Ricardo Pascoe Pierce
The Donald Trump administration announced that it would eliminate all tariffs on smartphones, tablets, computers, semiconductors, solar cells, and memory cards, among other electronic items, imported from China to the United States. Given that the Trump administration has been modifying all its unilateral tariffs practically the day after announcing them, this new “tariff adjustment” has not come as a surprise.
However, this announcement about the elimination of tariffs on products brought from China to the United States is particularly relevant because of its significance. This 180-degree change in Trump’s tariff policy is notable because it concerns the product the United States imports most from China. Deleting this tariff changes the strength of the “trade war” between the two most important economies in the world. It weakens, even kills, the US’s intention to bring down the Chinese economy with a 145% tariff.
Approximately 80% of iPhones sold in the United States come from China. With a tariff of 145%, the average price of each smartphone would have risen from around US$1,000 to around US$2,000, which would have been a real “shock” for the US consumer.
According to private analysts, Trump’s reversal of the tariff policy toward China has exempted around a quarter of China’s total exports to the United States from the trade tax.
In fact, for the same reasons, to avoid a blow to US consumers, several countries have seen the tariffs imposed by Trump reduced to a minimum. For example, Taiwan went from 64% to 10%, Malaysia went from 44% to 10%, and Vietnam and Thailand went from 30% to 10%. And that’s even though countries like Taiwan have a trade surplus with the United States of 74 billion dollars, and Vietnam enjoys a 124 billion-dollar surplus.
Notably, the reasons given to justify the imposition of tariffs have been falling, one by one, as reality imposes itself on the designs of politicians who apparently had little idea of how the world economy works and, more incredibly, how the US economy works.
The 90-day pause that Trump gave for all countries to come to Washington is passing, and there is no sign of the big players rushing desperately to Washington to agree on something “beneficial” for the United States. The only ones seen in Washington are Netanyahu of Israel, Bukele of El Salvador, and Milei of Argentina. The United States is more isolated than ever, including from its traditional European partners, who are beginning to look to China as a more stable and mature potential trading partner.
China is making strategic moves in Asia and Latin America. President Xi Jinping is visiting Vietnam, Malaysia, and Cambodia and strengthening ties with ASEAN (Association of Southeast Asian Nations). Meanwhile, China, Japan, and South Korea are holding a conference to finalize trade agreements.
The CELAC meeting in Honduras this weekend opened the discussion on fostering a stronger trade agreement between the nations of Latin America and the Caribbean. Several countries in the region have their eyes on China, most notably Brazil. However, until the region finds the path to sustained economic growth, it will be difficult to be a relevant player outside Mexico and Brazil. Argentina has yet to prove that it has emerged from its cycle of permanent economic crisis to become a relevant opinion in the Latin American concert.
The European Union has closed ranks in the face of Trump’s trade threats and his flirtations with Russia to the detriment of Ukraine. Europe’s closing of ranks with Ukraine, including increasing its military support, which could include sending French and British troops to defend the country against Russia, completely complicated the negotiation that Trump wanted in the region. Elegantly and without breaking ranks, Europe looks displeased at Washington and begins to make other allies.
The tendency to look for different partners has reinforced the consolidation of new regional blocs based on Trump’s tariff threats. What is remarkable is that the United States is increasingly alone. In an act born of ignorant arrogance, Trump has eroded the political and economic prestige the United States has accumulated since World War II. He led his country to a monumental defeat without firing a single bullet.
@pascoep
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