
Brad Setser
@Brad_Setser
The January US trade data showed signs of front running in consumer goods (and gold of course) but not in autos. That changed in February. The US is on track for a blowout q1 trade deficit ... 1/
The FT's reporting confirms all suspicions -- and March will match February in all probability as the incentive to front run April 2 is clear 2/ https://www.ft.com/content/d39...
And since it now seems (based on Bloomberg's latest reporting) that April 2 ("Liberation day") will only see the rollout of reciprocal tariffs not the sectoral tariffs (232s) that have been teased (including by Trump) 3/ https://www.bloomberg.com/news...
The fact that Trump is more hawkish on tariffs than most of his advisors only adds to the incentive to ship as much as possible to the US now -- as it is hard to imagine that the sectoral tariffs won't eventually take effect in some form 4/
As an aside, targeting all countries with trade barriers/ and or a trade surplus with the US will produce some strange results -- "Only countries that don’t have tariffs on the US, and with whom the US has a trade surplus, will not be tariffed" 5/
Korea and Canada don't have significant trade barriers to US industrial exports, as both have FTAs with the US. But Korea runs a large surplus with the US and it is hard to see how Trump doesn't tariff Canada even tho Canada runs a deficit with the US if oil is excluded 6/
the US generally runs surpluses with both Australia and Brazil, as both use some of the proceeds from the large iron exports to china to buy US goods ... 7/
The US has a free trade agreement with Australia, so it presumably won't be on the "reciprocal" list now being drawn up by Trump's advisors -- but Brazil has large tariffs and presumably will be on the list ... 8/
And if the tariffs are significant, trade will evolve dynamically and countries that don't now have a surplus and avoid tariffs may soon have a surplus (am thinking of say the UK ... which is an obvious workaround for tariffs on the EU ) 9/
I understand the desire not to impose too big a shock -- which presumably is why parts of the White House (the NEC I assume) are signalling that not all the tariffs will be additive and that some of the "IEEPA" tariffs could be replaced by reciprocal tariffs ... 10/
But the Bloomberg story also suggests a prolonged period of uncertainty, as the sectoral tariffs (232s) won't be part of the announcement, & presumably the China 301 review will also continue. Among other things, that implies more frontrunning 11/11 https://www.bloomberg.com/news...