Among the remotest places on Earth, Heard Island and McDonald Islands, about two-thirds of the way from Madagascar to Antarctica, are inhabited by King Penguins. No humans live there, and our friends at The Guardian report that the last recorded visit by people to either location was nearly a decade ago.
Yet, this week the Donald J. Trump Administration decided to levy a 10 percent tariff on products imported from the Australia-administered islands. Let’s call it The Feathers McGraw Tariff, in deference to Aardman Animation‘s stop-motion penguin villain.
There’s a reason for this seemingly absurd attempt to balance the scales of international trade by taxing imports produced by flightless birds. Human error.
Yep, someone in the corporate logistics department of the Starlinger Company clicked the wrong drop-down for the country of origin on shipping labels for industrial parts sent to California. Rather than originating in Vienna, Austria, the export labels listed the shipping address of Starlinger as being in “Vienna, Heard Island and McDonald Islands.”
Austria, Australia. Go figure.
But then didn’t the White House admit the imaginary trade deficit with the islands was all just a paperwork mistake? Nah. And that’s why a population of penguins was singled-out on the tariff list.
OK, so let’s talk about the tariff on Lesotho. Lesotho, as in the land-locked kingdom surrounded by South Africa. You know, the one with King Letsie III, son of King Moshoeshoe II and Queen Mother Mamohato Bereng Seeiso.
The average working adult in Lesotho earns less than the equivalent of $5 per day, and is too poor to afford most American products.
Don’t see an obvious reason for a new 50 percent tariff on Lesotho imports? It may have something to do with Clinton-era legislation called the African Growth and Opportunity Act (AGOA). That was a law signed in 2000 to create jobs and raise living standards on the continent through trade by eliminating tariffs on goods from African countries while simultaneously cutting back direct foreign aid.
It was this US legislation that helped create (some would say intentional and necessary) trade imbalances with many sub-Saharan nations to help them climb out of poverty. And that ongoing trade imbalance, facilitated by the United States, is the trigger for the current 50 percent tariff on Lesotho.
These days, the Executive Branch looks at overseas poverty somewhat differently than did previous administrations.
During Wednesday’s “Liberation Day” tariff announcement at the White House, the current Republican president said that the US was being “pillaged” by foreigners. “Our taxpayers have been ripped off for more than 50 years, but it is not going to happen any more,” said Trump.
So punitive tariffs are now the big international trade story. But what will be the impact on businesses in Pasadena, especially ones where all of their products are sourced from outside the US and virtually all the inventory is from developing countries?
Perhaps the best example of the newly worse situation applies to the Ten Thousand Villages shop on South Lake Avenue near California Boulevard. For context, Ten Thousand Villages is a fair-trade retail nonprofit that markets hand-crafted products almost exclusively from economically impacted nations.
A little more than half the store’s items are sourced through the nonprofit’s central purchasing department, the remainder are purchased directly by the store’s manager, Laurel Murrieta.
It’s clear that Murrieta is dealing with a dynamic tariff situation on a continuing basis. While we spoke, she was interrupted by a sales clerk trying to learn if earrings sourced from Chile (subject to a new 10 percent tariff) would still be available for a customer order. Murrieta referred the clerk to the nonprofit’s Web site to see if there was any update about the product’s future pricing and availability.
“I just talked to one of my vendors from Cambodia,” said Murrieta. Cambodia’s tariff is now 49 percent. “She said as long as I order things under $800 I’m not going to be charged a tariff. So that’s kind of like when you go on a cruise and you buy stuff and you come home you have to buy less than $800 in merchandise (before being taxed). So that’s kind of a weird loophole right now. I don’t know how long that’s gonna last, but there will be a lot of under $800 purchases going through.”
“The only thing that I really was worried about was my coffee order from Canada,” said Murrieta. Canada’s tariff rate on non-energy products is currently 25 percent. “And again, they told me as long as I stay under a certain amount I don’t have to pay a tariff,” said Murrieta. “But I don’t know what it’s gonna look like down the road for a lot of our vendors.”
“This is a really unfortunate situation. He’s not doing small businesses any favors.“
Murrieta asked if we knew what tariff rate was set for Ghana. The import tax rate for the west African country is now 10 percent. “That’s where all the chocolate is produced,” she said. “That’s definitely gonna affect our chocolate purchases.”
“You know these little villages in India?,” said Murrieta. India’s tariff rate is now 26 percent. “They have no idea what’s coming, and it really is sad.”
“I have to readjust my price about 50 percent if a tariff is gonna go to 25 percent,” said Murrieta. “Unfortunately, that’s gonna happen with some of our products. We may not be able to buy from that place until he’s (Trump’s) out of office. This is a really unfortunate situation. He’s not doing small businesses any favors.”
“I don’t want to be Debbie Downer from SNL,” said Murrieta. “But that’s how we are kind of feeling right now.”
“It’s just nobody knows what’s going to happen,” said Murrieta.
