Steep Tariffs on Mexico, Canada and China Will Take Effect Saturday paul Krugman’s substack blog predicts “ The end of North America”.
I’ve been saying for a while that markets were far too complacent about Trump’s threat to impose tariffs on Canada and Mexico, believing that he wouldn’t follow through because it’s such a stupid, self-destructive idea. As I wrote on Jan. 22,
[S]o far markets have shrugged Trump’s tariff threat off, apparently in the belief that he won’t follow through. But why not? Economists would, if he asked, tell him that high tariffs on neighboring nations closely integrated with the United States will do major damage; businesspeople would say the same thing. But if Trump wants your opinion, he’ll tell you what he wants it to be.
I believe that the only thing that might dissuade him from destructive policies would be a severely adverse market reaction — which means that the lack of such a reaction, based on the belief that he won’t really do it, greatly increases the probability that he really will.
And he really did. The New York Times reports,
President Trump plans to move forward with imposing stiff tariffs on Mexico, Canada and China on Saturday, in an attempt to further pressure America’s largest trading partners to accept deportees and stop the flow of migrants and drugs into the country.
In a news briefing on Friday, the White House press secretary, Karoline Leavitt, said the president would put in place a 25 percent tariff on goods from Mexico, a 25 percent tariff on goods from Canada and a 10 percent tariff on goods from China.
Ms. Leavitt said the president had chosen to impose tariffs because the three countries “have all enabled illegal drugs to pour into America.”
“The amount of fentanyl that has been seized at the southern border in the last few years alone has the potential to kill tens of millions of Americans,” she said. “And so the president is intent on doing this.”
The tariffs are likely to initiate the kind of disruptive trade wars seen in Mr. Trump’s first term, but at a much larger scale.
I think you have to see “fentanyl” in this context as the equivalent of “weapons of mass destruction in the runup to the invasion of Iraq. It’s not the real reason; Canada isn’t even a major source of fentanyl. It’s just a plausible-sounding reason for a president to do what he wanted to do for other reasons — George W. Bush wanted a splendid little war, Donald Trump just wants to impose tariffs and assert dominance.
Also, although I’m not sure such things matter anymore, what’s the legal basis for these tariffs? U.S. trade law gives the president huge discretion to impose tariffs, but only for a specific set of reasons: economic injury from import surges (Section 201), national security (Section 232), unfair foreign competition (Section 301), dumping — sales below costs. Drug smuggling, especially imaginary drug smuggling, isn’t on the list.
The president can impose tariffs much more broadly if he declares a national economic emergency. But has he done that? Does 2.6 percent inflation and 4.1 percent unemployment sound like an economic emergency to you? And even if Trump gets around to declaring an economic emergency, what does fentanyl have to do with it?
As far as I can tell, there’s a real possibility that Trump’s new tariffs will face a court challenge, and that he will lose. I’m not an expert on trade law, but I do know a bit, and this looks flatly illegal to me.
But even if these tariffs are blocked, or Trump finds some way to declare victory and call them off, the damage will be immense.
As I wrote the other day, in the three decades since NAFTA went into effect, North American manufacturing has evolved into a highly integrated system whose products — autos in particular, but manufactured goods more broadly — typically contain components from all three members of the pact, which may be shipped across the borders multiple times. Manufacturers developed this system not just because tariffs were low or zero, but because they thought they had a guarantee that tariffs would stay low.
One way of saying this is that until just the other day there was really no such thing as U.S. manufacturing, Canadian manufacturing or Mexican manufacturing, just North American manufacturing — a highly efficient, mutually beneficial system that sprawled across the three nations’ borders.
But now we have a U.S. president saying that a duly negotiated and signed trade pact isn’t worth the paper it was printed on — that he can impose high tariffs on the other signatories whenever he feels like it. And even if the tariffs go away, the private sector will know that they can always come back; the credibility of this trade agreement, or any future trade agreement, will be lost. So North American manufacturing will disintegrate — that is, dis-integrate — reverting to inefficient, fragmented national industries.
Hence my title, “The end of North America.”
And to think that many people imagined that Trump would be good for business. “
any bets on what Markets will do?
Puerto Rico Muni Bonds
Inflation watch- Your Coffee just went up (then down) by 50% A sixth-grade schoolyard bully. The "leader" of the United States. Just plain sick.
+
1.
Inflation watch- Your Coffee just went up (then down) by 50% Deportation agreement! How much per head is this costing the tax payer?
Far less than one single life taken by one of them!
Gary
1952,
How about the 64 people that died on American Eagle 5342 on trump's watch?
On trump's second day, he:
1. Fired the head of the Transportation Security Administration
2. Fired the entire Aviation Security Advisory Committee
3. Froze hiring of all Air Traffic Controllers
4. Fired
100 top FAA security officers.
I submit that these might have been contributing factors.
How about the 3 aboard the US Army helicopter that might have been pre-occupied with the turmoil that their new boss hegseth will bring?
I submit that this might have been a contributing factor.
Stable-Value (SV) Rates, 2/1/25 Stable-Value (SV) Rates, 2/
1/25
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.50%, RA 5.25%
Flexible RCP 4.75%, SRA 4.50%, IRA-
10
1110+ 4.75%
TSP G Fund 4.625%
pending (previous 4.625%).
Options outside of workplace retirement plans include m-mkt funds, bank m-mkt accounts (FDIC insured), T-Bills, short-term brokered CDs.
#StableValue #40
1k #403b #TIAA #TSP
https://ybbpersonalfinance.proboards.com/post/1865/thread
Steep Tariffs on Mexico, Canada and China Will Take Effect Saturday Maybe the bigger question should be is why are so many Americans hooked on this crap anyway?
