Daily update
Daily update
- More details are emerging about US President Biden’s imminent US consumer tax increases. Some of the tax changes are sizable, with suggestions that consumers of electric vehicles from China could be set at over 100%. Steel and aluminum consumers will also pay more to the US Treasury. However, the economic impact is likely to be muted. US President Trump’s taxes on intermediate goods generally squeezed US corporate profits more than they raised consumer prices, and the US is not a big consumer of electric vehicles from China.
- Taxes on trade can be justified by a desire to protect a developing domestic industry, or if the exporting country is unfairly subsidizing its exporters. All too often such taxes come under the heading of economic nationalism. As structural change brings increased economic uncertainty and insecurity, blaming foreigners is always a convenient scapegoat.
- China’s April price data was not especially exciting. Higher energy prices helped keep consumer price inflation just above 0% year over year. Producer price deflation persists, albeit slightly less than it has been. Neither price measure has any direct relevance outside of China’s borders.
- The New York Federal Reserve’s survey of consumer inflation expectations is due. It is as unreliable as similar surveys, correlating to current food and fuel prices.
