Hacker News Reader

Comment by hliyan | Hacker News Reader

Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.

View on HN

The numbers appear to be based on the trade deficit alone, not on any differences in import duties etc.

That is correct. It was empircally proven here: https://www.ft.com/content/c4f9c7f6-0753-4458-840e-bcde1b74a...

To quote Alex Scaggs of FT:

    Take the US’s goods trade deficit with any particular country, and divide it by the total amount of goods imported from that country. Cut that percentage in half, and there’s the US’s “reciprocal” tariff rate.

All countries tested against this theory are correct within 1-2 percent.

This is interesting. I don't know the details of Trump's tariff policy, but if this is correct, it would follow that the policy should have some mechanism to reduce the tariffs as the trade imbalance is reduced.

Not sure why? It’s an irrational policy not based on any kind of sense. I don’t think I’d expect it to be logically consistent. Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?

It’s all drunk monkeys driving a train… there is no economic theory to expect consistency from.

Unless they think that because it came out of an Excel formula, there's a logic behind it - and honestly, I wouldn't be shocked if these folks have that insight.

> Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?

In this instance, I believe the thought pattern is: "we're being smart here".

They’re even adding Greek letters, very intelligent. https://x.com/Brendan_Duke/status/1907741651172311353

I'll be damned, I had no idea and I still got it right.

Once people accept that this administration is very much like the Russian regime, where everyone is the type of person playing to an aesthetic, you see this stuff coming miles away.

This is what these sorts of people would do.

It’s not “irrational.” It’s crude, but it’s based on a logic that, on average, trade deficits should generally reduce to zero. And I strongly suspect this is about our large, diversified trade partners (EU, China) and is simply being imposed across the board for appearances.

There is no “logic” that any two country pairs should have an equal trade balance.

“Belief” or “dogma” or even “idea” would work, but there’s no logic in that claim.

There’s not even a policy goal. If the intent is to convert the US from a net importer to neutral or even a net exporter, it means our cost of production needs to be about average. Which means our populace’s quality of life needs to be about average; wealthy countries are more expensive to produce in. Mix in the supposed interest in economic and social liberty, and you’ve got a country trying to destroy its own wealth in the name of controlling what its freedom-loving citizens buy

There is no logic here. It’s drunk monkeys all the way down.

Imagine the classical triangular trade. Three countries can have entirely balanced trade, yet each country has a 100% trade deficit with another country. Everyone benefits, and no one runs a trade deficit. Throw a huge tariff in and a country’s trade, imports and exports, will collapse.

> a logic that, on average, trade deficits should generally reduce to zero.

1. Why do you believe this is true?

2. Why do you believe that 0 trade deficits are a good thing?

Now somebody factor in Services and rerun the numbers.

you can just read the methodology where they published it here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations

You're right I think it's MAX(10%,(imports-exports)/imports) as a general tariff plus targeted reciprocal (in some cases, not all)

It does nothing with "hostile". For China, yes, but for most other countries tariff is simply ($USA-import - $USA-export)/$USA-import. That simply, numbers are check for many many countries. I'm sure, USA imports a lot of tea from Sri Lanka and some fruits and wood/furniture.

(Freshly made Sri Lankian tea is the best, IMHO! I mean, proper tea, not all these grasses, berries and synthetic aromas which are named "tea" in modern western world).

I would have assumed it was Sri Lankan textiles that were a major cause of the tariffs.

Any recommendations for tea brands/products?

Unfortunately, no, as I've changed country of living year ago and still can not find way to good tea in new place. Also, I'm not sure, that recommendations from Europe is actual for you even if I have one.

But really best "black" tea of my life (and I spent most of my life in country with strong tea culture, where loose tea and teapots are still very popular, and not, it is not UK!) was bough at random tea factory in the middle of nowhere in Sri Lanka, packed in simple 1kg vacuum bags. No brand, no name, only date of picking (two days ago) and packing (today at the day of bought) :-)

Ahmad Ceylon Tea is a good strong black tea. They mainly trade in Middle Eastern markets I think so check Arab/Indian grocery shops

As a local, the brand called Dilmah is just a regular supermarket brand for us, but I hear it's quite popular in places like Australia and New Zealand.

> They just slapped 44% on us (higher than on China).

Not true, China's is on top of its existing tariffs.

So 53% on China in total, because the previous rate was 20%

The strange thing I find is that Trump is not going after the companies who were the ones that decided to move production to China in the first place.

(waves from across Lake Beira)

It's mind-boggling because the US has been trying very very hard to pull Sri Lanka away from China for a decade now

I would be surprised if the current US administration even knows where Sri Lanka is, let alone our pre-Trump foreign policy with them.

Reply on news.ycombinator.com