Can people please stop talking complete, unmitigated claptrap on the subject of President Donald Trump, Mexican tariffs, and the U.S. economy? Is it really too much to ask?
The panic over the last few days about possible Mexican tariffs is even more ridiculous than the panic we had last month about the China tariffs — and that was bad enough.
Trump’s new tariff threat will send prices soaring for U.S. households, say the doomsayers. They’ll cost hundreds of thousands of jobs. They’ll crash the stock market. They’ll crash the economy.
Really? No doubt this is why the Dow Jones Industrial Average DJIA, +0.60% plunged 350 points in a panic on Friday. And the Dow’s performance since then through Wednesday? Up around 600 points.
WATCH: Cory Booker unleashes fiery call for ‘foot soldiers’ at Michigan Dem conference
Leaked memos reveal how Supreme Court steamrolled Obama climate plan in 2016 showdown
Trump Disputes His Energy Secretary’s Assessment of Gas Prices: ‘He’s Wrong on That’
Nancy Mace Calls for ‘Immediate’ Expulsion of Fellow House Republican: ‘The Worst Kind of Pond Scum’
Repeat offender released early from jail now charged with capital murder of pregnant woman
Trump and Johnson to hold Virginia tele-rally against Spanberger’s gerrymander
Who is Joseph diGenova Reagan-era prosecutor tapped to lead ‘grand conspiracy’ investigation
Mob of teens chases college student into campus dorm, unleashes violent attack as police hunt suspects
Eight children dead in Louisiana domestic violence killing spree: What to know
Texas AG Paxton sues Dem fundraising platform ActBlue, alleging ‘fraudulent and foreign donations’
Bernie-backed Dem’s pro-gun Clint Eastwood post, Kaepernick critique spurs apology in battleground race
Watch Patel on Bartiromo: ‘I Can Announce’ Arrests Are Coming in Stolen 2020 Election Case – ‘Stay Tuned This Week’
Trump Reveals JD Vance and His Negotiating Team ‘Heading Over’ for Second Round of Iran Talks
WATCH: Houston faces $110M hit as Texas gov lays down law on ‘sanctuary’ policies
Left-wing activists heckle pro-Israel Democrat Haley Stevens at Michigan convention
The Standard & Poor’s 500 SPX, +0.54% is now higher than it was last Thursday, just before Trump shook his little fist at the Mexicans. And it’s not just the popular stocks such as Apple AAPL, +1.09% Netflix NFLX, +0.13% , and TSLA, +4.54% U.S. industrial stocks — as measured by the S&P 1500 Industrials index — are up 3%. The stocks of automobile components companies are up almost 5%. Small company stocks, often a useful barometer for the domestic, Main Street economy, are up about 1.5%, whether measured by the broad Russell 2000 RUT, -0.49% or the narrower, higher-quality S&P 600 index SML, -0.63% .
Sure, a few days’ stock market action doesn’t mean much long term. And the stock market isn’t America. But then again, apparently it was an Infallible Omen of Doom when the stock market fell on Friday. You see how that works?
Whether or not these tariffs are a sensible policy is another matter. But anyone claiming they will cost households a small fortune and wipe out vast numbers of jobs is relying on some heroic assumptions. Or, as non-economists call them: guesses.
U.S. imports from Mexico came to $372 billion last year, according to the federal government. So slapping a 5% tariff on them amounts to a federal tax hike of… er… $19 billion. Total federal taxes last year: $3.3 trillion. So we’re talking about a 0.6% tax hike.
But the Mexican peso USDMXN, +0.4490% has already reacted. It has weakened by 2.7% against the U.S. dollar DXY, -0.30% in a few days — wiping out more than half of that cost increase.
WATCH: Cory Booker unleashes fiery call for ‘foot soldiers’ at Michigan Dem conference
Leaked memos reveal how Supreme Court steamrolled Obama climate plan in 2016 showdown
Trump Disputes His Energy Secretary’s Assessment of Gas Prices: ‘He’s Wrong on That’
Nancy Mace Calls for ‘Immediate’ Expulsion of Fellow House Republican: ‘The Worst Kind of Pond Scum’
Repeat offender released early from jail now charged with capital murder of pregnant woman
Trump and Johnson to hold Virginia tele-rally against Spanberger’s gerrymander
Who is Joseph diGenova Reagan-era prosecutor tapped to lead ‘grand conspiracy’ investigation
Mob of teens chases college student into campus dorm, unleashes violent attack as police hunt suspects
Eight children dead in Louisiana domestic violence killing spree: What to know
Texas AG Paxton sues Dem fundraising platform ActBlue, alleging ‘fraudulent and foreign donations’
Bernie-backed Dem’s pro-gun Clint Eastwood post, Kaepernick critique spurs apology in battleground race
Watch Patel on Bartiromo: ‘I Can Announce’ Arrests Are Coming in Stolen 2020 Election Case – ‘Stay Tuned This Week’
Trump Reveals JD Vance and His Negotiating Team ‘Heading Over’ for Second Round of Iran Talks
WATCH: Houston faces $110M hit as Texas gov lays down law on ‘sanctuary’ policies
Left-wing activists heckle pro-Israel Democrat Haley Stevens at Michigan convention
Meanwhile, anyone hoping to buy a home, or refinance their home loan, also just got a nice cost saving. The trade tensions have sent long-term interest rates tumbling. Average 30-year mortgage rates have declined to 3.89% from 4.01% in just a few days, according to Mortgage News Daily. The interest savings from that move alone on an average new home loan comes to about $300 a year. According to Bankrate, 30-year mortgage rates are now about their lowest since the summer of 2017.
Oh, and then there’s the matter of that $19 billion in tariff revenues. To hear some people, you’d think it just vanishes. Maybe it gets trucked to a Great Secret Money Bonfire — possibly in Area 51 — where it gets torched. (Along with the money raised from the China tariffs, money spent by companies on stock buybacks, and so on).
Actually, if Uncle Sam levies $19 billion in extra taxes on imports from Mexico, then he has extra money that he can recycle back into the U.S. economy through spending, or tax cuts. How much? Try $19 billion.
Story cited here.
