Odd Lots Brad Setser on the Damage From Trump's Gigantic Tariff Shock
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Apr 5, 2025 
Brad Setser, a senior fellow at the Council on Foreign Relations, delves into the implications of Trump's tariffs on global trade. He highlights the U.S.'s choice to go it alone rather than collaborate with allies, which has ignited fears of a recession. Setser analyzes how these tariffs have led to reciprocal actions from China and explores potential strategies businesses might adopt to shift production overseas. He critiques the simplistic reasoning behind tariffs, advocating for a more nuanced understanding of global trade dynamics.
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Countering China
- The U.S. should strengthen trade with allies, creating a bloc to counter China's influence.
- Trump's approach of tariffs against all countries is costly and weakens this potential alliance.
Tariff Loopholes
- Two loopholes exist within the new tariffs: shifting final production to countries with balanced U.S. trade or using USMCA compliant production in Mexico.
- These loopholes might not align with the administration's intent and could be renegotiated.
Tariff Formula Origins
- The tariff formula was seemingly based on trade surplus divided by exports, then halved, applied to each country.
- This arbitrary method, resembling a last-minute term paper, led to nonsensical tariffs on countries like Sri Lanka.