Trade Deals

Is it believable to think countries are lining up to sign bilateral trade deals with the United States. Wouldn't this turn the World Trade Organisation and all previous free trade deals on their heads? 

Take Australia as an example, they have a free trade deal with the US, but that appears to now be worthless.

New Zealand's prime minister, Christopher Luxon has rushed to London to talk to the UK prime minister, Keir Starmer. No doubt, this is so the pair can get their stories straight. For New Zealand, there is a lot at stake; the UK is NZ's eighth largest trade partner, with much deeper cultural links, while China is NZ's largest trade partner by far. NZ has a large trade surplus with China, meaning China buys more from NZ than it sells to it. A larger trade surplus than exists with the US, and China isn't complaining. 

Those countries NZ has a large trade surplus with are: China, USA, Taiwan, Canada, Indonesia and India. My advice would be to wait out the current Trump administration, they're unlikely to last forever and any trade deals appear whimsical to say the least. Any trade partner has to be reliable, and the US has proven they're unreliable.

What do I think will likely happen? NZ will sit on the fence but buckle to US demands, thus wrecking the entire NZ economy. Australia will buckle sooner and they'll go downhill as a result. The UK will buckle immediately. 

But, what I hope will happen is that countries grow a pair and stand their ground. If they don't stand their ground, the US will be emboldened to make further demands.

China has warned any trade deals with the US which also attack China, will result in retaliation. That would be justified in my opinion. Any country rushing to sign a trade deal with the US, under terms dictated by the US, are taking a huge risk if they have a large share of their trade with China. 

New Zealand's Tariff Rate - Liberation Day USA

I see reports on New Zealand being listed as charging the US a 20% tariff on its goods. In fact, NZ charges about 1.9% on average, plus 15% GST. The total of the two is 16.9%, the tariff being paid by the end-user, while the GST is refunded to the importer when they file their periodic GST return. 

However, this is NOT the methodology America appears to have used. How did NZ get listed at 20%? The US appears to have looked at the trade balance, currently NZ exports to the US, about $1.1 billion more than it imports from the US ($4.5 billion). Thus, the $1.1 billion surplus represents 19.65% of NZ's exports ($5.6 billion). They've rounded that 19.65% up to 20%. 

Any country whose surplus increases from hereon will likely face increases in tariffs if that surplus becomes a greater percentage of its exports to the US. The US is effectively saying, you need to buy more from us, if you want to sell more to us. You cannot buy nothing and expect to sell more. Do you see?

I'm sure NZ officials do not understand this methodology, so if you're reading this, please contact the NZ government and inform them.