👋Hi Friends,
📆This Week’s Topic
This week we’ll be covering President Trump’s new Wave of Tariffs. Now they aren’t official yet: He is only threatening to set them into place on August 1st. In this article, we’ll be focusing on the threat of new tariffs, their immediate impact, and what it could mean for the US economy in the future.
💳 Cause & Effect
As you probably know, Trump has created several waves of tariffs, and removed them soon after. Now, he is threatening to create new tariffs that would be set into motion on August 1st. Economists have said for months that these tariffs could choke the nations growth, destabilize the job market, and shake up financial markets. But the President has ignored these warnings, instead celebrating the billions of dollars his policy is making for the government. However, there have been flaws he claims within the presidents economic strategy.
📊 Statistics
Data from June has shown accelerating inflation, specifically noting price rises on items like clothing, furniture, and appliances, which are all affected by the tariffs on Canada and China, and other nations with whom the US trade. President Trump’s proposed tariffs include 30% tariffs on the EU, as well as Mexico. Tariffs on Canada would rise to 35%. Steep tariffs are also to be set on Brazil, Japan, Thailand, and South Korea. There are also dozens of other countries upon which taxes on imports will be placed, increasing prices for consumers all across the board. EY-Parthenon’s Gregory Daco estimated that that average tariffs rate after August 1 will rise to 21%, which in his words would result in a “major risk for the economy.” Tariff vulnerable products such as household furnishing and appliances rose respectively 1 percent (0.7% higher than the 0.3% increase of May, and 1.9%, rising 1.1% higher than May’s 0.8%.
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🔚 Outcome
Despite President Trump’s assurances that his worrying policy of trade brinkmanship wouldn’t financially affect Americans, this data shows that it already has and will continue to on a greater scale if these tariffs come into place. The Consumer Price Index has corroborated what experts have said all along, showing again that most of the burden from the tariffs has fallen upon the shoulders of consumers and businesses. It seems as if the Trump Administration is trying to downplay these Statistics, even though prices have risen 2.7% from a year ago.
⛱ Consumer Effect
Prices are already rising, and with this new wave of tariffs, it will most definitely continue. And with President Trumps financial policy, he doesn’t seem as if they will either remove tariffs or even acknowledge that prices will continue to rise because of them. When responding to reporters, Trump stated that the numbers on food and energy were within the margins set by analysts, choosing to focus on the only type of goods (volatile goods) that were within the margins, and turning a blind eye to the bigger problem at hand.
⏳ Final Summary
These tariffs likely won’t mean anything good for the US economy, and will probably hurt both consumers and businesses. Prices on different products from apparel to household goods have risen and will continue to do so if new tariffs are set in stone. Analysts from Goldman Sachs have projected that by December, the inflation rate will be higher year over year than it would have been without heavy tariffs. In response to the price jumps of goods in June, Daniel Hornug says the data shows “clear, initial signs of Tariff effects.” He also stated that “looking ahead, it’s likely those impacts will grow.”
🙏Thank You & Important Information
As always, thank you so much for reading this edition of Friday Finance. If you would like to browse more article made by Friday Finance, go to fridayfinancedc.com and click the archive you can browse all our previous articles. Anyway, have a great week and we’ll see you next edition.
Grayson Stein and Jacob Gans
Friday Finance