Yuyuantan Tian: Recognizing the Truth Behind Trump's Tariff Statements

On February 13 local time, Trump announced the latest tariff decision: to impose "reciprocal tariffs" on other countries in the coming weeks or months. This means that all of America's trading partners are facing new tariff threats.

This month, the United States has introduced several tariff measures. These tariffs have shown some new characteristics:

First, many of the statements from the Trump administration regarding tariffs are contradictory, and there have been frequent instances of policy reversals. Second, the U.S. is no longer "talking tariffs about tariffs"; tariffs will also be used for non-economic purposes.

In response to these tariffs, it is essential to first recognize the ambiguities in Trump's statements in order to respond effectively.

In this regard, Tan Zhu has summarized seven different statements made by Trump about tariffs since his campaign.

In the past week, Trump has been promoting "reciprocal tariffs," constantly creating an atmosphere through U.S. media and social media that "'reciprocal tariffs' are coming soon."

Ying Ping, Dean of the International Organization School (Trade Negotiation School) at Shanghai University of International Business and Economics, told Tan Zhu:

In a strict sense, reciprocity means that the tariffs you impose on me are the same as the tariffs I impose on you, which requires a tax rate calculation for each item.

Statistics show that this involves about 5,000 types of goods and 186 countries and regions. In other words, 930,000 calculations need to be made.

In the past week, due to the massive volume of calculations, the announcement of "reciprocal tariffs" has been postponed multiple times.

A few days ago, Trump stated that "reciprocal tariffs" would take effect immediately, but now the effective date has changed to the coming months.

Even if the U.S. soon formulates specific policies for "reciprocal tariffs," the implementation of these policies will also be problematic—over the past month, the U.S. has repeatedly delayed the imposition of tariffs, one reason being that the U.S. Department of Commerce, U.S. Customs, and other enforcement agencies were not prepared, and even the X-ray machines used by U.S. Customs to scan packages were insufficient.

Tan Zhu noticed that now, in some countries, there is a reflexive response: whenever the U.S. imposes tariffs, these countries begin to discuss how to negotiate. These "negotiations" essentially revolve around how to make concessions to persuade the U.S. to "go easy."

After the announcement of "reciprocal tariffs," U.S. stocks surged across the board, with the three major indices averaging an increase of over 1%. U.S. capital was thrilled, believing that a "negotiation" opportunity had arisen again.

Before considering negotiations, it is crucial to first discern how much of the "reciprocal tariffs" is mere bluster, rather than allowing the U.S. to "play its cards."

After announcing the "reciprocal tariffs," Trump held a press conference. During the conference, Trump repeatedly mentioned the European Union, suggesting that the EU will become a key area for the imposition of "reciprocal tariffs."

Trump's perception of the EU can be summed up in one word: nasty.

Trump often uses "nasty" to describe people he dislikes: Hillary, CNN reporters, Democratic politicians... According to statistics, great, beautiful, and nasty are Trump's commonly used "three axes."

What Trump considers "nasty" is multifaceted. He mentioned at the press conference that the EU's taxes are too high, and EU countries contribute too little to NATO's military spending, which he views as taking advantage of the United States.

The nominee for U.S. Secretary of Commerce previously mentioned that the Trump administration will consider tariff issues on a country-by-country basis. This means that the U.S. will impose tariffs on different countries in phases.

According to Ji Wenhua, a professor at the Law School of the University of International Business and Economics, based on Trump's deployments over the past month, the order in which he imposes tariffs is roughly: Canada, Mexico, China, EU countries, Japan, South Korea, India, Southeast Asia, and other developing countries will also be a focus in the next steps.

Many of these countries are preparing countermeasures.

Summarizing the statements from these countries over the past month, the international community's reserve of countermeasures includes: imposing counter-tariffs on the U.S., initiating antitrust investigations against U.S. tech companies, using anti-coercion tools to restrict U.S. companies from entering local markets, increasing policy efforts to attract investments from other countries, and seeking import and export alternatives.

