FEAR of Tariffs will fade over time

[dan_s]

All Canada and Mexico have to do is significantly reduce the fentanyl coming into the U.S.
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Note from one of our very smart EPG members in New York: Trump May Nudge the World To Freer Trade

Trump announced on Friday that the U.S. will enforce reciprocal trade tariffs with other nations - meaning Trump will lift American tariffs to the rates those other nations charge us.

For all the self-righteous indignation by the Chinese, Germans and the huffy European Union bureaucrats, the U.S. has virtually the lowest tariffs of any major trading partner in the world (and these numbers don't even include the VAT taxes that are rebated on exports and zing imports).

We are also (by far) the richest country in the world with half of the world's wealth, which contradicts the argument by some of our protectionist friends that our free trade policy hurts our economy.

But as the hub of the global economy, we are the one nation that every other country MUST trade with. Trump's strategy is to use this leverage to force other nations to lower their tariffs on our goods.

If Germany or China or Japan want to stop Trump from raising our tariff rates, all they will have to do is lower theirs.

Period.

Could this escalate into a trade war that nobody wins? Perhaps. Germany and China have threatened to counter Trump's 15% tariff with higher tariffs on us.

That's a tit for tat game they can't win. China MUST have access to America's vast consumer market or they risk a depression. So it's in their strong self-interest to lower their tariffs, not raise them.

If Trump's strategy works - EVERY nation we trade with will soon lower their tariffs. Trade will be freer and fairer and everyone wins.
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Fear around tariffs has been at the center of Wall Street’s moves recently, and experts say the market likely has more swings ahead. The price of gold, which often rises when investors are feeling nervous, climbed again Monday to top $2,930 per ounce and set another record. But Trump has shown he can be just as quick to pull back on threats, like he did with 25% tariffs he had announced on Canada and Mexico, suggesting they may be merely a negotiating chip rather than a true long-term policy.

Trump, of course, has already gone ahead with 10% tariffs on China. Those will likely affect Wall Street by cleaving winning industries from losing ones, but they won’t necessarily drag the entire market lower, according to Michael Wilson and other strategists at Morgan Stanley. A big, market-wide impact would be more likely “if we were to see sustained tariffs on a range of countries including 25% tariffs on Mexico and Canada.” < Team Trump knows that tariffs on Canadian oil & gas would raise gasoline and diesel prices, which would increase inflation. In my opinion, the chance of Trump Tariffs on Canada are slim and none.