‘Reciprocal' Tariffs Make No Sense
At an Oval Office press conference Thursday, President Trump confirmed that he's going ahead with his reciprocal tariff plan. The U.S., he said, will impose the same tariffs on other countries as they impose on the U.S.: 'No more, no less.' That sounds fair—we treat them the way they treat us—but it's actually a terrible idea.
It amounts to outsourcing U.S. tariff policy to other countries. They would dictate what our tariffs would be. If other countries put high tariffs on American goods, then we would impose high tariffs on their goods. So much for American sovereignty. So much for deciding what's in our own national interest. The British economist Joan Robinson once said that a country shouldn't throw rocks into its own harbors just because other countries have rocky coasts. The same principle applies here: The U.S. shouldn't have stupid tariff policies just because other countries have stupid tariff policies.
A reciprocal policy would enormously complicate the U.S. tariff system. The Harmonized Tariff Schedule of the U.S., which details individual rates on particular commodities, has about 13,000 line items. The U.S. trades with roughly 200 countries. Is Washington ready to impose and manage 2.6 million individual tariff rates? The lobbying pressures for exemptions and exceptions on the U.S. side would be enormous. This would fill the swamp, not drain it. Foreign exporters would go to great lengths either to get their products under a lower tariff classification or to transship them to another country to reduce the duty they would face.
Reciprocal tariff systems lead to nonsensical policies. Consider: China exports rare-earth minerals that are essential for the production of many high-technology goods. The U.S. doesn't export such goods to China. But if China were nonetheless to impose high tariffs on them, would the U.S. then be required to impose real prohibitive duties on mineral imports from China?
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Politico
7 minutes ago
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A trade agreement with India was supposed to be one of President Donald Trump's first victories from the 'reciprocal' tariff salvo he fired against dozens of trading partners in early April. But while the administration has been promising for more than two months that a deal is imminent, they're still struggling to get it over the finish line. Two people close to the negotiations, granted anonymity because of the sensitivity of the discussions, say Washington and New Delhi continue to make progress toward the first phase of a trade deal, with the expectation that a more comprehensive agreement could come later in the fall. But the White House's demands to 'open up India' as it seeks a major trade victory ahead of President Donald Trump's self-imposed July 8 deadline — as well as his attempt to link the talks to thorny geopolitics in the region — have made it that much harder for Prime Minister Narendra Modi's government to sell the deal to a domestic audience. 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