Barackface: 9: Trade

It’s Beginning to Smell a Lot Like Stagflation And it's all about Trumponomics ........... At this point, however, the data really are looking increasingly stagflationary. And I thought it might be useful to talk about why the lights on the economic dashboard are flashing yellow or red. ......... The starting point for any discussion is the fact that Trump is pursuing really extreme policies on both trade and immigration. He has completely reversed 90 years of gradual trade liberalization, bringing us right back to Smoot-Hawley tariff rates (and imports as a percentage of GDP are three times what they were in 1930, so these tariffs matter a lot more): ......... On immigration, ICE has just gotten going on mass arrests and deportations, but the number of foreign-born workers in the United States is already shrinking after years of rapid growth: ...........
There is almost complete consensus among economists that tariffs are inflationary.
................ The war on immigrants is also inflationary, because it is choking off production in industries that rely heavily on foreign-born workers. Stories are proliferating of crops left to rot in the fields because farmers can’t find anyone to harvest them, construction projects hobbled by ICE raids and a climate of fear, and more. ............ What seems to have happened so far is that U.S. companies rushed to import and stockpile foreign products before the Trump tariffs went into full effect, and are still to a large extent selling out of those stocks. Also, many companies were reluctant to raise prices, alienating customers, as long as there was a chance that Trump would make deals that brought tariffs significantly down again. ..........
It’s true that many of Trump’s tariffs are clearly illegal, and the courts could force him to reverse them. But I wouldn’t get my hopes up. And if the tariffs are here to stay, we can expect them to be passed on to buyers.
............... we can be highly confident that, thanks to Trump’s policies, (winter) inflation is coming. What about stagnation? .............. America had a high average tariff even before Smoot-Hawley — 15.8 percent in 1929 — but the unemployment rate in 1929 was under 3 percent. ........... You might argue that tariff uncertainty will abate now that Trump has made “deals” with some of our major trading partners. But these aren’t formal, signed trade agreements. And Trump’s claims about what other countries have agreed to — like his insistence that Europe has promised him a $600 billion slush fund and “I can do anything I want with it” — are contradicted by the countries themselves. So tariff uncertainty remains high. And the uncertainty created by mass arrests and deportations, which is equally likely to hurt business, is just getting started. ............ Quarterly growth rates have been erratic, mainly because of wild swings in imports, which surged early this year as companies tried to front-run the tariffs then plunged as tariffs came into effect. But if you smooth out the craziness by looking at half years rather than quarters, you see a clear slowdown under Trump: ............ the last two years of the Biden administration were marked by “Immaculate disinflation,” with inflation falling while the economy maintained solid growth.......... But now inflation is coming, while stagnation seems to have arrived. So stagflation it is.

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— Paramendra Kumar Bhagat (@paramendra) August 8, 2025

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धरानका मेयर हर्क साम्पाङले विदेशले सम्मान गरे पनि सरकारले सधैँ अपमान गरिरहेको बताएका छन्।#harkasampangarevolution #nepalinews #NagarikNews https://t.co/UXikeGQr3L
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‘Americans are angry’: Democrats rally across the country
Why Poor Nations Got Hit With Higher Tariffs Than Rich Ones While his administration placed tariffs of 10% to 15% on imports from many of the world’s wealthiest countries, such as South Korea, Japan and European Union member states, it slapped goods from developing countries such as Vietnam, Bangladesh, South Africa and Iraq with duties of 20% or higher..........

Two of Asia’s poorest countries, Myanmar and Laos, were hit with tariffs of 40%, a potential death knell for their U.S. exports, which include goods such as furniture and garments.

.......... In a new era of gloves-off trade negotiations, these poorer countries had the least leverage with a country the size of the U.S. ......... Some countries that carry geopolitical or economic weight with the U.S. were spared the worst of the tariffs. The U.S. didn’t levy tariffs higher than the baseline 10% on Saudi Arabia, Qatar or the United Arab Emirates—oil and gas producers whose leaders are close to Trump. ......... Until 2020, many poor countries, such as Cambodia and Bangladesh, benefited from a special arrangement known as the Generalized System of Preferences that eliminated trade duties on products from more than 100 of the world’s poorest countries and territories. The arrangement hasn’t been renewed. Now poor countries’ access to the U.S. has diminished further. ........... Take Cambodia. The small country, a large garment exporter to the U.S., was hit with 19% tariffs, causing widespread worry in the country’s clothing industry......... “We are a poor country. Our purchasing power is not the same as a rich country,” said Sun Chanthol, Cambodia’s deputy prime minister who led the tariff talks with the U.S. ........... Cambodia has slashed its own tariffs on U.S. imports to zero. Its national airline has promised to buy 10 planes from Boeing, with an option to buy 10 more—a modest proposition compared with financial pledges of rich countries such as Japan, which agreed to buy 100 jets from the U.S. aerospace company. .......... Bernhard Wewengkang, an executive at PT Great Giant Pineapple, one of the world’s largest canned pineapple exporters, based on the island of Sumatra in Indonesia, expects demand will soften in the U.S., the company’s largest market, given the 19% tariff on Indonesian exports to the American market. ......... He is hoping to offload more canned pineapple into other markets—but so is everybody else in the industry. Great Giant Pineapple’s margins are too small to lower its prices, meaning U.S. importers will face higher costs that they may pass along by raising prices for shoppers. Wewengkang worries that will hit canned pineapple sales and hurt the company’s revenue. ............
Economists and trade officials are often left scratching their heads about why certain countries have dodged the bullet while others get slammed.
Algeria and Libya face tariffs of 30% on their exports to the U.S., while Iraq’s goods will be charged a duty of 35%. Among the highest tariffs was the 41% levy placed on goods from Syria. Having lived under punishing sanctions for years, the country exports very little to the U.S. Its tariff rate is higher even than the 39% tariff on Switzerland, one of the rare rich countries to get hit hard. ................ Hundreds of thousands of cartons of citrus have already been packed and are awaiting shipment to the U.S. in the coming weeks, the Citrus Growers’ Association of Southern Africa said in a statement. “The implementation of a 30% tariff…will mean most of this fruit will be left unsold,” it said.

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Saturday, August 09, 2025

9: Trade

There is almost complete consensus among economists that tariffs are inflationary.

It’s true that many of Trump’s tariffs are clearly illegal, and the courts could force him to reverse them. But I wouldn’t get my hopes up. And if the tariffs are here to stay, we can expect them to be passed on to buyers.

Two of Asia’s poorest countries, Myanmar and Laos, were hit with tariffs of 40%, a potential death knell for their U.S. exports, which include goods such as furniture and garments.

Economists and trade officials are often left scratching their heads about why certain countries have dodged the bullet while others get slammed.

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