zlacker

>>JumpCr+(OP)
The problem with this is that its almost all blue states that are in the North East, so its Trump's "enemies" that will feel the bulk of this in the form of higher energy prices.

Oddly its Mexican tariffs that will have a bigger deterrent to Trump as his base is the red southern region of the US that take more Mexican imports.

Looks like inflation is back on the table for the US, and this time they've done it to themselves via higher prices from tariffs.

One other thing to watch is that this is currently weakening the Canadian dollar and Mexican peso, which means the USD is getting stronger which is the opposite of what Trump wants ultimately.

So far the markets in all countries just hate this news.

China has taken the following actions as well this morning

- China to Levy Tariffs on Some US Products Including Chicken

- China to Impose up to 15% Tariff on Some US Goods

- China to Levy Tariffs on Some US Products Including Soybean

- China Adds 10 US Firms to Unreliable Entity List

Smart as this targets the US farmers, so Trump is almost certainly going to do what he did last time and just print money and hand it out like candy to the US farmers.

The worst case outcome and one that analysts at all major sell site institutions are now considering to be a possibility is worldwide stagflation.

Normally the economy of one or two powerhouses is humming along while others are going through cyclical downturns which helps smooth things over.

The United States seems very determined to crash the entire worlds economy at the same time, which will mean all major economies will be printing and spending cash all at the same time in an effort to prop up their economies.

The US has just started their printing press, and Beijing has been doing so for a year to try and fix their already hurting economy.

The world is in for a lot of pain in the next 2 years.

>>cholli+H9
Is there any solid empirical evidence that tariffs cause inflation? They increase prices for some things, but they don't increase the money supply.

>>bitshi+RQ
Can you clarify the definitions you're using? How is inflation different from increasing prices?

>>fredop+Q61
In the sense that you can measure it as a whole, such as what governments do with CPI reports. For example, if prices go up for a widget A, then maybe consumers switch to widget B. Prices for something went up, but inflation depends on the whole of things people actually buy.

>>bitshi+k81
American steel companies just raised prices a week ago in anticipation of tariffs (not even passed tariffs), and the tariffs wouldn't even effect them. Everyone is going to want their share of higher pricing power, so expect domestic producers to follow higher import prices (well, its already happened).

If there was a lot of domestic suppliers and (more importantly) a lot of domestic competition, inflation might be avoided. But none of that exists, so expect consumers to pay for the tariffs directly and then more.

https://www.cato.org/blog/more-costly-steel-tariffs-horizon

>>seanmc+f91
My question was about the evidence. For example, Trump introduced a 25% tariff on steel in early 2018, and yet we didn't see any unusual inflation until after the COVID stimulus.

>>bitshi+Ya1
No, I think you remember it wrong. US steel companies raised prices back in 2018 as well. It was just that it was one tariff at the one time, and many companies were able to avoid it by moving production overseas (the tax didn't apply to goods made with steel, just steel itself).

This time, there are more tariffs coming at the same time, and the trick of moving production abroad to avoid steel tariffs is no longer viable.

>>seanmc+4c1
In this comment chain, I have already clarified that by "inflation," I'm not referring to how an items price goes up after it becomes subject to a tariff. I'm referring to overall inflation in goods and services. You can see the rate of inflation from March of 2018 to the beginning of the COVID stimulus here: https://fred.stlouisfed.org/series/CPIAUCSL