When economics and politics (don’t) mix:

Many remark (check the twitter comments) that this sounds like stuff the “Supreme Leader of North Korea” (Kim Jong-un) would say. Trump also revealed additional, previously unknown, superpowers: his ability to “obliterate” entire economies of sovereign nations.

Bloomberg reports on the EU’s 42.3% low-tech “ironing board tariff.” The goal is to protect 10 EU producers who employ about 700 workers in Italy and Poland “dumped” ironing board imports. “Ironing boards are among a group of more than 50 Chinese products subject to EU anti-dumping duties, making China by far the most frequent target of such European levies. Other Chinese goods that face such import taxes include aluminum foil, ceramic tiles, ring binders, and tableware.” Also on that list: bikes and since 2019 also e-bikes.

The new Apple Mac Pro is a good example of how bilateral tariffs work – work as in “outlining the mechanics” not as in “achieve the goal of making America great again through insourced production.” Trump tweets on Sept 30, 2019: Great news! Apple announced that it is building its new Mac Pro in Texas. This means hundreds of American jobs in Austin and for suppliers across the Country. Congratulations to the Apple team and their workers!

Apple Inc was contemplating it would move the production of the Mac Pro abroad, but decided instead it decided to continue production in America – but only after it received crucial tariff exclusions. (Over 2500 firms asked the US government for such exemptions from the Trump Tariffs, but few have been granted. Lucky Apple!) Here is the process: To qualify for a tariff exclusions firms have to prove to the U.S. government that

1. The item is available only from China, and whether it (or a comparable product) is not available in the U.S. or a third country
2. The additional duties on the item would cause severe economic harm to the applicant, or other U.S. interests
3. The item is strategically important

According to Bloomberg, the Mac Pro qualified for a tariff exclusion on its metal PC case, although it seems preposterous that a “stainless steel space frame” could not be manufactured anywhere but in China. NASA is sending spacecraft to the moon but no US company can make a steel case? The power cable, on the other hand, was denied a tariff exception — will it now be made in the US? Unlikely, the most likely supplier is said to be Taipei-based Delta Electronics Inc., which already supplies to Apple from factories in China, Taiwan, and Thailand. It plans to invest $1.8 billion in Taiwan to boost production and R&D. The case of Delta Electronics highlights the problems with the tariffs-to-repatriate-employment program: When US manufacturers cannot buy from the cheapest producer (China) the do not move production home but they go to the second cheapest producer which is likely in another country. Photo by Nilay Patel / The Verge