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.
Groundhog Day and Friday the 13th
Planned Parenthood drops lawsuit challenging Trump administration’s Medicaid cuts
San Francisco uncovers nine secret drug and gambling dens disguised as convenience stores
Dozens of House Republicans Demand Mitch McConnell ‘Stop Stalling the SAVE Act’
Jeffries says GOP ‘done eff’d up in Texas,’ vows they won’t win five seats: ‘They can’t ignore it’
Chuck Schumer Lambasted After Comparing the SAVE Act to Jim Crow
Trump administration blocked from ending Temporary Protected Status for Haitians
BREAKING: Under Threat of Criminal Contempt, Bill and Hillary Clinton Have Agreed to Testify in House’s Jeffrey Epstein Probe
Donations surge for fallen NY officer and new mom following tragic death at hands of DWI suspect
Clinton Judge Releases Boy, 5, and His Father from ICE Detention, Makes Mistake So Bad on Order This May Be the First Time It’s Ever Recorded
Clintons agree to testify after House threatens contempt in Jeffrey Epstein probe
LAPD Chief Refuses to Enforce Gavin Newsom’s Crackdown on ICE Agents: ‘It Doesn’t Make Any Sense’
House GOP majority shrinks to just one vote as Johnson swears in new House Democrat
Trump and India PM Modi Reach Historic Trade Agreement, Includes Ending Importation of Russian Oil
Grammys blasted as ‘anti-China political tool’ after Dalai Lama wins audiobook award
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.
Groundhog Day and Friday the 13th
Planned Parenthood drops lawsuit challenging Trump administration’s Medicaid cuts
San Francisco uncovers nine secret drug and gambling dens disguised as convenience stores
Dozens of House Republicans Demand Mitch McConnell ‘Stop Stalling the SAVE Act’
Jeffries says GOP ‘done eff’d up in Texas,’ vows they won’t win five seats: ‘They can’t ignore it’
Chuck Schumer Lambasted After Comparing the SAVE Act to Jim Crow
Trump administration blocked from ending Temporary Protected Status for Haitians
BREAKING: Under Threat of Criminal Contempt, Bill and Hillary Clinton Have Agreed to Testify in House’s Jeffrey Epstein Probe
Donations surge for fallen NY officer and new mom following tragic death at hands of DWI suspect
Clinton Judge Releases Boy, 5, and His Father from ICE Detention, Makes Mistake So Bad on Order This May Be the First Time It’s Ever Recorded
Clintons agree to testify after House threatens contempt in Jeffrey Epstein probe
LAPD Chief Refuses to Enforce Gavin Newsom’s Crackdown on ICE Agents: ‘It Doesn’t Make Any Sense’
House GOP majority shrinks to just one vote as Johnson swears in new House Democrat
Trump and India PM Modi Reach Historic Trade Agreement, Includes Ending Importation of Russian Oil
Grammys blasted as ‘anti-China political tool’ after Dalai Lama wins audiobook award
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.
