US Administration announces 34% tariffs on China, 20% on EU

Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.

It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain.

We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories.

But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'.

I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated).

There's an underlying issue everyone is dancing around.

Income taxes on individuals are 2.4 trillion.

How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line.

Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more.

The only way this ends is one of two paths - a path similar to what we are on; default.

We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.

Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier.

If the solution was instead along the lines of changing tax-brackets to tax the 'privileged' more, that might have better addressed the problem you mention in the beginning.

tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.

Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?

Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education?

If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people.

To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes."

I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.

We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.

And how do you propose we do that? By giving schools even more money at taxpayer's expense?

> raising taxes at the high end

40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.

This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities.

If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.

> the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.

We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems.

There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.

Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?

It's true that free trade is hugely beneficial to large cap U.S. companies and their shareholders.

If you are U.S. worker without a lot of equity in the market all you notice is that your job gets outsourced.

It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries.

In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.

Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.

You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems.

The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs.

Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US.

Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems.

First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China.

And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.

Like... Scandinavia?

You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.

Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of.

> ... build out social systems...

The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them.

I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.

I'm always skeptical of the idea that we can just educate ourselves out of problems.

As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market?

The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment.

You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.

I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite".

Guess we'll see where it lands.

People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education.

What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets.

Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive.

Tax their Wealth.

Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.

There is a simple mechanism to distribute the money from the rich back to middle class / poor.

Its called taxes.

Basically, Trump shouldn't have done tariff and instead just taxed the rich after a certain point.

Oh wait, I think that sounds familiar.

Of course I am not saying tax them 90% and of course, you might say that there are loopholes. How are we going to distribute money from stocks? And you are right. But the thing trump is doing isn't working or maybe its working as intended by trump being a chatgpt wrapper.

If even trump literally just sat and did nothing, it would have been more beneficial.

I mean, Europe also has a high tax rate, its not that bad to have a high tax rate if you genuinely want equality, though I presume nobody really wants that. And Lobbying is legal in america which really shocks me.

I had said it time and time again. Trust is like a glass ball,once broken it can't be recovered. I feel like people are however still in shock of that glass ball being fallen and are in disbelief, But you guys gotta know whom y'all elected is doing harm.

Polymarket and even goldman sachs etc. are predicting 60% chance of US recession

The practical takeaway is that the average household will spend $3,500-4,000 more as a result of the tariffs. Clothes, furniture, toys will be about 30% more expensive, electronics will be about 25% more expensive, tires and jewelry about 15% more expensive, and industrial buyers are going to get hosed when they buy equipment.

There were major carve-outs for the auto industry (yay Michigan) and petrochemical industries (yay Gulf Coast); they’ll still get hosed on equipment but will mostly escape increases in cost of materials. Imported cars/trucks aren’t directly affected either.

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Meta discussion:

I can't do an analysis on the de minimis situation, I don't know of any public datasets that would allow such an analysis, and it's obvious that it will have extremely complex effects (and therefore, any first-order analysis would be very low-quality).

Note on ChatGPT-4.5 "Deep Research": I spot-checked the calculations for HS codes using my own research and the numbers seemed reasonably close to my own. https://atlas.hks.harvard.edu/explore/treemap is an invaluable resource for this kind of analysis. ChatGPT fumbled the bag on HS 30: Pharmaceutical products, by not excluding products listed in Annex II, which overestimated total tariffs by about 6% ($30 billion), but the net effect on households is still in the right ballpark (+/- 20%).

Edit: This isn't one of those simple low-effort posts that say "omg look what ChatGPT said". I'm capable of doing this analysis on my own, and I checked ChatGPT's work for the largest contributing categories of goods. Sometimes we disagreed by 10% or so, but overall the results checked out except for Pharmaceuticals, which I caught and didn't repeat misinformation in my "practical effects" tl;dr. The only way it is significantly wrong is if both myself and ChatGPT missed some large tariff category and assumed it was small - that could raise the real costs above the numbers in the analysis - but I checked all the largest categories that ChatGPT identified as well as all the largest categories from our largest trade partners shown by the Atlas of Economic Complexity, so it's somewhat unlikely that happened.

