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Yesterday, Donald Trump got out his penis pen, waved it around, and then signed a bunch of letters
that were delivered to the leaders of various nations, warning them that new tariffs are imminent.
The White House said it has delivered, or will deliver, a total of 14 letters to various national leaders, advising that rates between 25% and 40% will be imposed, absent some sort of new trade deal. Here is the first page of the letter sent to Japanese PM Ishiba Shigeru; the others are essentially the same:
His Excellency
Ishiba Shigeru
Prime Minister of Japan
Tokyo
Dear Mr. Prime Minister:
It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship, and the fact that the United States of America has agreed to continue working with Japan, despite having a significant Trade Deficit with your great Country. Nevertheless, we have decided to move forward with you, but only with more balanced, and fair, TRADE. Therefore, we invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far. We have had years to discuss our Trading Relationship with Japan, and have concluded that we must move away from these longterm, and very persistent, Trade Deficits engendered by Japan's Tariff, and Non Tariff, Policies and Trade Barriers. Our relationship has been, unfortunately, far from Reciprocal. Starting on August 1, 2025, we will charge Japan a Tariff of only 25% on any and all Japanese products sent into the United States, separate from all Sectoral Tariffs. Goods transshipped to evade a higher Tariff will be subject to that higher Tariff. Please understand that the 25% number is far less than what is needed to eliminate the Trade Deficit disparity we have with your Country. As you are aware, there will be no Tariff if Japan, or companies within your Country, decide to build or manufacture product within the United States and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely — In other words, in a matter of weeks.
If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by will be added onto the 25% that we charge. Please understand that these Tariffs are necessary to correct the many years of Japan's Tariff, and Non Tariff, Policies and Trade Barriers, causing these unsustainable Trade Deficits against the United States.
This Deficit is a major threat to our Economy and, indeed, our National Security!
Either Trump is writing his own letters these days, or else whichever staffer is doing the job has learned to mimic the President's poor grasp of international trade and his inappropriate use of capital letters and exclamation points. The reason that the exact contents of the letters are known is that, before sending them to their recipients, Trump posted copies of each to Truth Social.
The letter to Ishiba was the first one delivered (or, at least, the first one posted to Truth Social). It was followed by a letter to South Korean PM Kim Min-seok. Both nations ostensibly face new 25% tariffs. After those came letters to the leaders of Myanmar (40% tariff), Laos (40%), Thailand (36%), Cambodia (36%), Serbia (35%), Bangladesh (35%), Indonesia (32%), Bosnia & Herzegovina (30%), South Africa (30%), Kazakhstan (25%), Malaysia (25%) and Tunisia (25%). Why these countries? Who knows? The rates are very similar to the ones announced on "Liberation Day" back in April, and then suspended. The main exception to that is Cambodia, whose "new" rate is 13% lower than its previously announced rate.
As per usual, this cannot be viewed as a serious effort at remaking/improving the United States' trade relationship with these nations. First, one does not negotiate trade deals in public, on social media. Second, one does not negotiate based on such a poor notion of how tariffs work. Third, one does not negotiate from the vantage point of "you give us everything, we give you nothing, and you will smile and nod and like it." And on top of all of this, as everyone knows at this point, Trump always chickens out. As you can see, the latest "deadline" is August 1. However, Trump has already softened that; telling reporters yesterday afternoon that date is "not 100 percent firm."
Remember, Trump has yet to articulate, or commit to, a clear vision of exactly what he wants to achieve with his tariffs. He can either use them to: (1) increase revenues for the federal government or (2) to protect American industries and/or punish foreign industries/nations. The former involves setting rates that are feasible and that are likely to be paid (with the costs largely being passed to American consumers, of course), the latter involves setting rates that are not feasible, and that effectively close off the U.S. market. Trump cannot have both sets of benefits, as they are in conflict.
Particularly instructive here is South Korea, the recipient of Letter #2 yesterday. Because that nation is one of the United States' biggest trade partners (#6 by total value of goods and services traded), it makes a lot of sense to grease the trading skids as much as is possible. And so, almost 20 years ago, the George W. Bush administration negotiated the U.S.-Korea Free Trade Agreement (KORUS FTA), which eliminated tariffs on 95% of goods and services that flow between the two countries. That agreement was signed in 2007, took effect in 2012, and has been an unqualified success, increasing trade between the two nations by 70% in its first decade. In particular, South Korea has been a valuable market for America's farmers.
Now, perhaps the original agreement was not quite perfect. Perhaps there was room for improvement. Fair enough; it actually was renegotiated several years after the original agreement was created. KORUS FTA v2.0 was hammered out in 2018, which means it was the work of one Donald J. Trump. Although v2.0 made relatively minor changes to v1.0, Trump congratulated himself heartily at the time, describing the updated pact as "fair and reciprocal," "a very big deal" and "a historic milestone in trade."
In short, if the goal of the current trade war is to increase the amount of trade with foreign nations, well, in the case of South Korea, that goal has already been achieved. If the goal is to improve current agreements, by getting a "real" dealmaker involved, well, in the case of South Korea, that goal has also been achieved.
One could argue that maybe Trump wants to try to do even better, but that doesn't really work, either. First, the original deal was already very good at promoting trade between the U.S. and South Korea, even before he got his hands on it. There just isn't a lot of room for improvement. Second, why should anyone imagine he could do better this time, if he didn't get it right in his previous renegotiation? Third, Trump has made very clear that he does not abide by past trade agreements, including the ones that he himself negotiated. Why should any nation bend over backwards to accommodate him? If they give him what he wants (whatever that is), he will just be back with more demands in 6 months or a year.
So, one cannot accept that the latest round of letters (particularly the one to South Korea) is actually geared toward improved trade with those nations. Meanwhile, if the goal is protectionism, then there's no need for deadlines and offers to negotiate—you just impose the protective tariffs, and that's that. And so we end up back where we started: Trump's trade war has no clear trade-related purpose or vision.
This being the case, what might be driving his actions (both in general, and in terms of the letters sent out yesterday)? We've run down the most obvious theories before, but here they are again:
It's possible that it's more than one of these. In fact, it's possible that it's all four. Whatever the case may be, for the reasons we outline above, we cannot accept that all of this is really about trying to establish better trade relationships with other nations, nor is it about protectionism.
One last, semi-related point. Trump is clearly aware of the concept of a letter that is nominally addressed to [FOREIGN LEADER X], but whose main purpose is political theatrics. He just signed 14 such letters yesterday. This being the case, it's frankly a bit pathetic that he was verklempt yesterday afternoon when Israeli PM Benjamin Netanyahu presented Trump with a letter formally nominating the President for the Nobel Peace Prize. "Thank you very much. This, I didn't know. Wow. Thank you very much," said Trump.
Is he really and truly so unsophisticated that he does not realize he is being manipulated by master manipulator Netanyahu? It sure looks that way—Trump is not able to fake those kinds of emotions the way that, say, Bill Clinton or Ronald Reagan could. The only way the letter could be less genuine is if it came from Vladimir Putin or Kim Jong-Un. Meanwhile, every foreign leader in the world is watching, and just got another reminder that you can maybe reach Trump with diplomatic concessions, but you can definitely reach him with empty gestures and shallow flattery. South Korea's highest civilian award is the Grand Order of Mugunghwa, which is meant for South Korean heads of state, and for "heads of allied nations (or their spouses) who have rendered exceptional service to the country." We suspect the Grand Order is about to get a new member... (Z)