From Heritage Foundation’s EJ Antoni, “Trump’s tariff critics are trading on overblown and unfounded fears”:
Bringing Down Grocery Prices, Trump Style
CPI food at home is 8% of total CPI weights, fresh vegetables and fruit are 1.1%. Assume half of fresh vegetable and fruit are imported from Mexico (about 2/3 of fresh vegetables are imported from Mexico), and assume only half of the 25% tariff is passed on to US consumers (large country assumption). Then here’s a picture of the CPI for groceries, the January USDA ERS forecast and the implied level of grocery prices, assuming the tariffs are eventually placed.
(Would’a Been) Biggest Tax Increase Ever!
In nominal dollar terms. Thanks, Trump.
I Guess I Picked the Wrong Week…
to you know what (apologies to Abrahams and the Zuckers).
In one day, US taxes roughly $2.4 trn worth of goods (2023 amounts). Biggest one year tax increase in dollar terms since… ever, at $364 bn (if Trump goes through with plans). Automatic escalation clauses if the target countries retaliate (Canada already has declared).
Canadian Oil, Tariffs, and Gas Prices in PADD 2
Should’a bought that EV! Joseph Brusuelas notes tariffs should show up in gas prices in the Midwest pretty quick, as the region gets its oil from Canada.
The Effective Rate of Protection when Inputs are Imported
Or, when 10% is not just 10%. (GM edition)
This is a reprint of a 2018 post. It takes on a heightened importance when one considers (1) the fact that tariffs on Canadian imports will hit a lot of inputs, rather than final goods, and (2) the integrated nature of the American auto industry.
The Price Elasticity of Avocado Supply, Demand, and Tariff Pass Through
I was pondering whether the US is a large country insofar as tariffs on avocados are concerned. Since 90% of consumption is from Mexico, one might think the US is a large country; on the other hand, elasticities matter. This study by Ambrozek et al. (2019) indicates 0.2 demand elasticity at shipper level. Let’s guess that supply elasticity is 0.2 (about 80% of Mexican exports go to the US, and about 85% of production is exported; Carman and Kraft (1998) cite 0.2.
Economic Policy Uncertainty and VIX on the Eve of (Trade) Destruction
Through 1/31/2025, in anticipation of tariffs that might or might not be announced today.
Do You Feel Lucky? Trump Tariffs in View
Canada is America’s second largest trading partner. In 2023, of the $416 billion of imported goods from Canada, $119 billion is oil and gas, and petroleum products and coal. (Total merchandise imports is $3.1 trn.) From the Milwaukee Sentinel Journal today:
On the Eve of (Trade) Destruction*
The White House has confirmed imposition of tariffs on Canada, Mexico, and China tomorrow (Feb 1). Why are tariffs on Canada and Mexico different than (some) other tariffs? Consider this graph courtesy of Bloomberg via Torsten Slok: