Elementary, My Dear Tariffs! Trump's Trade Gambit Baffles the Markets

The Curious Case of the Tariff Tango

The game my dear Watson is afoot! Or rather a tariff. President Trump with the dramatic flair of a seasoned stage actor has unveiled a series of tariffs affecting no less than fourteen countries. The method as always is somewhat… unorthodox. Social media posts form letters – it's hardly the stuff of diplomatic finesse is it? Japan South Korea Malaysia Kazakhstan South Africa Laos Myanmar Bosnia and Herzegovina Tunisia Indonesia Bangladesh Serbia Cambodia and Thailand are all now caught in this economic web. One can only assume the logic behind this selection is as clear as the London fog on a November evening.

A Percentage of Perplexity

The numbers Watson are where the real mystery lies. 25% tariffs on some 30% on others escalating to a staggering 40% on imports from Laos and Myanmar! The president's letters suggest these rates are subject to change depending on the ahem 'relationship' the U.S. has with each country. It seems international trade is now less a matter of economics and more a matter of… personal feelings. 'Data! Data! Data!' I can hear myself saying but where is the concrete evidence to support such sweeping changes?

The Market's Murky Mood

Unsurprisingly the financial markets reacted with the enthusiasm of a dowager discovering a rat in her tea. The Dow Jones took a tumble the S&P 500 shed value and the Nasdaq Composite followed suit. 'It has long been an axiom of mine that the little things are infinitely the most important,' and in this case the 'little thing' of an unexpected tariff hike has had a rather large impact.

Deja Vu All Over Again

Ah but this isn't the first time we've seen such antics is it? These tariffs are in essence a resurrection of those announced in April albeit with a 90 day pause to lull us into a false sense of security. Now they're back with a vengeance. The administration claims it could strike as many as 90 deals in 90 days but all we've seen are broad frameworks with the UK Vietnam and China. It reminds one of a dog chasing its tail – plenty of activity but precious little progress.

Transshipping Treachery!

The letters warn against 'transshipping' – a cunning albeit devious practice of rerouting goods through intermediate countries to evade higher tariffs. It's a game of cat and mouse Watson and the mice are getting rather clever these days. The letters ominously declare that such goods will be subject to the higher tariffs anyway. One might say 'You know my method. It is founded upon the observation of trifles.'

The Deficit's Dubious Defense

The rationale behind this tariff tempest according to President Trump is to rectify the U.S. trade deficits. He a self proclaimed tariff enthusiast sees these deficits as evidence that the U.S. is being exploited. While large deficits with Japan and South Korea are apparent the deficit with Myanmar is comparatively minute. To treat them all with the same broad brush is shall we say less than elementary. 'It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories instead of theories to suit facts.'