From 'liberation day' to Independence Day
Learning that Lerner symmetry is a bitch
In Congress, July 4, 1776, The unanimous Declaration of the thirteen united States of America...For cutting off our Trade with all parts of the world...they are Absolved from all Allegiance...
The '90 deals in 90 days' has turned into three deals (UK, China, and Vietnam), with the Trump administration set to send letters to around 20 countries advising their new reciprocal tariff rates. According to Trump, these could range as high as 60-70%, with the administration threatening a new 17% tariff on EU food exports to the US. The recent G7 meeting was the most likely venue for concluding at least in-principle agreements, but the other G7 members and invitees went home empty-handed. Japan rightly insisted that the auto and steel tariffs had to be removed for a deal to be worthwhile, but cars and steel are the industries that Trump probably cares about most.
The deals that have been negotiated are fairly minimalist. The China text still hasn't been seen. The agreement with Vietnam was notable for the 40% tariff on trans-shipments designed to combat trade diversion. Vietnam had been a big winner from Trump's first trade war back in 2018-19, accelerating a trend for producers to relocate there. The broad scope of the reciprocal tariff regime is in large part designed to prevent trade diversion, with the tariffs on the uninhabited Australian external territories of Heard and McDonald Islands one of the more absurd manifestations of that effort.
Trade wants to be free, and the higher the tariff rate, the more trade diversion and outright non-compliance should be expected. Estimates of effective tariff rates typically make some allowance for historical non-compliance rates. The tariffs are a potential boon for global organised crime, which already has well-established cross-border smuggling networks that can easily transition from narcotics to iPhones.