Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I’m now using Substack as a blogging platform, and for my monthly email newsletter. For the moment, I’ll post both at this blog and on Substack. You can also follow me on Mastodon here.
John Quiggin 
EV news:
“The 2025 [BYD BEV] Seagull now starts at only 56,800 yuan (around $7,800), down from its earlier price of 69,800 yuan ($9,500). The promotion applies to the non-Smart Driving Vitality Edition.” https://finance.yahoo.com/news/byd-leading-charge-low-cost-142200352.html
This is a promotion, presumably at cost price, and BYD will be expecting to sell most Seagulls with higher specs. It does illustrate BYD’s growing confidence and assertiveness, and the high value it places on its new assisted driving suite, not included in the offer. But for the staggeringly low price, Chinese buyers will get a solid four-door family car, with a (Chinese standard) 300km range, perfectly adequate for urban use in China, or as a second car in rich countries. The car is a mire immediate threat to European carmakers, struggling to reach economies of scale in the transition, than to American ones, as BYD does not sell EV cars un the USA. (Disclosure: BYD shareholder.)
Administrative incapacity
Does the Trump Administration have the administrative capacity to collect the new tariffs? The average rate before the tariff tsunami on goods traded to and from the EU was 1%, according to the EU Commission. At such a negligible level, the tariffs can be collected under the honour system. It’s simply not worth the risk to cheat. In practice customs officers used to concentrate their efforts on criminal smuggling of people, drugs, tobacco and animals, and perishable food that can pose a health risk. Most containers pass through ports without inspection: the percentage inspected globally is somewhere between 2% and 10%. The main eenforcmnt tool of the excisemen is rewards for tipoffs, from dockers, ship crewmen, low-level employees and business rivals.
Tariffs of 10% (the new Trump default, even for the penguins) are a different matter, a fortiori ones of 25% or 125%. Traders will take them seriously and adopt energetic measures to evade them, such as falsifying origin and prices, transhipping in ports like Singapore, and bribing customs officers to look the other way. The last will be made easier by the huge increase in workload, not matched by an organized expansion in numbers. Judging by the immigration model, Trump will contract out much of the work to unreliable spivs and outright criminals It’s beginning to look like a rerun of Prohibition.
I alluded to the general idea of administrative incapacity in an earlier post. Cutting government workers in a blind and draconian fashion, as Trump and Musk are doing reduces administrative capacity very obviously. They appear to be cutting right across the board or at least there is no sign yet of any particular government department or agency getting expanded.
In that case, they never will be able to apply new and much higher tariffs for all the reasons James W. outlines above. The compliance apparatus simply will not be there. So even if the high tariffs are on the books and remain on the books nothing much will change except for an increase in corruption. American consumers may end up paying quite a bit of a “corruption tax” but none of that will go to the government. One guess as to the important bad actors who may get in on the smuggling themselves. No limit to the extent of corruption should be assumed now.
All the insanity of the phony tariff war will have served no purpose except to destabilise the markets and enable, as now seems very likely, some serious insider trading by certain nefarious and kleptocratic bad actors and maybe soon serious smuggling action as well. The mess is getting so bad that the US is heading, very rapidly, for failed state, disintegrating state, status. How is this ending to be averted?
Trump exempts smartphones and new phones from the tariffs. I think this is called Improv Economics or “Making it up as you go along.”
So far as we can tell, not a single tariff has been collected yet and nobody really knows what is going on… or when pronouncements might become L A W , Law, and when if ever it might become administratively feasible and practically possible to attempt to implement them.
https://newrepublic.com/post/193930/ports-not-collecting-trump-tariffs-glitch
This has to be something out of “Get Smart”. Trump has to be an agent of Kaos TM -incorporated in Delaware for tax reasons.
Well, the latest news is smartphones are back on the dartboard, but tomorrow… [shrug]