products on markets to artificially deflate prices, or manipulating currency.To determine how much higher those nations rates should be, the White House says it calculated the size of each countrys trade imbalance on goods with the United States and divided that by how much America imports from that nation.It then took half that percentage and made it the new tariff rate.Why not just charge reciprocal rates?The White House says its calculations kept new tariffs from going even higher for many countries and demonstrate that Trump is being kind to global trading partners.The administration maintains that creating a baseline levy with few exemptions is necessary to keep China and others from skirting the new tariffs by manufacturing goods and then shipping them to Vietnam, Cambodia, Mexico or elsewhere to then be sent to the U.S.Thats why the White House list of tariffed locationsincludes obscure placeslike the Heard and McDonald Islands, which are uninhabited. They are 2,550 miles (4,100 kilometers) from the coast of mainland Australia, which claims them as a territory.Is every country affected?No. Canada and Mexico are excluded because theyalready are facing 25% taxes on most imported goodsthat Trump announced last month, in an attempt to force both to crack down on fentanyl smuggling into the U.S.The White House originally said all others would be affected by at least the 10% tariff. But administration officials clarified on Thursday that countries already subject to stiff U.S. sanctions for example, Russia due to itsinvasion of Ukraine, as well as Iran, North Korea, Cuba, Belarus and Venezuela will not face the new, 10% global base tariff.Official said that is because sanctions and other existing barriers mean the U.S. has so little trade with those places that deficits are minimal.Why is Trump doing this?The president has spent months insistingAmerica was at its wealthiest at the end of the Gilded Agein the late 1800s and early 1900s, when it imposed high tariffs as the key means to generating revenue for the federal government.Trump even suggested Wednesday that the U.S. moving away from higher tariffs and toward a federal income tax in 1913 helped trigger the Great Depression of the 1930s a claim that economists and historians roundly reject.A more contemporary explanation might be found inProject 2025, a comprehensive blueprint compiled by leading conservatives about how to shrink the federal workforce and push Washington further to the right. It spelled outhow Trumpmight impose high tariffs around the globe, giving his administration more room to negotiate lower levies with trading partners in exchange for U.S. priorities.White House officials insist the new tariffs are more about closing trade deficits, stimulating U.S. manufacturing and generating government revenue than eventually negotiating new trading deals.But Trump has shown he is willing toback off on threats of tariffsin exchange for offers of concessions. His administration has said the president is always ready to make deals, a sign the new tariffs may prove to be more bargaining chip than permanent policy.Why do US trade imbalances matter?American trade policy created aU.S. trade imbalanceworth $1.2 trillion last year, a gap that some experts believe should be addressed in order to ensure the countrys long-term economic strength.But many economists say the trade imbalances that Trump is looking to correct are based on more than countries just using high tariffs or protectionist trade practices to boost their own exports. Basing the White Houses tariff math solely on trade deficits, for instance, fails to take into account U.S. consumer demand.Americans relish buying BMWs assembled in Germany, as well as French wine and coffee beans from Guatemala, and their spending can fuel trade imbalances regardless of the tax and tariff policies of the countries producing those goods.That means any attempt to close U.S. trade gaps by tariffs will likely mean increasing the cost of imported goods that Americans are buying, which in turn could hurt the economy because of increased inflationary pressures.Will Weissert, Associated PressAssociated Press writers Josh Boak and Zeke Miller contributed to this report.
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