"Instead, having seen the supreme court reject his sweeping global tariffs on Friday, Trump dug his shovel out, announcing a new global tariff of first 10%, then upping it to 15%. That may have lifted the president's mood, after a stinging rebuke from the top judges in the US, but it risks backfiring on his hopes for hefty interest rate cuts this year."
"The trade war, with its exhortation to businesses to make their products in the US if they know what's good for them, is one of Trump's signature policies. The logic is to create prosperity and long-term opportunity through bringing more investment and innovation into the US, lifting incomes. It also provided lucrative opportunities to tax Americans, with the tariffs rejected by the supreme court estimated to have raked in roughly $110bn (81bn) from those importing goods from overseas."
"The City consultancy Capital Economics has calculated that by raising the global tariff to 15%, Trump has ensured that at least for the next 150 days the effective tariff rate will rise back to 14.5%, slightly above where it had settled before the supreme court stuck down the reciprocal tariffs based on the International Emergency Economic Powers Act. That means American importers will still be paying higher prices for goods from overseas, with a knock-on impact on inflation."
Donald Trump raised global tariffs first to 10% then to 15% after the supreme court rejected his earlier sweeping tariffs. The tariffs aim to boost US investment, innovation and incomes by encouraging onshoring and to generate revenue estimated at roughly $110bn from importers. Capital Economics calculates the effective tariff rate will rise to about 14.5% for at least 150 days, keeping importers paying higher prices. Higher import prices will push inflation up and complicate the Federal Reserve's plans for interest-rate cuts. Companies that paid the IEEPA tariffs are seeking refunds, which could act as fiscal stimulus if returned.
Read at www.theguardian.com
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