President Trump’s Tariff Policy to Have Little Inflation Effects

President Trump’s Tariff Policy to Have Little Inflation Effects

President Trump’s Tariff Policy to Have Little Inflation Effects


US Commerce Secretary Wilbur Ross said that President Donald Trump’s new China tariffs will increase prices but “nobody is going to actually notice.”

Secretary Ross said in a TV interview that the tariffs will be “spread across thousands and thousands of products” and “nobody is going to actually notice it at the end of the day.

Tuesday, China said it will retaliate with higher tariffs on $60-B worth of US goods after President Donald Trump announced new US tariffs on $200-B worth of Chinese imports.

Coca Cola has announced plans to raise prices, citing the cost of packaging (aluminum) and packaging, though the impact on consumers is hard to gauge.

China’s Finance Ministry says it is going ahead with plans announced in August for increases of 10 and 5% on 5,207 types of US goods.

The reciprocal measures are the latest escalation in an increasingly protracted trade dispute between the world’s 2 largest economies in which the US has all of the leverage.

“If you have a 10% tariff on another $200-B, that’s $20-B a year. That’s a tiny, tiny, tiny fraction of 1% of inflation in the US,” Secretary Ross said.

Economists at Bank of America Merrill Lynch (NYSE:BAC) have warned that a full-fledged trade war, especially one that lasts more than a year, would slow the US economy. By disrupting supply chains, eroding business confidence and heightening uncertainty, a trade war, they say, could “push the economy toward full-blown recession” and jeopardize America’s economic expansion, the 2nd-longest on record.

Besides American Soybean farmers, American manufacturers are also being squeezed. Machinery and components used in finished goods made in the United States have been affected. US manufacturers are having to pay more for parts and equipment, thereby putting them at a competitive disadvantage to foreign rivals.

“As President, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself,” President Trump said in a statement from the White House Tuesday.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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