After Trump held the press conference, the White House released a briefing that elaborated on how to impose "reciprocal tariffs."

This briefing further mentioned several countries, with India at the forefront.

Trump's wording regarding India has a subtle difference:

Previously, Trump referred to "retribution tariffs" instead of "reciprocal tariffs" during a media interview.

At that time, U.S. media interpreted this statement as a slip of the tongue. Through this "slip," Trump made his stance clear—"I am seriously dissatisfied with India!"

So why was India not on the list of countries for the previous U.S. tariff increases?

As mentioned above, the specific policy for "reciprocal tariffs" is still a work in progress.

The reason this work-in-progress must be brought out now is related to a timeline: Indian Prime Minister Modi is in Washington, and after announcing the "reciprocal tariffs," Trump is set to meet with Modi.

Mao Keji, a researcher at the International Cooperation Center of the National Development and Reform Commission, specializes in India and is currently a visiting scholar in the U.S. He shared some of his observations with the host: In the context of US-India relations, what India cares most about is its strategic value to the United States. If the US no longer recognizes India's value in the so-called "Indo-Pacific Strategy," India's interactions with many countries will also adjust accordingly. On the surface, Trump's lukewarm attitude towards India leaves India unclear about the current stance of the US. At the same time, Trump has pressured India through implied tariffs, forcing India to proactively commit to reducing tariffs on exports to the US. Whether such concessions are effective remains to be further observed.

From the perspective of observing India, we can further clarify the reality behind this "reciprocal tariff"; we can also better understand the effects of unilaterally conceding to the US.

Having discussed "reciprocal tariffs," let's turn back to examine other tariff measures of the Trump administration.

Last year, during the presidential campaign, Trump advocated for imposing tariffs of over 10% on all imported products entering the US. This tariff is referred to as the "universal tariff."

Trump mentioned that he would simultaneously promote "reciprocal tariffs" and "universal tariffs."

On the first day of his presidency, he issued a presidential memorandum stating that US government agencies should use tariffs and other means to formulate appropriate measures to address issues such as the US trade deficit. This was seen as a revision of the "universal tariff" wording.

About a week later, Trump announced the first tariff measure targeting Colombia.

However, this tariff was unrelated to the "universal tariff" but was imposed because Colombia refused to accept immigrants deported by the US.

Subsequently, Colombia and the US reached an agreement on this issue, and Trump immediately revoked the tariff. From imposition to revocation, it took only one day.

Another week later, Trump announced the second tariff measure targeting Canada, Mexico, and China.

In the White House policy documents, the reasons for imposing tariffs on Canada, Mexico, and China were similar to those for Colombia, also related to border issues extending to immigration, crime, and other problems.

The difference was that Trump mentioned trade issues on his social media.

On February 3, Canada and Mexico made concessions to the US on border issues, and the US agreed to postpone tariffs on Canada and Mexico.

A week later, Trump announced a 25% tariff on all steel and aluminum imported to the United States—Canada and Mexico are the main sources of U.S. steel and aluminum imports. Trump specifically stated this time that there would be "no exceptions or exemptions" for the relevant requirements.

From this, we can clearly see the boundaries of the Trump administration's tariffs.

First, the tariffs that the U.S. can currently actually bear highly overlap with those from Trump's previous term.

Second, Trump prefers to amplify the verbal threat of tariffs and turn it into a universal tool.

Tariffs have proven to be an inefficient economic measure.

According to estimates from U.S. economic think tanks, in 2018, the steel and aluminum tariffs introduced by Trump actually led to a reduction of over 70,000 manufacturing jobs in the U.S. After the tariffs were imposed, although U.S. steel production increased, the growth was less than 10%, while exports of other U.S. goods significantly declined due to retaliatory tariffs from other countries.

Source: The Paper Original Title: Yu Yuantan Tian: Recognizing the Reality Behind Trump's Tariff Statements Author: Yu Yuantan Tian

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