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PaperclipPerfector  8d ago (text post)   31574 thread views

Culture War Roundup for the week of April 7, 2025

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So the tariff climbdown begins, at least on the part of the United States. Smart phones, computers, and chips to be exempt from the reciprocal tariffs:

https://content.govdelivery.com/bulletins/gd/USDHSCBP-3db9e55?wgt_ref=USDHSCBP_WIDGET_2

As things stand, this basically decimates small and medium-sized business owners while leaving Big Tech sitting pretty, despite the former being a key pillar of GOP support for decades, and the latter only having their MAGA awakening one month prior to the election.

I think this Hacker News comment really sums up what's just happened:

This is pretty much how I expected this to play out, at least for now. Trump acts all tough and doesn't back down publicly, but China actually doesn't back down. So what happens is that some businesses get exemptions to mitigate the impact. Then some fine print gets changed about how the rules are enforced. Like, suddenly it turns out that Kiribati is a major electronics supplier to the US :) End result - US economy takes a hit, China takes a smaller hit. Trade balance widens further, most likely. The rich get richer, while many small companies struggle to survive.

The admin's hand also seems to have been forced by the bond market going crazy. The trade specialists now have the unenviable task of unwinding the past two months in whatever way is least damaging to Trump's ego. Most likely, everything remains on the books, and we now spend the next several years developing workarounds for this clusterfuck.

Combined with this we might be seeing a major back-down on a lot of Trump's programs:

U.S. President Donald Trump suggested on Thursday that farmers will be able to petition the federal government to retain some farmworkers in the U.S. illegally, provided the workers leave the country and return with legal status.

"We're going to work with farmers that, if they have strong recommendations for their farms, for certain people, that we're going to let them stay in for a while and work with the farmers and then come back and go through a process, a legal process. We have to take care of our farmers and hotels and various places where they need the people," Trump said.

I'll note that personally I'm basically in favor of a policy by which migrants who are employed should be a much lower priority for deportation, and that ultimately a variably-sized fine is the best punishment.

But this fundamentally undermines any wignat hopes that this administration will seriously halt the melanation of America.

Pessimistically, the upshot of all this is that both Tariffs and Deportations are fundamentally unserious policies, which won't really help the headline numbers, while a few random unlucky individuals get caught up and destroyed in the gears of government.

Optimistically, this is the start of both a more restrained approach from the Trump admin and perhaps even an understanding that we need to restrain the imperial presidency.

  1. Impose huge tariffs on China to try to drive some kind of autarchic domestic manufacturing revolution.

  2. Embarrassing climbdown after the market melts down and your donors / friends get mad. Keep tariffs only on China. This means that cheap manufactured goods, clothing, widgets etc keep flowing in from South and Southeast Asia in huge volumes, so no boost to American manufacturing for any of them.

  3. Exempt electronics, computers, solar panels etc from Chinese sanctions, ensuring that even the critically important industries to national security stay 100% reliant on Chinese manufacturing because Tim Apple said that the iPhone would double in price if he didn’t get his exemption.

  4. Chinese tariffs remain at 125% on the US. Trade deficit with China widens. American manufacturing doesn’t develop at all (suppliers buy the easy stuff from elsewhere and the complex stuff from China, where the exemptions apply). Americans can’t sell anything in China.

This really is what winning looks like.

.5. Fuck up many US manufacturers who rely on parts / subassemblies / materials that don't have alternative sources outside China.

I'm sure this is all just some 6D chess...

solar panels etc from Chinese sanctions

That would be kind of a big deal -- solar panels in particular from China have been heavily tarifFed for years and years, despite that there's really no domestic industry in that area.

Are you saying that Trump is now reducing those tariffs? I don't think that's true.

The BBC article on this change specifically mentions solar cells as part of the exemption.

Trump acts all tough and doesn't back down publicly, but China actually doesn't back down.

Something that was always apparent if you paid attention but has become increasingly hard to ignore: Trump is not a master negotiator. He plays one on TV.

It wasn't even that good as TV went. It was just Omarosa being an absolute meme queen with the racialized undertones glaringly present, and Trump dunking on clowns. It was novel as TV concepts went, so gotta give that to ABC.

Anyways, I would posit that the Trump tariffs can be summed up in 3 different memes:

stickinbike.png michael scott handshake.png chadxi.png

There are many different image macros that can be applied. Be creative in my stead, dear bored board members.

US economy takes a hit, China takes a smaller hit.

Are

Smart phones, computers, and chips

actually a substantial portion of China's trade to the US? I thought we mostly were sourcing the important parts of those from its neighbors. Is this because most of those supply chains have a penultimate step in China for assembly?

Anyway, I dunno – a lot of small businesses might actually benefit from this, depending on where their line of work is. Where I live there are antennae manufacturing factories (I...think that's what they do?) and I assume competing with China is not fun for them.

As an aside, but I can't help but think gradually escalating tariffs would allow Team Trump to get the same end result, but with a lot more stability. Having, say, a year of gradually escalating fees ending at 1,000,000% percent or whatever we've slapped on China now seems much better from a market's perspective than "1,000,000% in 90 days."

[There might be reasons for the abruptness, of course.]

Don't forget the 10% tariffs on everybody except Canada and Mexico still exist - these sounds manageable, but they are still a big drag on the US economy.

Having, say, a year of gradually escalating fees ending at 1,000,000% percent or whatever we've slapped on China now seems much better from a market's perspective than "1,000,000% in 90 days."

If you’re actually going to do it it’s better to do it all on Day 1 because anything else is extremely inflationary as the tariffs slowly tick up (I assume this is the actual advice Trump was given). Of course, it’s a bad idea to do it at all.

China makes lots of phones, Iphones for instance. Their biggest export to the US is electronic equipment.

https://tradingeconomics.com/china/exports/united-states

The bulk of the Iphone is produced with Taiwanese, Japanese, Korean parts but a good chunk of the value is produced in China. China does 15-30% of the Iphone. Much more for Chinese brands like Xiaomi.

Yes, however, they get paid a small fraction of the total value.

Most of the bill of materials by value doesn’t come from inside China, it’s shipped there, and then an American firm pays them 10 bucks to assemble it all together, for a $1000 phone.

This is just one more part of why the method of computing trade balances by looking at bilateral difference completely bonkers.

I think we underestimate assembly to our peril. You can't just slap them together like lego, you need quality control and various kinds of precision engineering capabilities. The Iphone is very small and thin, you need tight tolerances and clever tricks.

"Cook has stated, "The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here [in China]." He further noted, "In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields."

15-30% of the value of an Iphone is not trivial and not easily replaced!

Indeed, but it is curious that they would only be paid a tiny amount for that if it was such a high fraction of value.

Gotcha, so it's the assembly part that counts. Sorta what I figured.

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