Tariffying Times
No, really, how bad is it?
UPDATE 09APR25: If you detest Trump and his tariffs, and think globalism is great and the green utopia is around the corner, watch this documentary about what Indonesia is doing to its own people so China can flood the global market with cheap EVs. We’ll talk after.
UPDATE 07APR25: This would seem to indicate that Trump has an opportunity to establish a BRICS alternative, with FTAs and currency swaps, rather than tariffs and excise taxes. Standing by.
UPDATE 07APR25: listen to the companion pod for this article.
UPDATE 07APR25: Indonesia begins to panic as the decades-long free ride on USAID grants and trade surpluses begin to bite and the rupiah collapses. Our bet is capitulation by month’s end.
Unless you’ve worked a lot in logistics and cross-border trade, you may not be aware of the global tariff system. Most countries have a base tariff rate, with variations based on protected products and industrial sectors, or socio-cultural mores that levy a “sin tax” on consumers who enjoy certain luxuries—alcohol and tobacco being the most common.
As of April 3, 2025, Indonesia imposes import tariffs on goods from the United States in accordance with its Most-Favored-Nation (MFN) tariff schedule, as both countries are members of the World Trade Organization (WTO). These tariffs are generally consistent across all trading partners without preferential trade agreements with Indonesia.
General Tariff Structure:
Non-Agricultural Products: Most tariffs are bound at 35.5%, with certain sectors such as automobiles, iron, steel, and specific chemical products having higher rates or remaining unbound.
Agricultural Products: Over 1,300 products have tariff bindings at or above 35.5%
Recent Tariff Adjustments:
In October 2023, Indonesia implemented new tariffs on various imported goods under Finance Ministry Regulation No. 96/2023:
Perfumes: 10-15%
Hair Products: 15%
Iron and Steel: 0-20%
Bicycles(!): 25-40%
Wristwatches: 10%
Import Licensing and Restrictions:
Beyond tariffs, Indonesia has implemented import licensing procedures and permit requirements that can affect U.S. exports. These measures have been subjects of discussion between the U.S. and Indonesia regarding their alignment with WTO obligations.
U.S. Trade Relations:
In 2024, U.S. goods exported to Indonesia totaled $10.2 billion, while imports from Indonesia were $28.1 billion, resulting in a US trade deficit of $17.9 billion.
For precise and up-to-date tariff information on specific products, consulting Indonesia's official customs tariff publications or the Directorate General of Customs and Excise is recommended.
Until recently, the United States had a relatively liberal trade policy compared to global standards, but it also maintains targeted protectionist measures in key industries. Here’s how the US compares to the global tariff system:
1. Average Tariff Rates
The US has an average applied tariff rate of about 2.4%, which is lower than the global average of around 7% (according to WTO data).
Many developed countries, such as the EU (1.8%) and Japan (2.5%), have similarly low tariffs, while developing nations often impose higher average tariffs (e.g., India ~17%, Brazil ~8%).
2. Free Trade Agreements (FTAs)
The US has fewer FTAs than the EU or China, but it does have major agreements like:
USMCA (formerly NAFTA) – Zero tariffs on most trade with Canada and Mexico.
Bilateral FTAs with South Korea, Australia, and several other countries.
The EU has more FTAs, covering a larger portion of global trade, making European trade more open overall.
3. Protectionist Measures
The US imposes higher-than-average tariffs on specific industries:
Agriculture: Tariffs of 10–30% on products like dairy, sugar, and peanuts.
Steel & Aluminum: Trump-era tariffs (Section 232) of 25% on steel and 10% on aluminum remain in place against many countries.
China: High tariffs (up to 25% on $300+ billion of Chinese goods) due to the ongoing US-China trade dispute.
In contrast, countries like China, India, and Brazil generally have higher across-the-board tariffs, whereas the US mainly targets specific industries or competitors.
4. Non-Tariff Barriers (NTBs)
The US relies more on NTBs, such as anti-dumping duties, subsidies, and "Buy American" policies, to protect domestic industries.
The EU and Japan use NTBs extensively, especially in agriculture and regulatory standards.
The US has a lower overall tariff than most countries, but is aggressive in protecting strategic industries. Compared to the EU and Japan, the US is less engaged in global FTAs, meaning it lacks as many duty-free trade partnerships. China, India, and many developing nations have much higher tariffs, making the US look liberal by comparison.
As of January 2025, the United States recorded an overall trade deficit of $131.4 billion, an increase from the revised deficit of $98.1 billion in December 2024. This is due primarily to low tariffs on US imports, and high tariffs on US exports. This is compounded by a strong dollar, raising the cost of US goods overseas, but making imported goods much cheaper in domestic markets.
By comparison, Indonesia with its excessive tariffs, excise taxes, customs fees, and other costs runs a trade surplus. As of February 2025, Indonesia recorded a trade surplus of $3.12 billion, marking the 58th consecutive month of surplus since May 2020.
Despite the screaming, hollering and hand-wringing over Trump’s tariff regime, his policies actually make sense, in that they punish nations that levy excessive tariffs and barriers on US goods, while enjoying nearly unbridled access to US consumers.
Additionally, much of the yelping is coming from corporate sectors where low US tariffs have made it cheaper to produce goods overseas and import them. This leads to lower-paying service jobs in the US, where gradually even the cost of cheap foreign goods exceeds the family income. This pain is compounded when the dollar is weak.
