Daily update
Daily update
- US President Trump retreated from more trade taxes on Friday, exempting iPhones and some other electronics from much of the 145% tax on imports from China. This would have been a very visible tax increase. While consumers tend to be sensitive to the price of high frequency purchases like food and fuel, a roughly 60% increase in an iPhone’s consumer price from trade taxes would be noticed.
- Over the weekend, Trump partially retreated from the retreat, emphasizing that a 20% tax would apply and additional unspecified taxes on technology are coming. This erratic policy making leads to investors questioning the existence of a competent plan.
- China’s March export data surged, presumably as US firms stockpiled ahead of draconian US taxation. Some exports to the US will be indirect. Today, a battery made in China is taxed 145% by the US. A battery made in China and installed in a Vietnamese-made computer is taxed 10%. Stockpiling by US firms may delay (but cannot prevent) the coming US inflation spike.
- There are Federal Reserve speakers scheduled, including Fed President Harker on the role of the Fed. There is a serious risk that the Fed’s independence could be challenged; we may hear more about the value of an independent central bank.