Tariffs: America First or will it be America Alone?

© Nataliia Osetrova

The best thing about Trump’s letters sent to tens of countries, naming their new tariff rates, is the option to instead move factories to the US. 

Approvals to shift production to the US will be made “in a matter of weeks”, says the White House – despite being unable to meet its own self-imposed three-month tariff deadline. 

“As you are aware, there will be no Tariff if [your country], or companies within your Country, decide to build or manufacture product in the United States, and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely – In other words, in a matter of weeks.” (Punctuation and capitalisation, its author’s own) 

Notwithstanding the fact that many countries have issued travel advisories about even visiting the US, anyone working in the supply chain sphere will know that no factory would be able to start production “within weeks”. 

The letters threaten a higher tariff if companies try to avoid the rates via transhipment, a clause which will likely be closely examined in terms of how it can be policed. 

And it adds: “If for any reason you decide to raise your Tariffs then, whatever the number you choose to raise them by, will be added on to the [percentage] that we charge.” A sentence which rather belies the opening gambit of the letter: “It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship…” 

Few relationships thrive on tactics such as these, which some have called ‘bullying’. Although not in the White House – the ‘fact sheet’ published yesterday claimed: “President Trump is the best trade negotiator in history.” 

And more letters “may [be sent] in the coming days and weeks”. 

However, yesterday’s executive order delayed the start of tariffs until 1 August, just three weeks away – although according to the president, the date was “firm, but not 100 percent firm”. 

Either way, say forwarders, shippers are likely to be busy over those weeks. 

“Customers will ship out inventory as much as possible within July into the US,” said Kathy Liu, VP global sales & marketing for Dimerco.  

“It will be similar to what we have seen. But all those are only short-term solutions for customers, moreover, tariffs to different countries might be further adjusted by Trump.  

“It’s really unpredictable at the current stage. On the other hand, shippers in Asia have already added on an extra price, based on the tariff, and have sold to end customers in the US since April. Once this becomes a practice, the market will accept it eventually.” 

The question will be, however, whether the US consumer accepts it too. 

Latest tariff rates

(Source: NYT)