Customs madness from outer space

DONALD TRUMP’S tariff announcement on April 2nd has drawn mockery for its spurious maths. Any bilateral trade deficit is treated as gross unfairness; the tariffs are set by taking the measure as a share of goods imported from each country, and halving it. But there are other oddities too, from the fact that the tariff rates appear to be calculated for places with an internet domain name to the fact that they are based on a single year of data. The starkest demonstration of the absurdity of the tariffs is to look at the bizarre outcomes they produce. Here is a list of the three craziest duties.

Before April 2nd, Saint Pierre and Miquelon was perhaps best known as the last vestige of French territory in North America. Now it bears the dubious honour of being the recipient of the highest “Liberation Day” tariffs, of 50% (a position it shares with Lesotho). That is more than twice the rate applied to the European Union, and five times the rate on some other overseas French territories. In July, the only month in the past two years when the islands traded at all with America, they exported $3.4m in goods to Uncle Sam, while importing next to nothing. That was, in hindsight, a bad move.

Some populations will take the news better than others. The inhabitants of the Heard Island and the McDonald Islands, for instance, will shrug off their tariff rate of 10%. Four kinds of penguins and 29 species of mammals live in the Australian territory—but no humans. The minuscule amount of trade recorded with America appears to reflect mislabelling or administrative error. Some speculate that the fact the islands feature on the White House’s list at all, instead of receiving the same rate as Australia, is because they have an internet domain name (.hm), which appears to be how officials picked their targets.

3 April will probably go down in history as a turning point – at least in the history of German carmakers, there will be a ‘before’ and an ‘after’ 3 April 2025. Since midnight local time, Trump's 25 percent punitive tariffs have been in force on car imports. For all vehicles not produced in the USA. And so, before 3 April, thousands of cars piled up in Sparrows Point. Volkswagen's container terminal is located there, just before the bridge that collapsed last year. BMW also stores its vehicles there.

VW did raise the prices of its cars in the US by 25 per cent. But because all US car dealers knew that the Trump tax was coming, they bought as many cars as possible from ‘Old Germany’ by the end of March.

Now they can advertise at the old price – at least while there are still cars in stock. It's no wonder that VW was able to increase its sales by 7.1 per cent in the first quarter, with BMW increasing its sales by 3.7 per cent.