Trump exempts phones, computers, chips from ‘reciprocal’ tariffs

Ryan Petersen was on the Bloomberg Odd Lots podcast a few days ago.

> Consumer version: expect to see some empty shelves, rejected orders, and higher prices for the next few weeks.

Make that the next few years at this rate.

> Customs and Border Protection is trying to keep up.

There are still people there? DOGE hasn't hit them up?

The moment they put tariffs I was thinking they just supercharged smuggling and illegal border crossing with multi trillion dollar market.

For those who think this is ridiculous, this happens already on a regular basis with batteries to get around the regulations and fees around shipping them. Instead of getting the battery in the mail you’ll get a cheap flashlight in the mail with a battery inside it.

Perhaps one could say they are "Smart shoes": https://en.wikipedia.org/wiki/File:DonAdams.jpg

It's the opposite! A universal tariff is a tariff on all inputs that manufacturers need to be competitive. How will Ford or Tesla ever be competitive if all their inputs are 24% more expensive than Toyota's inputs?

Autarky doesn't work. Juche doesn't work. Comparative advantage works, both theoretically and in practice if we study economic history.

Universal import taxes on everything make no sense.

If you want to protect strategic production, you apply selective tariffs to support that local production while ensuring it can ramp up and import what it needs until it becomes self-sufficient.

Most countries, the US included, have used selective tariffs for this purpose. Applying a blanket tax on every type of import just increases inflation, as you can't possibly manufacture everything locally. For many products—especially cheap ones that were outsourced to China—there's no way to produce them cheaply enough for your internal market to absorb all production.

And you can't export them either, because their higher production cost makes them uncompetitive compared to cheaper alternatives from low-cost countries.

The secondary effects of import taxes are wide-ranging: they help when applied selectively and carefully; they don’t when applied capriciously and without thought.

The mere fact that high taxes were slapped on phone imports so "phones could be made in the US," only to backtrack mere days later, demonstrates that this is either the work of an insanely bright economist nobody understands, the scheme of a grifter aiming to benefit personally, or the capriciousness of a borderline dementia patient who cannot act rationally.

Factories, tooling, machinery, etc. must be amortized over a market and production run. If you're making toilet paper, the cost is relatively low and the market is huge. The TP you make today will still be good TP in a decade. No one toilet paper factory can serve the world, so you'll need many of them in many markets. The inputs can be found within the U.S.. Why not build one in the U.S.?

A factory that produces a specific model of phone is only going to be able to run for a few years before it needs to retool for a newer model. That means a huge investment goes into such a factory on a continual basis. If one factory can serve the entire world demand for that model, why build two?

If you're going to build just one factory, are you going to build it in a market that's walled off behind trade barriers, both for outputs and inputs? Only if that market is significantly bigger than the rest of the world combined. If the rest of the world is bigger, than you build outside the trade barriers and people inside of them will just have to pay more.

Tariff's might bring low-end, high-volume manufacturing back to the U.S.. Chip fabs, phone factories, or anything so high-end/low-volume that it must be amortized over a global market is not going to return to the U.S. because of tariff's. An administration that changes their minds every few hours only makes matters worse. Whether Trump has recognized this and is conceding defeat or he's bowing to pressure from companies like Apple is immaterial. That kind of factory is not coming to the U.S. anytime soon.

Universal tariffs with no exception don't even incentivize domestic manufacturing when it cuts local manufacturers off from an outside market that's bigger than the domestic one.

My company manufactures equipment in North America, with the most expensive input coming domestically from Ohio. Guess what though? Retaliatory tariffs from the global community means that the most rational course of action is now to move that manufacturing *out of the US* so that we can sell to the global market without penalty.

Sorry Ohio, but Mexico is currently *not* engaged in a trade war with Canada and half the EU so the rational decision for a company who wants to sell in those markets is to divest from the US.

Even universal tariffs with no exceptions is a problem.

Many things cross US/Canada/Mexico border in the process being manufactured. And tariffs will stack up.

Many advanced products (tech/chip, etc) are not entirely made in any single place. Some stuff is imported, and some is exported again, and tariffing the world, will also make the world tariff you.

I think this is all around bad. Best case scenario the US has elected a president who decided to burn all political capital, alliances and credibility in search of a slightly better deal.

Doing this sort maximum pressure economic extortion style policies, *might* getter you a slightly better deal. But at what cost?

Can EU countries buy US military equipment, when it turns out that the US will withhold support for equipment we've bought and paid for, in order to pressure a democracy, fighting for its existence, into surrender.

Trump may get a win in the headlines, because everyone thinks he'll go away if he get a win.

> Your computer parts factory likely runs using a large amount of imported raw materials, imported machines, and imported tooling, and there are no tariff exemptions for those broad categories… so you’re screwed.

All the planning charts and demolition orders have been on display at your local 24/7 news feed for more than eight years, so there’s no point in acting surprised about it. You’ve had plenty of time to lodge any bribe worth the president's time and it’s far too late to start making a fuss about it now. Oh, for heaven’s sake, Americans, President Trump did a crypto scam on his supporters before being sworn in, you know. I’m sorry, but if you can’t be bothered to take an interest in local affairs, that’s your own lookout.

I've no sympathy at all.

