USA vs the World

Everyone loses.

Summary

· Trumps reciprocal tariffs are a back of the envelope fantasy.

· They are a form of taxation on consumers, raising prices.

· Importers and customers pay, the income goes to the Treasury.

· Heavy tariffs on the EU, and none on Russia is a gift to Putin

· America is going backwards as China is racing ahead and defining the high-tech future.

Trump vs the World

The threats we face from the real world are being added to by the actions of one idiotic man, his backers and voters.

Trump’s tariffs speech, inappropriately postponed from April Fool’s day by 24 hours, was a cacophony of self-serving soundbites which superficially look compelling and will be taken as read by many of his devotees – for now.

The Art of the Con.

Trumps team state: “Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the US and each of our trading partners. This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing”.

The derivation of the reciprocal tariffs is just a back of the envelope exercise in dividing the trade deficit by total goods imported and divided the result by two, purportedly to show how generous he is being! For example, in the case of China:

· Goods trade deficit: $291.9bn

· Total goods imports: $438.9bn

· Those figures divided = 0.67, or 67%

· And halved to give a reciprocal penalty of 34%. That’s it!

Incredibly, the calculations don’t even account for population or GDP differences.

That is why little Lesotho will be hit the hardest - the reason being that they export diamonds to the US, but most of its citizens are too poor to buy American goods. Vietnam and Laos are in the same boat. Then a 10% tariff slapped on everyone else, even the UK, who imports more than we export. There are even tariffs on uninhabited islands. Has anyone really thought this through?

WHATS A TARIFF??

Much as I dislike overused comparisons to WW2, Hitlers Generals come to mind. They clearly saw Hitler making one military blunder after another, but stayed silent because no one could argue with an omnipotent boss. Trump believes ‘everyone loves this plan’ and anyone who doesn’t is crazy or fake.

Trump feels that, with the biggest market in the world, industry will flock back to the US. Some might, after a ‘little turbulence’, but who can plan with unpredictability now the norm. Balancing trade means making everything more expensive and, in an America, where Musk, Bezos and Zuckerberg own more wealth than the bottom 170 million Americans, the cost-of-living crisis will only get worse, and people will buy less. Folk like me will think twice before buying anything American.

Playing into Putin’s hands.

For the EU, who he clearly detests, the tariff is 20%, despite EU tariffs on US imports being 3%. The problems affecting the huge stuttering German economy will become more acute and the economic growth that our Labour Government are depending upon become more difficult still. With no reciprocal tariffs on Russia the impact on Europe will make the ongoing war more costly and reduce resources available on other aspects of public spending. Putin must be delighted.

Meanwhile in China…

As American science is being crippled, China is the place to go to see how the future of science and technology is unfolding – there can now be no doubt about who will dominate the world. This NYT writer, visiting one industrial campus said this:

“I’d never seen anything like this Huawei campus. Built in just over three years, it consists of 104 individually designed buildings, with manicured lawns, connected by a Disney-like monorail, housing labs for up to 35,000 scientists, engineers and other workers, offering 100 cafes, plus fitness centers and other perks designed to attract the best Chinese and foreign technologists.”

THATS JUST ONE COMPANY

China produces 3.5 million graduates in science, technology, engineering and maths a YEAR. They are racing ahead with computer technology and AI applications for just about anything you can think of, to add to their manufacturing base. The Chinese installed 100,000 car charging points last year as opposed to the 214 in the USA. 550 Chinese cities are connected by high-speed rail, in the USA, they are still on the drawing board.

Chinese electric cars are outperforming others in every way possible. They make 80% of solar power technology (1.9%b in the USA) and have 58% of the world’s solar generating capacity.

If we are heading to future dominated by AI technology, the Chinese have raced well ahead and will be manufacturing technology faster, better and cheaper than we can dream of.

Meanwhile in the US, scientists are being driven out of their careers, some will be gladly accepted in Europe, including the soon to be expanded Oxford and Cambridge. America’s brain drain has already begun.

About 75% of the more than 1,600 scientists who responded to the Nature poll said they were considering leaving the United States following recent actions by Trump officials targeting research funding and specific universities.

Back in the physical world.

Meanwhile in the physical world, the consequences of the human activity are in evidence everywhere, from the current weather out of my window to insurance companies soon to be made bankrupt by endless claims from not so natural disasters.

China’s progress too could be ruined by melting of the Himalayan glaciers and the US is facing more natural disaster as I write. Climate change will not go away because politicians don’t want to mention it. Infectious disease won’t either; threats are rapidly evolving while RFKJr puts research to sleep. No mention either of the genocide in Gaza with Israeli murdering anyone they want, including yet more health care staff – all impossible without American help.

Now to add to all that we have economic insanity.

American Republicanism has now become the destructive toy of a single, deluded man.