Many are justifiably mystified by the logic behind the latest round of US “reciprocal tariffs” (Opinion, April 8). The use of bilateral trade balances to calculate the relative tariff level per trading partner is indeed unorthodox. This combines with questions about the economic logic of tariffs in the first place and the way the Trump administration views their likely distributive effects.
There is however one very clear logic. Under Trump 1.0, Chinese and other companies shifted export “production” from the new, higher-tariff sites to Vietnam or Mexico — without necessarily moving their factories. This evaded the effects of administration trade policy. Under this latest round of Trump 2.0 tariffs, that is no longer possible. For Chinese, Korean, or indeed US firms producing abroad, the only remaining route to tariff-free access to US domestic markets is to shift goods production to the US. We shall see if the negotiations to lower all tariffs to zero take place. Given the logic of forced-onshoring, I have my doubts.
Geoffrey RD Underhill
Amsterdam, The Netherlands
