The Journal’s report dovetailed with a report from Bloomberg on Friday, in which the president is said to have directed his aides to proceed with plans to hit China’s imports again — even as both sides prepare to meet in order to dial back on trade tensions. The new tariffs will be set at 10 percent, sources familiar with the matter told The Journal, below an original figure of 25 percent floated by the administration earlier.
As for trade wars, debt, PE ratios, and other threats that get a lot of media attention, every few months or weeks when the stock market makes new highs, I’m reminded why ignoring the media and pundits is a good idea.
As early as March 2018, I was correct in predicting that Trump’s first round of tariffs would be a ‘nothing burger’. A year ago economists and media pundits were predicting disaster and that there would be high inflation that would cripple the economy. Fast-forward to today and the S&P 500 is at new highs and CPI still low. The economic impact of the tariffs has proven thus far to be minimal or nonexistent.
Inflation was higher in 2017 and 2011:
Annual inflation rate in the US fell to 2.7 percent in August of 2018 from 2.9 percent in July and below market expectations of 2.8 percent. It is the lowest reading in four months amid a slowdown in cost of fuel, gasoline and shelter. Inflation Rate in the United States averaged 3.27 percent from 1914 until 2018, reaching an all time high of 23.70 percent in June of 1920 and a record low of -15.80 percent in June of 1921.
So in other words, the tarrifs have not caused any uptick in inflation.
I predict the same outcome here too. Nothing bad will happen. Stocks will keep going up. At the very worst, inflation may tick up just very slightly, but it will be imperceptible to most people. If tariffs are supposed to be a tax, it’s like paying $10 extra for a washing machine or 50 cents extra for aluminum siding. Washing machines are only .1% of overall CPI. Few will notice or care, yet the media is saying it’s the end of the world. All the inflation is in services. The inflation for rent, healthcare, tuition, daycare, and insurance far exceeds any inflation attributable to tariffs, that’s for sure.
Given that the media has been wrong about everything since 2016 when Trump won [the same media that predicted crisis if Trump won and crisis due to Brexit], they have no credibility at this point. I’m not even saying this as a Trump supporter, but I think many can agree the financial media needs to be held accountable for being wrong so often and giving bad advice that has probably cost investors a lot of money by selling too soon. Everyone benefits from accuracy and accountability in reporting.