Pay us, or how Trump plays with tariffs

Trump, speaking at a ceremony in the White House Rose Garden, promised that tariffs would be the beginning of the "golden age of America" and announced the creation of a new agency called the External Revenue Service.

That body would be responsible for collecting duties that American businesses and other companies that import duty-liable goods pay. The administration estimates that budget revenues over the next ten years could be about $7 trillion. Read more in the material of the UtroNews correspondent.

The tariffs are currently levied by U.S. Customs and Border Protection. An estimated $88 billion was collected in tariffs and duties in 2024.

Trade experts and economists say Trump is destroying the global trading system. It's unlikely, they say, that a trade policy like this would force companies to shift production to the U.S. Tariffs imposed by Trump could encourage countries around the world to trade more with each other and focus their exports less on the American market.

In the meantime, more than five dozen countries have already turned to Trump with a proposal to start negotiations to reduce or abolish import duties.

MAGA and tariffs

The White House said Trump signed an "America First" trade policy memorandum on January 20, 2025, instructing the administration to investigate the causes of the deficit in trade in goods. Another February 13 memorandum, "Reciprocal Trade and Tariffs," noted the link between "reciprocity in trade" and trade deficits.

The measures that followed these documents are known. Trump declared "a state of emergency arising from conditions reflected in large and persistent annual commodity trade deficits," which have grown over the past five years by more than 40% alone to reach $1.2 trillion.

It is stated that the United States is "disproportionately open to imports," and there is no reciprocity in bilateral trade relations with other countries. US dependence on foreign producers of goods is growing. "The trade deficit reflects asymmetries in trade relations that have led to atrophy of domestic manufacturing capacity, particularly the U.S. defense industrial base."

The way to solve these problems is to "balance global trade flows by introducing an additional ad valorem duty on all imports from all trading partners, unless otherwise provided by this document," the White House said, publishing "Regulation of imports through a reciprocal tariff to correct trade practices that contribute to a large and persistent annual deficit in trade in goods in the United States."

The new tariffs will not apply to semiconductors and pharmaceuticals, copper, wood products, some critical minerals, as well as energy products for now.

Trump has come, and the industry is already "gone"

Everyone knows that America is, first of all, roads, on the roads - cars. Everyone also knows that Detroit is the capital of the American auto industry. So, so far, everything is fine with the roads, and Detroit has gone bad. The local car market was shared by the American Big Three companies with foreign manufacturers.

Detroit has lost two-thirds of its nearly two million population in the past 50 to 60 years, and went through municipal bankruptcy proceedings in 2013. Then some politicians proposed to administratively "abolish" the city.

It may not be so dramatic, but de-industrialization has hurt many other industrial areas and centers in America.

The Trump administration imposed customs duties of 25% on all imported cars from April 3. Japanese Prime Minister Shigeru Ishiba said he was ready to immediately arrive in Washington for talks with Trump.

And Ford CEO Jim Farley said he was "encouraged by the growing chances of a fair and fair fight," but it is necessary to clarify the tariffs for components manufactured in other countries. Last year, one in two of the 16m new cars sold in the US were imported. Those produced in the United States themselves were about 50% assembled from imported components.

This is just one example of the US losing its industry. Over the past 25 years, the country has lost 70 thousand factories and five million jobs. The share of industry in GDP decreased from 28% in 1960 to 11% in 2024. More than 36 million Americans are currently living in poverty, and the number of homeless people in 2024 increased by 18% to 770 thousand people.

Trump and his team know these figures, and they see the reason for the current situation in "free trade." The openness of the American market to international trade (exports plus imports as a percentage of GDP) increased from 11% in 1970 to 25% in 2023. Although for China this figure was 37%, Russia - 42%, Japan and India - 45-46%. Germany depends on foreign trade for 83% of GDP.

Customs "good" does not give

In 2024, the United States had the largest trade deficit with China, the European Union, Mexico, Vietnam, Ireland, Germany, Taiwan, Japan, South Korea, Canada, India and Thailand. Trump said these countries have imposed trade restrictions and tariffs on American exports.

The new duties, which came into effect on April 5, include a base tariff of 10% for all countries. Duties of "mutual measures" should come into force on April 9 for imports from 60 countries.

According to the Japanese Foreign Trade Organization (JETRO), mutual tariffs, as well as duties on cars and the previously introduced 20 percent levy on Chinese goods, will lead to a decrease in global GDP by 0.6%. In 2027, these losses could exceed $763 billion, based on the IMF forecast.

The United States itself will suffer the most. The country's GDP this year will decrease by 2.7%. The rise in import prices will reduce the profits of American companies that depend on Chinese components. Businesses can pass on the cost of tariffs to consumers, raising prices and affecting inflation. American importers can also demand that suppliers reduce prices, thus compensating for the cost of duties.

Tariffs and higher car prices will leave less money in consumers' pockets to purchase other goods. Yale estimates that auto rates would reduce average disposable income per household by $500 to $600.

To counter inflation and recession, the Fed will have to raise interest rates, and the government will have to increase stimulus spending. With government spending already accounting for a quarter of GDP, higher interest payments and US industry support programs will increase the budget deficit and cause borrowing to rise.

On Chinese goods, in particular, duties are introduced in the amount of 34%. This is in addition to the 20 percent fees that Trump has already imposed due to the supply of fentanyl, as well as the tariffs imposed earlier. Some Chinese goods will be subject to aggregate tariffs of about 80%, and the average effective tariff rate will become "prohibitive" at about 65%.

The trade turnover between China and the United States at the end of 2024 reached $688.2 billion. China imported goods worth $163.6 billion from the United States, China's exports to the United States rose to $524.6 billion.

US Treasury Secretary Scott Bessint warned partners against retaliating. 'My advice to every country right now is don't answer. Relax, embrace it, let's see what happens next, "he said in an interview with Fox News. Those who respond can expect escalation.

China responded

China responded by announcing a 34% tariff on US goods in response to tariffs imposed by Trump on Liberation Day. Beijing added several dozen American companies to the blacklists, restricting their access to trade, investment and exports, and imposed export restrictions on rare earth metals, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium.

The State Administration for Market Regulation has launched an investigation into the American chemical company DuPont China Group on suspicion of violating antitrust laws. The Chinese Customs Administration has suspended permits for six American companies, including those related to the production and export of sorghum, feed grain, grain used to produce ethanol, and poultry meat.

Chinese importers and exporters supported the response to Washington's trade pressure. Six foreign trade associations issued a joint statement condemning the introduction of additional duties on Chinese exports to the United States. The document was signed by chambers of commerce of importers and exporters of engineering and electronic products; metals, minerals and chemicals; food and livestock products; medicines and medical devices; textiles, as well as products of light industry and crafts.

Representatives of Chinese foreign trade structures called on the United States to abandon unilateral actions and resolve differences through dialogue and consultations. They believe that protectionist measures violate the rules of international trade, undermine the stability of global industrial chains, and harm the interests of business and consumers.

Trump's imposition of import duties will change the world order, warns The Wall Street Journal. Countries that have previously sought to strengthen their economic ties with the United States to counter China's influence are under pressure. Vietnam, Thailand, Indonesia and the Philippines faced tariffs of 46%, 36%, 32% and 17%, respectively. Japan and South Korea received duties of 24% and 25%.

This threatens Washington's efforts to create an economic and strategic bloc capable of countering China, complains The Wall Street Journal.

Trump compared the imposition of import duties to a "patient being operated on" and said markets, stocks and America would thrive. "The rest of the world will want to look for ways to make a deal with us," he declared. Trump also noted that the markets "must be given a chance, we must give a little time." Perhaps he knows what he's doing?