Tariffs: Enemies List

We update the Top 15 LTM trade deficits with trade partners for January 2025.

Mar 06, 2025

We do a Jan 2025 update (today’s release) detailing the highest goods trade deficits by nation. The market is still gearing up for day-to-day tariff whims from the White House on Canada and Mexico with China not inclined to get pushed around with some very strident rejoinders using the word “war.”
We saw the Commerce head (Lutnick) active on CNBC this morning looking to explain away the tariff risk with Bessent from Treasury also active in marketing tariffs. As talented and as successful as these men are, tariff facts are hard to avoid with the ground zero reality that “buyer pays.” There is also the existence of negative multiplier effects from such tariffs that the Cabinet “marketers” avoid raising and the interviewers do not ask (see The Trade Picture: Facts to Respect, Topics to Ponder 2-6-25, Tariffs: Questions to Ponder, Part 1 2-2-25).
As we watch Cabinet members giving their all for the team, the “reciprocal tariff” concept that is next at bat is being intentionally oversimplified. The commentary is downright misleading with too much “sell-job” and light on analysis (see Reciprocal Tariffs: Weird Science 2-14-2).

In addition to the latest monthly trade release, the day started off with this latest on the 25% tariffs on Mexico:

From Trump today on Truth Social: “After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement. This Agreement is until April 2nd.”

The above is just the latest on the delusion circuit. The problem with the statement is that Mexico does not pay the tariff. What he meant – and still refuses to say – is that the US buyer will not be required to pay the tariff (until April 2). Lies are like oxygen to Trump on the tariff topic. The street and investors know better, but the uncertainty of what Trump actually knows or does not know is part of the guesswork. That is a scary thought.

The above chart updates the Top 15 trade partner deficits. Some of these names surprise people that do not watch these metrics closely. Vietnam and Ireland being in the top 5 in trade deficits tends to open some eyes.

With its low-cost labor, Vietnam has been a destination resort for avoiding China tariffs, and that nation could be in the crosshairs once Trump checks in with his podiatrist. Some of the accusations include transshipments or essentially rebadged China products. In contrast, Ireland’s US trade deficit has soared with expansion of pharma and a narrower product concentration as detailed below.

The Pharma concentration of Ireland-US trade could in theory fall under blanket EU tariffs and/or targeted Pharma tariffs. If you are a major buyer of Ireland-based pharmaceuticals, you better stock up early and often. With St. Patrick’s Day dead ahead, you better front-load your Guiness and Jameson inventory. Trump’s conduct toward Ireland will be interesting to watch. No one would dare hit the Irish American vote in the “old days.” Of course, there is a heavy blue state mix there.

See also:

Gut Checking Trump GDP Record 3-5-25

Trump's “Greatest Economy in History”: Not Even Close 3-5-25

Asset Returns and UST Update: Pain Matters 3-5-25

Happy War on Allies Day 3-4-25

Footnotes & Flashbacks: Credit Markets 3-3-25

Footnotes & Flashbacks: Asset Returns 3-2-25

Footnotes & Flashbacks: State of Yields 3-2-25

Mini Market Lookback: Collision Courses ‘R’ Us 3-2-25

Tariff links:

Auto Tariffs: Japan, South Korea, and Germany Exposure 2-25-25

Mini Market Lookback: Tariffs + Geopolitics + Human Nature = Risk 2-22-25