Trump’s big tariffs and small ambitions

Analyzing Donald Trump’s customs policies is similar to the shooting for the ongoing goals. Confidently said that the weekend was there at the beginning of the weekend ”Nothing“Mexico, Canada and China can prevent tariffs imposed, Mexico and Canada were able to discuss a recovery on Monday.

This is a rare time for the merciful economists. It is hard enough to predict the influences of the US president’s policies, but it is too hard to surprise everyone together with Trump itself.

We do not know the following: whether US tariffs will happen; They are temporary or permanent; Whether they are proclaimed or punished by the bargain. We do not know what other countries will take revenge. All these things are very important before entering the deep uncertainty of the economists’ models.

However, economists should not feel lonely, especially for bad treatment. Announced tariffs on the weekend, the US President insulted his Treasury Secretary who was in a light version of the tariff Just a few days agoThe Scott Besent had no idea.

By Sunday, Trump justified the tariff on the basis of the guilt of three countries Fentanile, relaxed border protection US addiction, Trade deficit And her Regional ambition on the soil of CanadaThe Of course, his assumption is a Canadian trade deficit $ 200bn Was roughly Four times too highThe Trump is also perfect.

In a world where nobody knows something specific, here you have tried to give you something. One thing I will not live the way I will live is the miniature price of Trump to withdraw the immediate tariff threat. Mexico seems to have promised to send soldiers to its northern border where they have already taken a position and promised to create a Fentanel jar in Canada.

How big was the proposed tariff?

Following Trump’s Declarations, the number of great trades flew very quickly, as is true that 90 percent of Avocados Came from Mexico that was swallowed in the United States. But what we want to know is the proportion of US imports that will face new tariffs.

Obviously that number will change over time because US importers will look for other suppliers, but this is a good starting point.

The chart below uses the latest US census bureau numbers for 12 months until November 2024, which shows that about 40 percent of the total US imports come from Mexico, Canada and China. With the import of crude oil from Canada (a Western Canada elected $ 60 barrel) from Canada), more than half of these imports will attract 25 percent tariff and the remaining 10 percent.

These figures allow a more dug count. About 40 percent of imports face about 20 percent extra tariffs, we can work for the overall tariff for the United States. If fully imposed and is constant with trade patterns, the average weighted tariff rate will increase somewhat under 8 percent point points.

The announcement of Trump’s weekend was so huge, keeping it in the Historical Tihasik context.

After World War II, the customs and trade related general agreements (GATT) and the Smut-Holi tariff that came with great frustration in the sixties was greater than the reduction of responsibility related to the main general agreement.

Trump prefers to compare with the 25th US President of his tariff, fellow Republican William McKinley, who imposed 49.5 percent tariff in 1890. McKinley also shows important facts comparing with the effects of tariffs.

Ours Information The average US tariff decreased after their imposition on October 9, as the proportion of dutial US product imports dropped from 5 percent to 5 percent by 5 percent.

Do not tell the president who sees the tariff as a cash cow, but the overall tariff income has also decreased as the trade of customs products has decreased so sharply.

Trade patterns are sensitive to large tariffs that the fact shows a key problem with the dotted line on the chart below, which does not assume any changes in trade patterns. This is wrong if used as prediction, but it is still a useful number perfectly as a scale image. This tariff is large.

In the 1890s, what McKinley found soon was to decrease as a revenue of support tariff for his Republican Party. Surprisingly, people dislike higher prices.

McKinley Have lost about half of their seats Just a month after the imposition of tariffs, the House of Representatives in the 9th election. What does Trump care? Who knows Does he know? It doesn’t appear like him.

How big is the economic impact?

Now we know that constant trade patterns are a horrible basis for a forecast, yet I’m going to be with it because it is useful for displaying scales. Products are imported About 10 percent US GDPAnd if the price of these products has increased by 8 percent (the size of the overall tariff), the level of US price will increase by about 0.8 percent. This is why economists advise to influence inflation Between 0.5 percent to 1 percentThe

This is a cute number, but again a terrible forecast. Why? Because we do not know that companies will use the tariffs as an excuse to push through other prices or whether the tariffs will be absorbed by some exporters in the United States or in the United States.

The broad economic impact of Trump’s tariff pushes the demand for supplies in the United States and other economies. Foot financial policy contains my colleagues in the radar Wrote a great piece on thisThe

It was said that the economic effects are extremely difficult to scale. We know that the chain shock of tariffs and supplies is possible for increasing and inflation and the impact that the impacts are almost always difficult to see in global economic models that take large obstacles because they were inferred about very small changes.

In other words, perhaps the director general of the World Trade Organization is wise to listen to Okojo-Okonzo-Iwela, when he said that a global trade war with tight-fru-tat tariff could create a global trade war. “Catastrophic“Results. The IMF model displayed in the chart below suggests that the Trade Wars may do slightly damage.

Are US customers really smart?

US Customer Costs Published was significantly strong on national accounts of the fourth quarter Last week by the Bureau of Economic AnalysisThe What is more interesting is that the actual growth in expenditure is from most sustainable products. They contribute 0.85 percent points to 2.3 percent annual growth recorded in the fourth quarter.

Was US customers expecting tariffs and bought before the price raised? Quite likely. Data suggests that this is a commendable story and it will probably follow the strike of the buyers if steep tariffs continue.

I am reading and watching

• A former Fed officer has been arrested and has been accused of passing economic privacy in China. Liza Tobin is as saying Up to a fabulous writing: “If someone from a Chinese university provides you $ 450,000 for part -time work, escapes”

• The position of the foot on Trump’s trade war is not such that many people will surprise: newspaper It seems that it is unreasonable

• European Further Customs Claim Fertilizer is producing. They want to be applied to the anti-dumping tariff in Russia

• Martin Wolf Darkness Possibility

A chart that is important

Before the weekend’s excitement about the tariff, I planned to make you delight with the deep examination of housing and its contribution to the UK inflation. This is a story of interesting data measuring problems, comparing the price trend of rent with the United States and important questions about stock and flow. Blast Trump that you missed now.

Although the Bank of England’s Monetary Policy Committee is worried that the UK service is more diligent than other economies, most of the UK problems with the price of service come down to inflation. The chart below shows that the UK service inflation was lower than the latest data in the United States or Eurozone.

It is difficult to see the UK as a special inflation problem that others do not share. We will see Bow’s explanation when the interest rate is decided on Thursday.