Madagascar and tariffs

Trump's tariffs are imbecilic. If they ever go into effect as designed they stand to do the whole world economy an enormous amount of harm. Even if they are reversed quickly by one route or another, -- not just put off for 90 day intervals but reversed -- they stand to do harm, because these things are not simply a switch easy to turn on and off and on again.

But let us think about a simple bilateral example of this stupidity for a moment. Trump proposes to create a "reciprocal" tariff of 47% on imports from Madagascar, to go into effect when the latest "pause" comes to an end. Why?

On some level (the one that justifies the word "reciprocal") he seems to want us to believe that Madagascar at present has a 47% tariff, or greater, on the US, so it is the least we can do on behalf of fairness. You will likely not be surprised to learn that that is not the case. About 40% of imports to Madagascar require payment of a 20% customs duty. Not 47%. Not even half that.

There are ways that companies, HQ-ed in the US or otherwise, can mitigate that 20% -- but it would be a bit of a digression to get into that here. Where did the Trump administration come up with the number 47% as something that would be "reciprocal"? Well, understanding that involves playing arithmetical games with the fact that the US has a bilateral trade deficit with Madagascar. We sell less to them than they sell to us.

Let us avoid the games and ask: why is that? Why the deficit? Two points, I submit, explain this:

1) The people of that country are generally poor and they do not buy a lot of imported goods. They buy and sell from each other what they need to live a subsistence existence, except for one big thing.

2) They sell to the export market a LOT of vanilla. They lead the world in vanilla production and export. Their climate, soil, etc. seem to be ideal for it. If you go to a bakery in the US and buy a cake with vanilla frosting, you are very likely going to taste something Malagasyan.

On the Trumpian analysis (insofar as there is one) this means that Madagascar is being unfair to us and we have to punish it, subject to their presumed willingness to renegotiate a trade deal. I have no idea what that deal would be. If Trump manages to stop their export of vanilla to the US it will make that country poorer than it is now, and less able to afford imports from the US.

Just something to think about. Oh, and personally I have a terrible trade deficit with my barber. I regularly need my hair cut and he never needs to have anything written for him at all. So I buy from him and never sell anything to him to balance it out. WHAT A BASTARD! How do I punish him????

By the way ... I couldn't possibly end this post with a "buy America" lesson. I will learn to cut my own hair a lot sooner than the US is going to be able to substitute the loss of imported vanilla with our own vanilla. We have only a very small ("niche" is the word commonly used) presence in the vanilla-bean harvesting world. The soil and climate in south Florida and Hawaii make it possible there, but not in the quantities necessary to replace the stuff we are presumably going to lock away from ourselves via a tariff.

It seems likely that the Malagasy beans will make their way to the US by some indirect route, passing through some 3d country on whom the sliding scale of Trumpian tariffs looks more kindly. But no such result will suffice to mitigate the judgment with which I began.

These tariffs are imbecilic. And they don't become less imbecilic by being delayed for 90 days at a time. That is like leaving a sword of Damocles of dumbness hanging over the world's commerce.

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