Tariff Man

In case you weren't convinced that Donald Trump was serious about tariffs; he is.  But it's not necessarily about trade.

Raising the cost of imported goods from our two largest trading partners (Canada and Mexico) with the imposition of a 25% tax is very unlikely to happen.  Seriously, would Trump blow-up the Mexico-Canada-US trade deal he negotiated during his first term?  What would he gain by sparking a trade war with our neighbors?  And increasing the cost of imported goods on US consumers?  And contributing to inflation?  So it's basically bullshit.

What we are seeing is the threat of tariffs not for purposes of trade or economic policy but as a weapon of diplomacy and coercion. An escalatory ladder.  A bargaining chip.  Only a fool would enact them as you'd be punishing domestic businesses and consumers.  The investment markets don't like it either.

Tactically, tariffs may be a tool for rejuvenating targeted US manufacturing; but that ignores the simple efficiency of a cheaper dollar.  But you already knew that. 

The more things change the more they stay the same.