Trump’s exceptional tariff weekend

Late Friday his own Customs and Border Protection (CBP) department issued a notice listing products that will be exempt from Mr. Trump’s so-called reciprocal tariffs that can run as high as 145% on goods from China. The exclusions apply to smartphones, laptop computers, hard drives, computer processors, servers, memory chips, semiconductor manufacturing equipment, and other electronics.

The CBP notice takes the tariff rate on these products down considerably. Barron’s calculates that the exceptions cover $385 billion in 2024 imports. That includes $100 billion from China, or 23% of U.S. imports from that country. The tariff rate falls to 20% on the newly exempted Chinese exports.

The press spent Saturday reporting this without cavil from the White House. We weighed in with a WSJ.com editorial on Saturday afternoon, noting that this meant a big reprieve for powerful tech companies, though not for small manufacturers.

But on Sunday morning Commerce Secretary Howard Lutnick said tariffs on electronic goods would go up again in the future, though he offered no details. Mr. Lutnick hasn’t been the most reliable voice on the Administration’s plans, so that was taken with some caution.

Finally Mr. Trump jumped in late Sunday afternoon. “NOBODY is getting ‘off the hook’ for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst!" he wrote. “There was no Tariff ‘exception’ announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff ‘bucket.’"

Mr. Trump blamed the press for reporting the exceptions that his own CBP had announced, albeit in stealth fashion at 10:36 p.m. Friday. And he announced that his Administration is taking a “look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN" for potential tariffs.

So what happened and what’s the real policy? Who knows? Perhaps Mr. Trump didn’t like the reporting that tech giants like Apple and its shrewd and capable CEO Tim Cook were getting exceptions. Other winners in the CBP notice would be Dell Technologies’ Michael Dell, Jensen Huang of Nvidia, and the executives and shareholders of Hewlett-Packard and TSMC.

This is no rap on them, since their job is to look out for the best interests of shareholders and that means getting tariff carve-outs if they can. Some of the companies may not have sought exemptions, though the opacity of the process for getting one is the Beltway Swamp’s dream.

These CBP exemptions would be good news for consumers who were otherwise facing much higher prices for smartphones that are a staple of modern life. How would you like a $2,400 iPhone? But after Mr. Trump’s broadside, tech companies and electronics firms are left wondering who will get reprieves.

Perhaps Mr. Trump doesn’t like that exceptions are a tacit admission that tariffs will make American companies less globally competitive, especially in the artificial intelligence race. That explains the exemptions for ASML’s chip-making equipment and Nvidia’s graphic processing units. Mr. Trump first makes U.S. companies less competitive, then he and his Administration pick exceptions worthy of help to remain competitive. Politicians, not success in the marketplace, pick business winners and losers.

Exemptions would also undermine the Administration’s legal justification that his tariffs are needed to meet a national “emergency." Imports of glassware and umbrellas from China are an emergency but imports of electronics aren’t?

All of this exposes the political nature of tariffs. Some industries benefit but others don’t. Too bad if you make shoes, or clothing, or thousands of other consumer products that must pay the tariffs but lack the political or market clout to win exemptions. Too bad, too, if you’re a small manufacturer that relies on a component from China but can’t afford a K Street lobbyist.

Welcome to the new tariff economy, where you still pay onerous taxes, endure punishing regulation, and now must also navigate the political minefield of arbitrary tariffs.