Bunch of stories about Trump tariffs:
A lot of people are wondering if tariffs and the specter of a trade war with China will hurt stocks and the U.S. economy.
My take is, this talk of ‘trade wars’ is overblown and there will be no negative impact on the stock market or economy. It’s worth noting that the S&P and US economy boomed in the 80′s, but NAFTA was ratified in 1992, so it’s not like the economy is dependent on it. There is this narrative by the financial media and elsewhere that the economy hinges on trade deals, but it doesn’t. Trade will always exist, and putting some small tariffs on a handful of goods as a sort of ‘symbolic gesture’ (or what Scott calls the ‘Batman effect’) will not impede global commerce. Neither side, US and China, wants a war, because neither side benefits.
Just because Trumps tweets it doesn’t mean it will happen or will happen in the worst imaginable way, as rhetoric about walls and immigration last year showed. A year and hundreds of tweets later, still no wall or mass deportations.
I think the market has overreacted to this, given that the odds of China-U.S. trade relations deteriorating are very slim. With the S&P 500 down 6% from the January 2018 highs, it’s a good buying opportunity. It’s also worth noting in 2009 Obama imposed tariffs on Chinese-manufactured tires, but the US economy brushed it off like it was nothing and the S&P 500 has nearly tripled since then. Nor did Obama’s tariffs lead to a full-fledged trade war with China either. Not surprisingly, the left-wing media is ignoring this.
Obama administration imposed punitive tariffs on tires imported from China from the normal rate of 4% all the way up to 35% in September of 2009 (for a full year), followed by a 30% tariff in 2010 and then a 25% tariff in
I agree with the AEI that tariffs, contrary to Trump’s claims, will not create jobs. But the liberal media is wrong that tariffs will hurt the economy. It will be a ‘big nothing’, with no jobs created but no negative economic impact either.
Maybe the tariffs will cause an uptick in inflation (such as raising the CPI by a tenth of a percent), but it will be impossible to pin such an uptick on tariffs, versus other factors that may also cause inflation, such as the rising stock market and increased overall economic activity.
Given my ability to predict stuff, when I say something is going to be a certain way, it often is. A common theme or general tendency is for things to not be as bad as the media narrative makes it out to be, but the narratives the media ignores (such as the threat of Islamic immigration to America or the incidence of black on white crime) are worth paying attention to. If the media is hyping something as a crisis, there is a good likelihood it won’t be a crisis.