Trump’s tariff: Devoid of logic
On April 2, Trump’s Liberation Day, he announced a sweeping tariff to all countries (allies and enemies alike) all over the globe. It is so sweeping that pundits felt that the pegged rates are totally devoid of logic. Just plucked out of thin air. Consider this, among member states of the ASEAN, two tiny countries, Cambodia and Laos, with so little trade with the USA was slapped with the highest tariffs at 49% and 48%, respectively. On the other hand, Singapore and us (the Philippines) were slapped with the lowest tariffs, at 10% and 17%, respectively. Though devoid of logic, at least there could be some reasons, no matter how trivial these maybe.
Let’s start with the report from the Office of the US Trade Representative. The US goods trade with Cambodia totaled an estimated US$13 billion in 2024. This represents the sum of the US goods exports to Cambodia of US$321.6 million and its goods imports totaling US$12.7 billion in 2024. The US goods trade deficit, therefore, with Cambodia was US$12.3 billion in the same year. Hence, the US trade deficit with Cambodia is 3,849% of its export.
With Laos, U.S. goods trade totaled an estimated US$844 million in 2024. This represents the sum of the US goods exports to Laos in 2024 of US$40.4 million and its goods imports amounting to US$803.3 million in the same year. The US goods trade deficit, therefore, with Laos was US$762.9 million in 2024. Hence, the US trade deficit with Laos is 1,888% of its export.
There are some quarters though that are trying to put forward the notion that Singapore and the Philippines were given special treatments as both countries are close allies of the USA. Well, that doesn’t make sense at all.
Why? In us, our total trade (in goods) with the USA totaled an “estimated US$23.5 billion in 2024.” Our imports from the USA amounted to US$9.3 billion. Our exports, on the other hand totaled US$14.2 billion. Thus, resulting to our country’s goods trade surplus with the USA amounting to US$4.9 billion in 2024. Therefore, the US trade deficit with us is 52.69% of its export.
On the other hand, with Singapore, the US total trade (in goods) amounted to US$89.2 billion in 2024. US goods exports to Singapore in 2024 were US$46 billion. US goods imports from Singapore totaled US$43.2 billion in the same year. Therefore, the US goods trade surplus with Singapore was US$2.8 billion in 2024. Hence, the US trade surplus with Singapore is 6%.
So that, what is really clear is, in countries where the USA has a trade surplus, the tariff is pegged at 10% while in those it has a trade deficit, the rates are pegged not based on the absolute amount but on its (deficits) relation to its exports. That is why as clear as daylight, as it has a trade surplus with Singapore, it is only slapped with 10%. Since in us, the deficit is just 52.69% of its exports, we are tariffed at 17% while Laos (with US deficit at 1,888% to its exports) and Cambodia (with US deficit at 3,849% to its exports) were slapped 48% and 49%, respectively.
These are the only apparent indicators. That the higher the US deficit (vis-à-vis its exports) to a country, the higher the rate. Apparently too, that President Donald Trump is, indeed, transactional is absolutely correct.
However, as to why these are the rates just simply do not add up. Trump’s claim that the US tariff is purely reciprocal and generously pegged at just 50% of what a country charges them is absolutely untrue. Just take our country for instance. If 17% is half of what we slapped on imported US goods, what products, in particular, are we charging 34% on the average? None. Honestly, it just doesn’t make any sense at all.
More revolting is the fact that the USA slapped the rest of the world of these tariffs on the basis of its trade relations in terms of goods only. What about services? What about Hollywood’s exports of films worldwide. What about Neflix and some other tech companies’ services that are, in fact, to some extent, invading our privacy. Absolutely, the US companies are raking in billions annually on these services too. If Trump cares to add them to the USA’s exports, probably, its trade deficits in some countries will be wiped out, or, at least, narrowed down too.
Simply put, Trump is just feeding his ego or just trying to quench his insatiable thirst for recognition.
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