10 > 3.3.
With Donald Trump’s frequent announcements about fluctuating tariffs, keeping track of the ever-changing landscape feels like an exercise in futility.
As I attempt to decode the situation with China, the trade dynamics between the UK and the US are becoming alarmingly clear: we’re on the losing side.
Colin Grabow from the Cato Institute succinctly articulates this predicament:
Last Thursday, the Trump administration unveiled its first trade agreement since the tariff escalation on April 2, and it’s evident that elevated tariffs are here to stay. This deal, celebrated by the White House as “historic” and a “breakthrough,” only marginally improves trade conditions compared to the chaos of recent weeks. In fact, when we look back to when Trump took office, there’s little cause for celebration.
Prior to Trump’s tariff spree, American imports were subject to an average tariff rate of 3.3 percent. Now, goods from the UK are slapped with a 10 percent tariff (which, apparently, is the best any US trading partner can anticipate in the foreseeable future) according to experts. Tariffs on British auto imports, which were a mere 2.5 percent just months ago, will now quadruple (and that’s just for the first 100,000 vehicles; anything beyond that incurs a staggering 25 percent tariff). [DRH note: the tariffs on auto imports from Britain will be 4 times as much, not 4 times higher.]
Despite the rhetoric framing tariff increases as temporary measures, they are now a permanent fixture of the trade environment. The fact that President Trump is promoting an additional $6 billion in tariff revenue as a boon of the US-UK deal suggests their persistence in our economic landscape.
Many of my pro-Trump acquaintances assure me that there’s a master strategy at play, one that will ultimately result in lower tariffs on our exports while keeping import tariffs stable or reduced. However, as Grabow highlights, this narrative is increasingly at odds with the administration’s actual messaging. They appear to be settling on a baseline tariff rate of 10%. As it stands, 10 is decidedly greater than 3.3.
Trump often asks if we’re tired of winning yet. I can confidently say, I am.
Postscript: Trump frequently claims that “tariffs” is the most beautiful word in the dictionary. Here’s a thought experiment: consider that tariffs effectively function as taxes. What would you think of someone who proclaims “taxes” to be the most beautiful word in the dictionary?
