Trump's Tariffs Are the Highest in a Century. Yet, They Seem Like a Relief.

New York Times

3 days ago

Six months ago, few people would have anticipated that the United States would place a 15 percent tariff on exports from Japan, one of America's closest and most longstanding allies. President Trump had campaigned on the idea of a 10 percent universal base-line tariff, plus a higher levy on China, but it was not clear whether he would follow through.
But on Tuesday, when Mr. Trump announced a trade deal that included a 15 percent tariff on Japanese products — the highest rate those goods have faced in decades — there was a palpable sense of relief. Stock markets in Asia and Europe rose. The Japanese Nikkei 225 surged by over 3.5 percent, while shares of Japanese automakers, which will also be charged a 15 percent tariff on their exports to the United States, jumped more than 10 percent.
The reaction is a testament to just how quickly and completely Mr. Trump has transformed the world's expectations regarding tariffs. In a few short months, the president has normalized tariffs at rates that would have been shocking just months ago. But by threatening even higher levies and holding out the prospect of devastating trade wars, he has somehow made sharply higher tariffs, which are now at rates not seen in a century, feel like a relief.
The reaction is largely due to the incredible uncertainty the president has created with his global trade negotiations. He has threatened higher tariffs on dozens of countries as of Aug. 1, unless they strike a deal with the United States. So far, the administration has announced deals with Britain, Vietnam, Indonesia and the Philippines, all of which have left tariffs of 10 to 20 percent in place.
The fact that the United States closed the deal with Japan on Tuesday was in itself a positive surprise. Negotiations between the countries had been difficult, in part because Japan had been heading toward a national election where politicians were under pressure not to fold to the United States on Japan's core interests.
The governments were also clashing over the 25 percent tariff that Mr. Trump had imposed on global autos, a key export for Japan, as well as Japan's barriers to U.S. rice, which it has long deemed to be of inferior quality. It was unclear whether the two countries would be able to overcome such barriers.
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