People don't want incentivization of American domestic manufacturing. That's where the fundamental disagreement is, after all. People don't have confidence in American products built on US soil by upper middle class Americans. It's going to take long to (re?)build trust to reverse that.

“Trump’s first term would probably have seen a version of this week’s debacle if he had chosen different advisers, and if he had not later been knocked off course by Covid.

For the first two years of his first term, in 2017-18, his instincts were largely kept in check by his economic adviser Gary Cohn, a former chief operating officer at Goldman Sachs, who dampened Trump’s determination to use tariffs to end trade deficits.“

https://www.theguardian.com/world/2025/apr/12/did-trump-tari...

> Why is no one highlighting how this is repeating history 8 years ago?

Because it’s not? The tariffs which are currently in effect or soon to go into effect are so far out of line with anything in modern history that there is no comparison.

The reason everyone is panicking is because people expected more of the same as 8 years ago but instead we got something massively worse, without a hint of cohesive strategy, and that has gone into effect rapidly and on the whims of one person who can’t even appear to get on the same page as his advisors.

Everyone knows there’s some element of bluffing going on, but that’s also the problem; This administration knows their bluffs would be transparent this time so they decided to go extra big to make a point. This becomes a problem for all of the people and companies whose business was suddenly upended by out of control tariffs with little time to prepare (compared to the smaller tariffs everyone was preparing for)

They’re banking on the damage either not being directly noticed by their voter base, or being able to convince their voter base that the damage is actually a good thing. I’m already seeing people applaud these actions as if they were narrowly targeted at cheap Chinese goods on Amazon or fast fashion, without realizing how much of the inputs to our economy go through one of the countries with tariffs ranging from 25-145%.

Some people are determined to adopt contrarian positions and act like they’re above it all, but the people who have to deal with the consequences of this stuff (myself included) are taking a lot of damage from these supposedly no big deal negotiations. It’s not being handled well. Even if they were to disappear tomorrow, a lot of damage has been done and they’re hoping people like you will find a way to rationalize it away as not a big deal

The tariffs from 8 years ago were a seemingly rational policy and were largely upheld by the Biden administration.

These tariffs look designed to rapidly eject the US from the global economic order and hand over the reins to China. Though saying they were "designed" at all seems extravagantly generous.

Because last time the US government required alliances to participate in the trade war. Maybe it is not rational, but the US is the leader, so most countries just thought, 'Ok, if you really need it...'. But this time, the trade war is against the whole world. Everyone is confused.

The articles you've linked are about threats of 10% to 25% tariffs in the context of active trade negotiations between the US and China. Here, there's an actually imposed tariff of 145% and no talks at all as far as has been reported. It's not the same situation.

Wow you had these at-the-ready, didn't you. Thanks.

*I've read through a few of these and it seems like perhaps Trump still thinks it's 2018/19, but China's position has only gotten stronger.

It seems the attempt to jack up tariffs so high this time was a bluff to "show" how strong we can be, but he miscalculated on how shaky the stock/bond markets actually currently are and the financial players know we're not in a position to go it alone.

And China knows this and they know they can wait us out. I believe it will be considered a misstep, at best and a catastrophe at worst.

the most important tidbit

> Apple already pays tariffs on products including the Apple Watch and AirPods, but hasn't raised its prices in the United States.

so, they fear tariffs because their price is already at the highest their products would sell? that's an interesting point most people don't understand. the tariffs were only 15% then, but still interesting to see how it played out.

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The president has all the power that the congress and the senate gives him. Previous presidents were not given this much power. The bad guys are in the congress and the senate for not upholding the constitution.

We don't need to abolish the presidency or entirely change our system for a parliamentary model. We do need to drastically shrink the executive branch and its powers though.

I've found it interesting that so many are seriously concerned with what Trump is doing but not why the executive branch has the authority to do it in the first place.

You still often have one man with all the power in a parliamentary system. The Prime Minister. Take Canada as an example. JT had basically complete power over government. It's as rate for the prime minister party or coalition to go against him as it is for a president in the US to be impeached.

I think the trick has to be to just get better people into those positions. Which means better people need to have some incentive to get into politics. It's a tough one for sure.

> 8486 Machines for producing semiconductors & ICs: wafer fab, lithography.

Does US buy them from China too?

Demand for Proton services is probably up.

I was thinking about this yesterday and how stupid a comment it was to make.

The thing that’s really been getting to me, is that, I’m liberal, not pro-Trump, but the MAGA American heartland story has been really getting to me. I want to see small business, manufacturing, small town American succeed. And there’s some part of me that thought maybe Trump, as much as I don’t like him, is the thing that is needed to make that happen, but man it seems like he’s really fucking over the people who supported him the most.

Thanks for a great free article.

The title is sensationalism when it should be phone and computer associated parts are exempted from tariffs or something like that.

  > I'd say that I don't understand how anyone can be charmed by this con artist, but the truth is that I have simply lost a ton of faith in the "average" person.

From what I am hearing, he seems to have appealed on culture war issues. On economic issues, it was assumed that Biden had been doing something bad and Trump would end it, but they didn't much care past that.

There is still a halo of "Democrats are bad at the economy" dating from the 1970s and rooted in the New Deal.