I purposefully didn't include 2nd and 3rd order effects (e.g. chained CPI) because they are usually relatively small, massively uncertain (my analysis would be worth as much as dog poop on a shoe) and those higher-order effects take too long to manifest. It's not worth predicting costs out 2+ years because the political environment is far too unstable. Just today, the U.S. Senate voted to block all the Canadian tariffs and end the "state-of-emergency" that this executive order is standing on. Front-page diplomacy or private back-room deals could make Trump adjust tariffs up or down on various nations multiple times this year. Who knows what the situation will be 6 months from now, let alone 5 years from now when global supply chains and pricing elasticity might re-normalize. The fact that ChatGPT didn't include these effects is a point in its favor, not a glaring oversight.

I'm not complaining about downvotes but if you are downvoting this, please let me know why so that I can improve. I put a lot of work into this far beyond just typing some crap into ChatGPT and I think these numbers add a lot to the discussion.

Not the big China exporters, not any more. They all include taxes in the price on your country specific web site, ship to their warehouses inside the EU, handle taxes and your local courier just delivers.

Now if you're talking DHL yes, they have you fill forms upon forms and charge you for the forms you didn't ask for. But if that happens, no one will have time to process all the forms so private imports from China will simply ... halt for a while. Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.

If in the US, I'd hold on any direct purchases from China for 3-6 months.

> So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.

Hah. That's DHL commission territory :) Definitely hold from direct purchases until Temu sorts it out for you.

https://bidenwhitehouse.archives.gov/briefing-room/statement...

Basically it just means Temu/Aliexpress/Etc. will ship their goods to the US in bulk instead of bypassing customs on individual small orders, and distribute from domestic warehouses, having to now compete with US producers who do the same thing.

It does completely kill any business built on dropshipping individual orders from chinese factories without ever touching inventory however.

All three of those stores are very popular in my part of Europe. So there must be some workaround.

All three of those stores are very popular in my part of Europe. So there must be some workaround. Based on your edit I would guess that they would import a bunch of orders in one shipment to make the 'per shipment' charge small per item/order.

I doubt the US will even manufacture substitutes for most of the things I liked and ordered from AliExpress. People with hobbies primarily supplied by Chinese manufacturing (like mine- electronics, 3D printing, FPV drones) are just going to be paying more for the same thing. There's no way we'll get an American substitute for niche products- all the US chip fabs are going to be filled with orders for higher dollar parts.

Note that the fact sheet says per item, not per shipment. So there doesn't even seem to be a way to make one big purchase of several items to pay a single fee. They will hit you for every item in the shipment.

Quick edit: I also note that the fact sheet makes a distinction between things sent through international post vs. other means. If you send via UPS/FedEx/DHL there will be regular customs fees (34%?), and through post you will have the $25/50 per item fee. So I will definitely have to pay attention to the shipping method for anything bought from AliExpress from now on.

Quick edit 2: I literally have a PicoCalc from ClockworkPi coming in the mail in a few days- I guess we'll see if DHL charges me any extra fees.

This is what strikes me about these new tariffs... for all the concern about how it's going to impact the US economy (and I don't doubt it will), this is STILL far, far, less protectionism than literally every other country in the entire world. Donald Trump's justification for all this is that the U.S. is propping up the entire world economy to it's own detriment, and I'm not sure he's necessarily wrong here.

Do they open every package? What stops Temu or whatever from just keep sending them? I mean drugs get through so ..

I had plans to build some animatronic Halloween decorations for this year over the summer. I’m not going to spend hundreds to thousands of dollars on parts that nominally cost less than $50.

My own pain is minor though compared to everyone I know who uses Temu and other things to basically outfit their life. This will be insanely regressive as they have the least to spend on “on brand” products, which themselves are imported too. This is like “super sales tax for the poor.” Me, I’ll just save my money and wait for the next president to undo the mess. My buddies not as successful monetarily as me? Their quality is life is going down the drain.

Would appreciate you (or anybody else) shed some light on the economics of the thing.

