Loading ...Why the Tariffs Won’t Cause Inflation…
Just thought of this and wanted to share.
BECAUSE OF THE DOLLAR GOING TO 160+ the tariffs on foreign goods will not cause inflation.
We’re correcting the inequities. Just watched Trump on CNBC. China has tons of tariffs on our goods. We’re just matching them. Is that a problem??
The dollar soaring will cause us to be able to buy foreign goods at lower prices. This will be offset though by the tariffs which raise prices. Probably Americans will keep the same buying power on foreign goods and better buying power on commodities.
We’re going to see the best economy in our history coming….money is going to POUR into the United States…
Changing YOUR name to Provocative Chuck
🙂
Only provocative to doomsdayers rooting for a United Sates collapse…
I respect your view PC, but firmly believe the dollar is in a bear market until 2023, with sideways chop from there until 2026, before the next bull phase begins. I will accept your position if we fail to make new lows (for this bear cycle) by the end of the year.
Fair enough….
Several reasons.
US consumer (eg, Walmart) is a global price maker, not taker.
To sell it, you meet the price needed in a US competitive market for it to do so.
Exporters then work backwards. And in China, market share matters more than profit.
They eat the tariffs.
Good piece at ZH y’day. Noting further that their capital account matters more to them than current account. Their elite want the $ flows to continue, as they use them to cash out of yuan. https://t.co/KM1hGyfpfA
And that piece also suggests they’ll devalue the yuan to stay competitive at target $ prices.
Thanks Chuck. Overwhelming prevailing opinion is a higher USD spells doom to the EM and eventually US markets. I’ve not seen one argument that supports both higher US markets and a higher dollar. Not one. The majority is usually wrong. In addition, if Trump is so on the wrong path with these tariffs which have been talked about since March why are the US markets doing so well while the Chinese markets are having a difficult time. Are the markets saying Trump may be onto something and may I be so bold have it right on the tariff issue? I think this works its way out before summer ends and off we go (higher).
This could do it, as Pedro says so well above. These foreign countries could devalue their currencies so we still buy their products. So the only thing that changes is the dollar goes up as a response to the foreign countries actions because of the tariffs set by U.S.A.
These foreign countries could actually drop their tariffs also helping the U.S.
Nice Chuck. Agree on almost everything but wonder how much intervention will occur.
Just thought of some more things.
We’ll pay about the same prices for foreign goods but see price deflation for commodities.
You know what will probably also happen? These foreign countries that have been raping us on their tariffs will probably drop their tariffs, and we’ll then drop ours, making American goods way more competitive helpin U.S. companies get more sales and higher stock prices!!
PLUS, did you guys hear why interest rates won’t rise?
1) Our Ddebt. Duh.
2) Low inflation because of rising dollar lowering commodity prices.
3) Trump said he doesn’t want higher interest rates because it will strengthen the dollar which they won’t be able to stop going up. They may have to LOWER INTEREST RATES TO STOP THE FLYING DOLLAR…
We’re about to see a Nirvana economy for a while with growth and low interest rates and a runaway dollar.
Money is flowing into US and thats why we see rising stocks, rising dollar and rising bonds (lower yields on LT bonds).
For Gold, its when they stop hiking. The dollar going up will hurt Gold initially but eventually they’ll rise together after they stop hiking.
You could get an inflationary boom in the next cycle and I expect thats when we’ll see the backup in long rates that everyone has been predicting.