Jane Clifton: Trump is playing high-stakes bingo with world economies

NZ Herald

2 days ago

Patriot games: Donald Trump and Ursula von de Leyen hammered out tariff terms. Photo / Getty Images
Observers didn't actually witness US President Donald Trump and European Commission President Ursula von de Leyen calling out, 'Legs-eleven, two little ducks, twenty-two, clickety-click, sixty-six,' when they met in Scotland recently, but it must have been close.
The US's tariff crusade has degenerated to the equivalent of a slow night down the bingo hall, with numbers constantly announced but never conclusively scratched out.
For now, the US has hoisted 'Young and keen, 15,' as its new, higher impost on European Union exports.
In unprecedented unneighbourliness, Canada is reeling from 'Jump'n'jive, 35'. Switzerland is smarting at 39%, China, 30% and India, 25%, whereas the UK and Australia are agloat over 'PM's Den – 10'.
But – eyes down, looking! – there's a new bingo call every minute, and not just by the US President. Global trade comes with an indefinite purgatory of 'technical' talks. As of now, platoons of lethally accomplished technocrat pedants are beetling over the fine print to argue for excluding various categories – amounting to practically every country's entire export output. Already, carve-outs worth billions have been agreed.
The roll call of exceptions may not get a lot of publicity. This is not just out of tact – as in, letting the US still think it has kicked ass. It's simply not practical to express a detailed daily update. Imagine it: 'At press time, the latest US tariff is 15% except on baking soda, where it'll be 10%, gumboots, sugar-free confectionary and paper napkins, 12%; 8% on fish byproducts, onion rings …' and so on.
If the list of exceptions goes on and on, trade acronyms are seemingly limitless in length. The Trans-Pacific Partnership bloated into the ridiculous CPTPP agreement because some countries thought it would sound nicer if they chucked in 'comprehensive', 'progressive' and 'agreement'. So, who knows? We could all soon be reciting tariff bingo.
Crazy to think that just a year ago, the tariff system was a bit like Blu-ray – still going but hopelessly naff. As a vestige of protectionism, tariffs were retained according to the St Augustin principle: Lord, make me good, but not just yet. As is now tattooed onto global markets' hard drives: they are back, Terminator style.
The US can call the shots in world trade and is capable of going right off the bingo card – as in its 200% opening salvo on pharmaceuticals. Accordingly, the definition of 'fair trade' has undergone an emergency rewrite.
Trade imbalances used to be considered nothing personal, just a reflection of country A's consumers liking country B's stuff more than country B's folk like stuff from country A.
Various factors aside from tariffs caused such preferences: base price, quality and reliability of supply, and, to a lesser extent, reputational factors such as slave labour, carbon emissions and pollution.
The US, however, has decided other countries are not buying enough of its stuff, and worse, have nicked some of its best businesses. It has shown tariffs to be a highly effective whacking stick – newly accessorised with 'unrelated' side deals like arms and energy arrangementes.
The EU is to buy NZ$1270 billion of US energy between now and 2028. Absolutely not a concession after Trump's initial threat of 'Dirty Gertie, 30' – honest.
Some analysts predict the US will come off worse overall with domestic cost-of-living and inflation consequences; others see a weaker Europe and a more aggressive China.
The only safe prediction is that tariffs will keep moving up and down.
Still, if prospectuses start turning up calling for investment in a causeway across the Labrador Sea joining Canada to Europe (via Greenland's Denmark connection), it might not be a hoax.
Canada's EU membership application could well be in the mail.