[walterbell]

https://www.ft.com/content/96bc1b74-14dd-47ab-8bbd-1add97a2a...

> both leaders claim their approaches have helped them this week avoid what Trump calls “liberation day” tariffs.. Mexican officials on Thursday said the strategy had borne fruit and they would focus on getting an even better deal. Economy minister Marcelo Ebrard said: “It's a great achievement, I’d say, from the point of view of where we started not long ago that there would be no exemptions.” .. Mexico remains upbeat, with [President] Sheinbaum on Thursday trying to lure companies to invest in USMCA-compliant production in the country. “We think that with the dialogue we’ve established there are the conditions to have a better deal,” she said.

[graeme]

You've completely ignored what I wrote. The formula the white house used to set tariffs would result in lower tariffs for Canada and Mexico. If both countries were included in the formula Trump would have to cut announced tariffs on both countries.

Do you dispute this? It's trivial to calculate.

[clipsy]

You're making the mistake of believing that anyone left in the MAGA camp is arguing in good faith.

[walterbell]

You're disagreeing with statements by the President of Mexico, describing the result of ongoing negotiations?

Canada and Mexico share a physical border with USA, which has already resulted in unique (i.e. unrelated to the math of 180+ other countries which don't physically border USA) tariffs tailored to border security goals, under national security emergency directives which overrode USMCA.

USMCA has been historically gamed by international manufacturers seeking more favorable terms for products destined to the US market. As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties, which would then reduce the need to invoke the emergency-power tariffs that have been deployed against 180+ countries.

[bawolff]

> As stated by the leadership of both Mexico and Canada, USMCA will need to be renegotiated to address issues identified by all three parties

On the canada side, i think the issue identified that needs to be addressed is the US president being a dick.

(I'm not being sarcastic here, that is my genuine impression. If you disagree can you cite a source for what issues canada wants addressed? Obviously times are a bit weird since we are having an election and its considered bad form for the gov to do anything during election season)

[walterbell]

Nov 2024 analysis, https://www.whitecase.com/insight-alert/north-america-prepar...

> Some Members of Parliament have also advocated for increasing trade barriers on Chinese imports alongside the United States, which the Canadian government has recently begun doing unilaterally. Suggesting Canada could be interested in coordinating those China-related trade policy measures across all three USMCA members, Deputy Prime Minister Chrystia Freeland recently said she sympathizes with US concerns that “Mexico is not acting the way that Canada and the US are when it comes to its economic relationship with China.”

[bawolff]

That doesn't seem to support canada wanting to renogtiate usmca. The best way of handling that issue is probably not renegotiation (its way too specific of a situation to write a clause into the agreement for). Furthermore, Chrystia freeland hasn't been deputy PM for four months now, and the situation has changed a lot since then (not to mention we also have a new prime minister since then). At the time of that statement i don't think there was much appetitie for renegotiating usmca.

Compared to now where our current PM is straight up saying "The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperations, is over"

[walterbell]

From the FT article linked upthread, https://archive.is/J09AN

> A broader change to the USMCA also looks likely, with Carney saying there had been “so many violations” that the free trade agreement needs “a renegotiation”.

[graeme]

Yes, because the math provides a much simpler explanation.

[walterbell]

Napkin math cannot apply to Mexico and Canada tariffs, because the USMCA (and preceding NAFTA) have long intertwined North American manufacturing supply chains, with components moving back and forth across borders.

Even the emergency border security tariffs and counter-tariffs announced earlier this year by US and Canada have since been carefully tailored for specific products and exceptions, as cooler heads prevailed on both sides of the border, to minimize immediate and catastrophic ripple effects across North American manufacturing.

[amluto]

The entire new tariff scheme is napkin math. Although it could also be napkin math done by some LLM.

If it was real math, it wouldn’t assume that there is some magical trade elasticity that is completely linear in the tariff rate. And real math might notice that the prices of goods that are subject to tariffs are an utterly absurd measure of value, cost, movement of money, or anything else.

Consider:

A US company does a bunch of R&D and designs a widget. They pay $10 each to a Chinese factory to manufacture it. They warehouse the widgets in Hong Kong. Each widget purchased by a US customer results in a “$100” item being imported. $90 stays in the US. $10 goes to China.

The same company does exactly the same thing except they ship in bulk to a US warehouse. The imported item is now “$10”. The tariff is 1/10 as much, the napkin math sees 1/10 as much trade imbalance, but the economic effect of the import is identical.

Or maybe they ship from Hong Kong to a French customer. This should be seen as an export from the US to France with $90 and an export from China to France worth $10. But I think it’s invisible to the napkin math.

Now consider that the US is home to some wildly successful companies with names like AMD and Nvidia. They sell chips for thousands of dollars each, worldwide. They pay TSMC quite a lot less to make them. If they warehouse in the US, they may be screwed now! If they ship from Taiwan to a buyer somewhere else, the US has, in effect, exported quite close to the full sale price of that chip, but no trade goods ever touched US soil. Can the napkin math sees that?

You can bet that several other countries use brains instead of napkins and will have no difficulty thinking that they could retaliate by restricting or taxing of these US-designed goods even if they’re imported from elsewhere. And China is working very hard to make their own alternatives, and they will surely be willing to export them.

(Don’t forget: The UK and Israel have CPU design expertise. ASML is dependent on tin zapping tech from San Diego, but they’re an EU company. And it looks like the successor to that tin zapping tech might be free electron lasers, and that technology come from US national labs and universities, but other countries also have FELs, and the nerdy physicists who fiddle with them are not happy with the US government right now.)

[walterbell]

> The entire new tariff scheme is napkin math.

See the 2024 paper (40 pages) by Stephen Miran, current chair of the Council of Economic Advisers, which has influenced tariff policy, https://news.ycombinator.com/item?id=43589350

https://financialpost.com/news/stephen-miran-economist-trump...

> Miran.. points to Trump’s application of tariffs on China in 2018-2019, which he argues “passed with little discernible macroeconomic consequence.” He adds that during that time the U.S. dollar rose to offset the macroeconomic impact of the tariffs and resulted in significant revenue for the U.S. Treasury.. “The effective tariff rate on Chinese imports increased by 17.9 percentage points from the start of the trade war in 2018 to the maximum tariff rate in 2019,” the report said. “As the financial markets digested the news, the Chinese renminbi depreciated against the dollar over this period by 13.7 per cent, so that the after-tariff USD import price rose by 4.1 per cent.”