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.
Trump-backed incumbent loses primary after super PAC bankrolled by Dems meddled in race
Mamdani repeatedly sidesteps questions on reported plan to revive tax hikes on wealthy New Yorkers
Retired police chief helps subdue passenger after alleged midair outburst over alcohol cutoff
NYC church arson suspect allegedly plotted more attacks, had violent notes like ‘murder them’ and ‘rape him’
It’s Time to Let States Lead on Paid Family Leave
Primary showdown: Polls close in Tennessee as conservative firebrand eyes governor’s office
EXCLUSIVE: Michigan House speaker calls for answers over $300M taxpayer-funded Rx Kids program
Amazon Investigating After Footage of Delivery Driver Refusing to Take ‘Extra Two Steps’ Goes Viral
Senate scrambles for the exit amid outstanding to-do list: ‘Clear as mud’
It’s True Even if It Makes You Wince: The GOP Establishment Is Right About the Filibuster
Police Officer Arrested for Allegedly Abusing Flock Cameras as Part of Personal Vendetta
Death Toll Hits Triple Digits, Thousands of Africans Remain in Spanish City in Aftermath of Invasion
Doctor Charged in Massive Medicare Fraud Scheme That Allegedly ‘Exploited Elderly Patients’ and Taxpayers
Keeping Strait of Hormuz toll-free is paramount concern for international bodies as Iran-Oman negotiations drag
Trump signs executive orders targeting birthright citizenship, birth tourism after Supreme Court setback
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.
Trump-backed incumbent loses primary after super PAC bankrolled by Dems meddled in race
Mamdani repeatedly sidesteps questions on reported plan to revive tax hikes on wealthy New Yorkers
Retired police chief helps subdue passenger after alleged midair outburst over alcohol cutoff
NYC church arson suspect allegedly plotted more attacks, had violent notes like ‘murder them’ and ‘rape him’
It’s Time to Let States Lead on Paid Family Leave
Primary showdown: Polls close in Tennessee as conservative firebrand eyes governor’s office
EXCLUSIVE: Michigan House speaker calls for answers over $300M taxpayer-funded Rx Kids program
Amazon Investigating After Footage of Delivery Driver Refusing to Take ‘Extra Two Steps’ Goes Viral
Senate scrambles for the exit amid outstanding to-do list: ‘Clear as mud’
It’s True Even if It Makes You Wince: The GOP Establishment Is Right About the Filibuster
Police Officer Arrested for Allegedly Abusing Flock Cameras as Part of Personal Vendetta
Death Toll Hits Triple Digits, Thousands of Africans Remain in Spanish City in Aftermath of Invasion
Doctor Charged in Massive Medicare Fraud Scheme That Allegedly ‘Exploited Elderly Patients’ and Taxpayers
Keeping Strait of Hormuz toll-free is paramount concern for international bodies as Iran-Oman negotiations drag
Trump signs executive orders targeting birthright citizenship, birth tourism after Supreme Court setback
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.