This will get very interesting.

Vietnam uses many US services such as Microsoft Office, Netflix, ChatGPT, Facebook ads, etc. This is revenue that directly go into the pockets of American companies.

"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.

Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]

[0] https://ustr.gov/issue-areas/reciprocal-tariff-calculations

1. It’s not affected by these tariffs 2. It wasn’t used as a basis for the calculation

Also, there are some hints this might be from a LLM [1].

And an official statement that it's about trade imbalances and not reciproc tarrifs [2].

And they ask the affected country to "not retaliate" [3].

IMHO Trump tries to lead the US like he managed his businesses. And here I'd like to refer to the three casinos he owned that are now insolvent [4].

[0] https://universeodon.com/@cryptadamist/114272481124239587

[1] https://universeodon.com/@henryk@chaos.social/11427313249281...

[2] https://ustr.gov/issue-areas/reciprocal-tariff-calculations

[3] https://edition.cnn.com/2025/04/02/business/liberation-day-t...

[4] https://www.nytimes.com/2016/06/12/nyregion/donald-trump-atl...

Is that because we can't grow olives here, or because we don't have federal subsidies propping up a domestic olive industry that can compete with corn and soy?

I ready don't know the details well enough there, but it feels like this could just be selection bias at play.

However, one thing we absolutely cannot grow here in any sort of money-making way, is coffee. So 32% tariffs on imports of coffee from Indonesia.... when we do not even export coffee.

It's gotten so bad that Tunisian olives are shipped to Italy, pressed into oil, and labelled as Italian Olive oil.

You should be using America corn oil. /s

I'm not sure this is true. I buy olive oil specifically from California. It's niche but could be larger if they weren't competing with lower overseas labor costs.

Additionally, his base will not blame him, they will swallow whichever of the many narratives the propagandists are currently cooking up that suites their fancy.

The whole thing is kind of nuts.

Maybe you don't like either of these choices; but at the same time; saying "I believe that having cheap access to product produced halfway across the globe is a god given right to American people; how dare you imposing me to make such a choice" is part of the reason why we need 13 earth to sustain the modern US lifestyle.

I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.

It's basically Europe but hundred or more years ago.

"Silver lining:" there's a good chance that oil was either rancid or doesn't pass basic quality tests for the "extra-virgin" part:

https://www.ucdavis.edu/news/imported-olive-oil-quality-unre...

The COOC web site lists California olive oils that they've certified. Last time I checked California Gold Olive Oil was certified, and they even sell it in half and full gallons. That's just one I've tried and liked-- there are a bunch of others listed on the COOC web site. (Edit: there are probably certification trade associations for other countries/regions, COOC is just the one I'm familiar with.)

  1. Support local producers. There are high-quality olive oils made right here in the US that might surprise you.
  2. Work with Tunisia manufacturers to move their production to the US
  3. If you don't want to support local producers, pay extra and enjoy your Tunisia olive oil as much as you want
  4. If politics is the real issue for you, move to Tunisia, there is no "orange man" there

You must not have read many of the comments here. Way too many people are trying to defend this just because they don't want to have to admit that they were wrong on Trump being better for the economy.

A usual lack of high qualified low paid workers?

Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap. Unions and worker rights have been gradually chipped away at for years and now they're straight up chainsawing them. Why work a monotonous job that pays at or just slightly above minimum wage, has skills that aren't really transferable should you decide to change careers, is rough on the body and doesn't even provide proper health care or sick days to rest, and employers will call you in during natural disasters with the threat of firing you otherwise and then leave you to literally die while pretending it's not their fault when you do die? [1]

It's companies and the government saying, "We want everything, and in exchange, we'll give you nothing. And you will be happy." No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory." People in some countries do, and it's because those jobs are a step up from the current standard. Factory jobs in the US are, in many cases, a step down and that step keeps lowering. High tech/high skilled manufacturing can be an exception, but the bulk of the jobs they're hoping to bring back aren't that.

[1] https://www.npr.org/2024/11/02/g-s1-28731/hurricane-helene-t...

That El Salvador prison could also come in useful.