Daily update
Daily update
- US President Trump appears “very happy” with the economic consequences of trade taxes to date, and is therefore proposing to add to US consumers’ tax burden with levies on computer chips and pharmaceuticals. The tax on chips will probably reverse some of the effects of the retreat from taxing smartphones.
- Trump also signaled a possible retreat from auto tariffs to allow companies to relocate production to the US. There are some challenges to this thinking. Relocation would not be quick. Relocation would add costs (unnecessarily duplicating factories). Relocation would require long-term investment in an erratic policy environment.
- The UK BRC March retail sales data showed stable, positive growth rates (earlier gloomy predictions from the BRC about the effect of the UK budget on spending do not appear to be happening). The German ZEW sentiment poll is due. This surveys economists, who tend to prize rationality. In the current environment, economists may be less cheerful about the future.
- US March import and export price data does not show the inflation from tariffs (that is applied after the import prices are calculated). Monitoring the trends in import price data should confirm that the tariff tax burden is paid by the US, as is generally the case.