These tariffs are not expected to last long, ie., the intent behind this is not to generate money through tariffs, rather it is using such tariffs as a leverage (bargaining chip), to negotiate deals that promote US exports by lowering the duties imposed for US goods by other countries, so that they generate more income through exports and reduce their trade deficit.
He just wants zero-trade barriers, like letting Telsa sell cars in India through the import route, rather than manufacturing them here.
We mostly impose higher tariffs on luxuries, he wants to tax the necessities.
Ok. Frankly, I like the fact that there is a simple formula. It wasn’t arbitrary 25% like the steel tariffs in his previous term. And it seems to be (as per excel) for deficit countries -
Tariff Imposed = MAX [10%, 1/2 x { (Imports-Exports) / Imports * 100} ]
With a formula, they can revise actual tariff every year based on latest data and the same logic. One can argue on fair/unfair but it looks transparent. This should crush the volatility/uncertainty around it.
Well, game theory has most meaningful applications in military strategies and global politics. Just how nuclear weapons bring peace, retaliatory tariffs can bring down tariffs across the board (obviously only if the gamble pays off).
If anyone is interested, the Cuban missile crisis in my opinion is the most dramatic real life example of brinkmanship (involves US interestingly). And in short, here’s the definition of it on Google:
When America was in war against Vietnam and the body bags are coming home and the war was not going anywhere, Lyndon Johnson did not know what to do and a senator advised him, let us just declare victory and reverse course and get out.
I think that is the same advice that Trump is going to receive, that he will just declare victory in the next couple of weeks and then change all the policies that he has introduced, saying that, oh, my policies have been achieved, everyone has come to the negotiating table, everyone is scared of America, and he will declare victory because he will never admit loss. He will declare victory and we will move back to the regime we were.
But unfortunately, he will find out that the world would have moved on by that time
I too predict that in a few months/days, Trump will lower tariffs against some countries. This is likely because these countries will retaliate, prompting him to either reduce or waive the tariffs. India could experience short-term fluctuations in the market, and industries like automotive and agricultural products could suffer. But overall, this won’t greatly affect India.
In the name of fighting unfair trade, America has just demonstrated what truly unfair trade looks like.”
Noted economist Nouriel Roubini also slammed the US tariff methodology, saying the entire formula is totally flawed as it falsely assumes the only fair trade balance is zero. "By that standard, since the US runs a trade surplus in services, other countries should impose a large services reciprocal tariff against the US,”
