After Trump’s hike on China tariffs and pause on the rest the world, a perverse dichotomy now exists for global trade: 125% US duties on Made-in-China vs 10% or 25% levies on products made elsewhere, though only for 90 days.
The consequence? Tremendous opportunities for “re-assembly” plants in Vietnam or Southeast Asia, or outright smuggling operations in Mexico or Canada, given the potential arbitrage opportunity.
Such a situation couldn’t last long, with US consumers paying higher prices and third countries making a good profit - to evade US tariffs. The 90-day pause provides a good off-ramp, and Beijing and Washington may both think long and hard about the risks of further escalation. The tariff on China may eventually settle at a level where both countries can tout as a win, while leaving it not that profitable for a third-country detour.
Stocks Surge After Trump Pauses Tariff Hikes on Non-Retaliating Countries
Lolz. Lmao, even.