This, simply put, is globalism—outsourcing everything to low labor-cost nations, with final assembly at home. At a more complex level, globalism has spawned such things as the ISO, IMF, WTO, WHO, World Bank, and everyone’s boogyman, the WEF. At the center of it all is the EU, the globalist sandbox where global regulations and enforcement systems are tested and rolled out.
What Trump has done is drive a stake in the heart of globalism. The EU creates the regulations, but the US enforces them, and if the US goes off on another tangent, there really isn’t a need for the EU, nor any of the other parasitic organizations that act as the gendarmes.
It is interesting to note that the Trump tariffs do not apply to Russia or Belarus, which are ironically isolated by the many sanctions against them. However, the tariffs do indirectly apply to Israel, via the global supply chain.
Trump’s tariff regime appears to favors nations producing energy and agricultural products (including fertilizer). He seems to be trying to lower energy and food costs to counteract the inflationary action of the tariffs.
That’s a bold move, Cotton. Let’s see if it works for them.
Article I, Sections 8, 9 and 10 grant Congress the exclusive right to impose import tariffs (Duties), while all levels of government are banned from imposing export tariffs.
However, Section 232 of the Trade Expansion Act of 1962, gives the President the power to unilaterally levy import tariffs if there is a perceived threat to national security. Additionally, Section 301 of the Trade Act of 1974, grants the President the power to levy tariffs against countries engaging in intellectual property theft and unfair trade practices, the primary justification behind the China dispute.
Trump is doing nothing radical—it is essentially an eye-for-an-eye trade policy. His efforts appear to pass Constitutional and legal muster, using established powers vested in the Presidency.
Trump has thrown a monkey wrench into the globalist gears. For decades, the world has enjoyed nearly free access to US consumers, while profitting off taxes and duties against US products. Furthermore, US consumers have enjoyed low-cost goods from overseas, but at the expense of high-quality jobs that has eroded individual buying power and left the US vulnerable to foreign market manipulation.
It remains to be seen how all this will shake out. An operation this complex has thousands of variables, nearly all of which must align to deliver the desired outcome. Trump certainly has the ego to attempt something like this, but is it enough to claim victory within the next four years?
In the meantime, remember the Four Ds: dodge, dip, duck, dive, and, er…dodge.
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As one might imagine, there aren’t a whole lot of great films related to tariffs and trade wars. The best one I can think of is The Constant Gardener (2005), starring Ralph Fiennes and Rachel Weisz. It’s particularly apropos with its theme of global trade and the pharmaceutical industry. Well worth a box of popcorn.
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'Tarrifying'? Very punny, Wilde:)
First of all, thank you, Rufus, for your thoughtful and balanced piece on the current tariff panic. In an age where Trump Derangement Syndrome and extreme polarization dominate Western discourse, it's rare to find commentary that attempts genuine analysis rather than reacting to the messenger.
Most mainstream coverage fixates on variations of "orange man bad," completely missing the point. In reality, tariffs — as blunt as they may seem — are not entirely irrational when facing a trade imbalance as massive as the one the U.S. endures today. Dock workers themselves have expressed amazement at the sight of colossal container ships arriving fully loaded from China’s ports — the largest in the world save Singapore — and returning empty. That’s right: not half-empty, but completely empty. The implication is chilling — the U.S. has nothing China wants to buy.
Given that, efforts to reclaim U.S. manufacturing make basic sense. However, as with all things, the devil is in the details. Trump may be right in principle, but the execution has been haphazard. Rather than build consensus with key stakeholders and phase in policy with cooperation, he launched an all-out tariff war on so-called Liberation Day. The result? Chaos. Even if it's ultimately a win, it may prove to be a Pyrrhic one.
What's most striking to me is the lack of real analysis in the media. Beyond the usual inflammatory soundbites, there’s little in the way of grounded commentary. What’s happening now isn’t revolutionary — it’s part of a broader shift already in motion. Countries are rethinking globalization, leaning into friendshoring, and forming regional blocs like ASEAN and BRICS. Even if some manufacturing returns to the U.S., it would have been wiser to target specific subsectors rather than take a scattershot approach.
Singapore offers a useful example. Despite high labor costs and minimal land, they've developed a thriving, high-growth manufacturing sector by focusing on niche areas. If the U.S. blindly forces companies to set up shop domestically without considering costs, infrastructure, or sustainability, they may build a fragile sector propped up only by tariffs.
In summary, while I support the goal of revitalizing American manufacturing, it deserves the deft chisel kf a skilled sculptor— not a sledgehammer.
Good article. Tariffs are confusing. My friend, Arthur, in Scotland, told me that the Scots are upset about Trump's tariff on Scottish whisky. Whisky is their biggest export.
Probably 12 years ago or so, I read an article by the famous Libertarian writer James Bovard. Back in the day, he and his girlfriend toured Europe.
Bovard found a way into the World Tariff HQ in Basel (maybe Geneva or Zurich, I can't remember), Switzerland.
James found a stack of binders 6" thick, which contained all the tariffs in the world. James decided to liberate this binder and put it in his backpack.
When he returned to his hotel room, James told his girlfriend to pack. They were leaving on the next train to anywhere.
So, yeah, the EU sets tariffs and the US enforces them. Trump is saying "Piss off!" to the EU both in Ukraine, NATO, and tariffs. Trump is getting the Euro-Monkey off of America's back.