Tariffs May Offset Half of Tax Cuts

| September 06, 2018
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With the President hinting at the potential for more tariffs this time on Japan, the full effects have yet to be seen.

Cornerstone Macro, headed by Nancy Lazar, makes the point that second-order effects could be more significant than the precise dollar amounts from the tariffs.

The 25% tariff on $50 billion of goods from China would total $12.5 billion, equivalent to a 0.1% tax hike on the U.S. economy.

A 10% tariff on an additional $200 billion worth of goods would effectively double that, to 0.2%.

“While still manageable, this would offset almost half of the estimated boost from tax cuts in 2018,” the firm wrote to clients.

At this point we have no definable ‘edge’ on predicting the effects of tariffs on developed economies. This is why we rely on measuring and mapping the rate of change of data.

 

Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O

 

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