March 29 – April 4, 2025
Big news. Of course, it is an increase in import customs duties in the USA. The scale is colossal (see the last section of the Review), but our opinion is that the main reason for the introduction of sanctions was a question of political struggle, and not a desire to improve the economic situation in the USA.
Firstly, the chosen method of assigning tariffs causes specialists to be taken aback. Details can be found in the last section of the Review, but here is only one picture:
Secondly. Additional budget revenue will be offset by rising prices and, accordingly, lower demand (households and corporations will spend more on traditional purchases). Therefore, the overall positive effect of duties may be significantly lower than it seems at first glance.
Thirdly. The effect of income redistribution within the US between different industries, as experts have already noted, will lead to a strengthening of the real sector and a decrease in the stability of those industries that are controlled by liberal elites. This, we note, is already politics.
And fourthly, the most important thing. The main losers in this situation are the Euro-Atlantic elites of Western Europe. It is against them that the spearhead of Trump’s reform is directed. Theoretically, it is more effective to take control of the Fed, but here, apparently, the situation is much more complicated than it seemed at first.
We will not discuss the political consequences here, but we will note only one thing: the blow to the Euro-Atlantic elites may be so strong that they will try to fight. We will not discuss this in today’s review, but we will return to this topic in mid-April.
Macroeconomics. Fitch has downgraded China’s credit rating for the first time in years, citing rapid growth in government debt:
Рис. 2
Mexico’s fixed investment is -6.7% per year; the last time this happened was during Covid:
Рис. 3
Monthly dynamics of industrial production in Brazil have failed to reach positive territory for 5 months in a row:
Рис. 4
France’s annual industrial output change has been negative or zero for 10 consecutive months:
Рис. 5
Canada’s services PMI (an industry benchmark; a reading below 50 indicates contraction) is the weakest in the survey’s history (excluding Covid):
Рис. 6
Mexico’s manufacturing PMI 46.5; excluding the Covid dip, this is a record-worst reading:
Рис. 7
And business confidence in Mexico is at an 8-year low (not counting the 2020/21 Covid slump):
Рис. 8
US manufacturing PMI price component hits 3-year high:
Рис. 9
Texas Fed Zone manufacturing activity is weakest in 8 months, while uncertainty about the outlook is highest in 2.5 years:
Рис. 10
US trade balance remains at record deficit levels:
Рис. 11
US government layoffs in March are breaking multi-year records, the economy as a whole is at its peak in the 30 years of statistics (excluding a brief Covid surge); and layoffs for the entire first quarter are the highest since 2009 –
Рис. 12
However, here we can refer to Trump’s reforms.
Over the past 2 months, the NASDAQ index has fallen by 20%, thereby ending up at the levels of a year ago:
Рис. 13
This is also Trump.
And the Dow Jones index has lost all of its yearly growth:
US unemployment claims hit 3.5-year high; non-Covid, 7-year high:
Рис. 15
Continued Claims (Insured Unemployment) (CCSA)
Рис. 16
True, in March the length of the work week in the US increased slightly (and the February data was revised upward):
Рис. 17
Well, gold continued to rise, reaching $3,170 per ounce; and although Trump’s tariffs caused a correction, there is no doubt that the positive trend will continue overall:
Рис. 18
Main conclusions. The methodology for determining tariffs for different countries leaves no doubt that economics has nothing to do with it. Pavel Ryabov has the floor:
“When I read yesterday that the Trump administration takes into account not only direct tariffs, but also hidden barriers and non-trade restrictions, when calculating the comprehensive tariff, it seemed like something out of a monumental work.
Initially, I still assumed that professionals sit in the “mission control center” and apply a thoughtful, well-reasoned and competently calculated approach, where a comprehensive analysis of the economic and financial impact of tariff policy is carried out at the macro level (taking into account the impact of inflation, changes in demand, sustainability of production, etc.), delving into the industry level with the identification of a group of goods up to 4-5 digits in the commodity classification in order to determine weak links in the chain at the national level that are dependent on imports.
Balancing of supply chains and inter-industry impacts, assessment of transformation of the structure of global trade flows and reactions of trading partners, which directly affects both exports and cross-border capital flows, plus dozens of other factors of direct and indirect impact in order to minimize costs and secondary consequences, maximizing potential positive aspects of tariff policy in the form of elimination of external competitors by administrative measures.
That’s what professionals do, but the new Trump administration is not one of them.
To develop a tariff policy affecting the turnover of goods worth trillions of dollars, you don’t need to have any brains at all and you don’t need to conduct any analysis..
It is enough to download the export and import data for key partners, then calculate the annual data and divide the trade balance by the total volume of imports, rounding up, which, according to Trump, forms a complex tariff, which is divided by two – this is the final tariff rate for countries (I made the calculations in the table).
…
Here is what I was able to calculate.
The volume of imports of goods to the United States amounted to 3.29 trillion in 2024, while the United States has a trade deficit with countries supplying goods to the United States for 2.86 trillion or 87% of all imports – this is the volume on which “mutual duties” are applied…
The average weighted tariff is about 27%, taking into account the expanded tariff for China, and for the remaining 13% of imports (432 billion), tariffs are 10%.
The average weighted tariff is about 25% for all imports to the United States (a record for 100 years!) according to our own calculations, which is 12 times more than the tariffs in 2024.
TOP 10 countries by import volume to the USA: EU (as a region) – 609.2 billion, Mexico – 516 billion, China – 439.8 billion, Canada – 420.5 billion, Germany – 161 billion, Japan – 149.5 billion, Vietnam – 136.6 billion, Korea – 133.1 billion, Taiwan – 116.4 billion, Ireland – 103.4 billion, India – 87.5 billion.
TOP 10 countries by trade deficit with the USA: China – 295.2 billion, EU – 236.8 billion, Mexico – 181.5 billion, Vietnam – 123.5 billion, Ireland – 86.8 billion, Germany – 85.2 billion, Taiwan – 73.7 billion, Canada – 70.6 billion, Japan – 68.7 billion, Korea – 66.2 billion, Thailand – 45.6 billion
The total US trade deficit is 1.21 trillion per year, formed mainly by Asian countries at 749 billion, the EU at 237 billion, and Canada and Mexico at 252 billion.
It is impossible to reduce this deficit without fatal structural transformations within the US, since the deficit is formed by the balance of competitiveness, trends in globalization over decades, the volume and structure of solvent demand in the US (population, business, and government).”
I repeat once again, the purpose of the tariff revolution was not so much economic (and here Pavel Ryabov is right, the method of determining duties raises serious questions), but political. Which we will discuss further, as the situation becomes a little clearer. Since the main blow to the Eurasian elites should be the collapse of the real sector of the Western European economy.
So our readers are warned. And therefore armed. So they can relax peacefully on the weekend and start the work week with new ideas about reforms in the global economy!