2019 Fentanyl SourcesQ: Where is most fentanyl seized?
A: According to a 2023 report from the Department of Homeland Security, most fentanyl is
primarily found and seized from vehicles driven by US citizens at official ports of entry.
Inflation watch- Your Coffee just went up (then down) by 50% Deportation agreement! How much per head is this costing the tax payer?
Far less than one single life taken by one of them!
you do know about immigrant crime rates, yes?
Steep Tariffs on Mexico, Canada and China Will Take Effect Saturday https://www.cnbc.com/2025/01/31/trump-tariffs-on-canada-mexico-and-china-begin-saturday-white-house-says.html“We’ve got the Super Bowl coming up, and eerily, the amount of people that fit in the [New Orleans] Superdome are almost exactly equal to the number of people dying every year here in America from fentanyl, and that comes from China and Mexico,” Trump trade advisor Peter Navarro told CNBC in an interview earlier Friday. “This is why we have these kind of discussions.”
For these countries, that is a loss of potential customers each year that could be buying the goods that these countries export to the US.
I thought the case against Canada is also fentanyl but Navarro's statement does not include Canada.
Has anyone in this forum tried fentanyl? Where would I buy it if I want to try why it seems so popular.
Fund Allocations (Cumulative), 12/31/24 YBB, here or at your site, pl consider adding an extra line for previous reading for OEFs & ETFs right below the current reading.
E.g.,
"OEFs & ETFs: Stocks 60.54%, Hybrids 4.24%, Bonds 17.58%, M-Mkt 17.64%
Allocation as of 11/30 -
OEFs & ETFs: Stocks 61.41%, Hybrids 4.27%, Bonds 17.40%, M-Mkt 16.92%"
Now, I see that is a huge change for equities, which could be a mixture of price appreciation plus change in fund flows (decrease in MM?). The reader can then go dig more for data on their own.
Steep Tariffs on Mexico, Canada and China Will Take Effect Saturday Businesses, shoppers brace for higher prices if tariffs on Mexico and Canada imports start SaturdayFollowing are edited excerpts from
a current NPR report:
Businesses and shoppers in the U.S. are bracing for higher prices on everything from gasoline to guacamole, as President Trump renews his threat to impose steep tariffs this weekend on imports from two of the country's biggest trading partners.
Trump told reporters at the White House Thursday that he intends to follow through with his threat to slap a 25% tax on imports from Canada and Mexico starting Saturday, in response to what he called a flow of immigrants and drugs across the country's northern and southern borders.
General Motors told financial analysts on Tuesday that it could shift some pickup truck production out of Mexico and Canada if tariffs are imposed. But the automaker is reluctant to act while the trade landscape is still uncertain.
"We are prepared to mitigate near-term impacts," said CEO Mary Barra. "What we won't do is spend [a] large amount of capital without clarity." The auto industry in North America is highly integrated, relying on manufacturing in all three countries.
Mexico is a leading producer of flat-screen TVs.
Canada is also a major supplier of crude oil to U.S. refineries, especially in the Midwest. "Increasing expenses by 25% is going to lead to higher costs at the pump for U.S. consumers and higher input costs for businesses around the country," said Matthew Martdin of Oxford Economics.
Mexico and Canada would likely respond to any tariffs by imposing taxes of their own on U.S. exports.
Inflation watch- Your Coffee just went up (then down) by 50% @Gary1952: Hope you aren't needing gasoline, major appliances, a flat-screen TV, automotive products, or lumber to build a home, because
taxes on anything imported from Canada or Mexico will increase by
25% starting tomorrow.
Steep Tariffs on Mexico, Canada and China Will Take Effect Saturday Following are excerpts from
a current New York Times report:
Tariffs on goods from the United States’ three largest trading partners will go into effect on Saturday, a Trump spokeswoman confirmed Friday. Goods from Mexico and Canada will be subject to 25 percent tariffs and those from China will be hit by a 10 percent tariff. Those countries account for more than a third of the goods and services that are imported to or bought from the United States, supporting tens of millions of American jobs, and all three of their governments have promised to answer Mr. Trump’s levies with tariffs of their own on U.S. exports.
In a press briefing on Friday, the White House press secretary, Karoline Leavitt, said the president would put in place a 25 percent tariff on goods from Mexico, a 25 percent tariff on goods from Canada and a 10 percent tariff on goods from China.
Ms. Leavitt said the president had chosen to impose tariffs because the three countries “have all enabled illegal drugs to pour into America.”
“The amount of fentanyl that has been seized at the southern border in the last few years alone has the potential to kill tens of millions of Americans,” she said. “And so the president is intent on doing this.”
The tariffs are likely to initiate the kind of disruptive trade wars seen in Mr. Trump’s first term, but at a much larger scale.
Mexico, China and Canada account for more than a third of the goods and services imported to or bought from the United States, supporting tens of millions of American jobs.
All three governments have promised to answer Mr. Trump’s levies with tariffs of their own on U.S. exports, including Florida orange juice, Tennessee whiskey and Kentucky peanut butter.
The tariffs will immediately raise costs for the importers who bring products across the border. In the nearer term, that could disrupt supply chains and lead to product shortages, if importers choose not to pay the cost of the tariff. And in the longer run, companies may choose to pass the cost on to American consumers, raising prices and slowing the economy.
Mr. Trump’s desire to hit allies and competitors alike with tariffs over issues that have little to do with trade demonstrates the president’s willingness to use a powerful economic tool to fulfill his domestic policy agenda, particularly his focus on illegal immigration.
