The reasoning behind the tariff rates today may be even worse.
These numbers were purported to be some kind of well-thought-out number to represent the sum of tariffs and non-tariff barriers on the US. They're framed as 'reciprocal'.
The "tariffs charge to the US" numbers are simply the US trade deficit with that country divided by total imports. South Korea, for instance, has been hit with a 25% tariff rate that is a halving of the 50% 'calculated' rate. How did the US do that calculation?
Another example: The trade deficit with China ($295.4 billion) / US imports from China ($438.9 billion)=67%
Once that number was arrived upon it was then cut in half in some kind of 'deal-making' PR strategy but the implication here is that if you happened to sell your oil or computer chips to the US (sorry Taiwan) instead of China, you get smoked by tariffs. Also, it means that your dollar figure has nothing to do with non-tariff barriers.
Shockingly, the administration might have just asked ChatGPT to do its homework. If that wasn't bad enough, uninhabited islands were also singled out for tariffs. Even worse, they may have asked ChatGPT to generate a list of ISO country codes and that's why Svalbard and Jan Mayen (they share a code) were listed together, even though they're administered separately by Norway.
There is no logic here and the whole thing reeks of a slapped-together plan rolled out by unserious people.
In today's post-announcement interview with Bloomberg, Treasury Secretary Scott Bessent was rattled and didn't know what the tariff rates were on Mexico/Canada and was also unsure about China policy.
What's next
Even with that, I believe the Trump Put is in deep jeopardy. This isn't the same guy who ran the White House from 2016-2020 and bragged about every move in the Dow Jones Industrial Average. He doesn't seem to care about pain in the markets anymore, or at least a 10% decline hasn't been enough to get his attention. Will it take 20%? 30%?
This article was written by Adam Button at www.forexlive.com. Read More Details
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