How Hard Will Trump’s Trade War Hit?

Short answer, according to WaPo: hit harder than people think it will:

“These cate­go­ries show a sim­i­lar trend. Most dur­able goods (brown lines) have be­come cheap­er since the end of 1999. Dur­able goods are typ­i­cal­ly used for three years or more, such as furniture, cam­eras and auto­mo­biles. As a cate­go­ry, they are more likely to be trad­ed across borders — and thus the most likely to get pricier should a trade war es­ca­late.

Some nondurable goods (teal lines), such as toys and cloth­ing, are also easy to man­u­fac­ture cheap­ly a­broad and ship to the U.S. It’s no co­in­ci­dence that they are a­mong those with the low­est price in­creas­es.

Most ser­vices (red lines), such as res­tau­rants and health care, are chal­len­ging to im­port and ha­ven’t seen the type of com­pe­ti­tion that would keep prices low.

We can also go one step farther and cal­cu­late just how much each cate­go­ry has con­tri­buted to the annu­al in­fla­tion rates watched by the Fed. Dur­able goods — many of them cheap im­ports — have been the only cate­go­ry that helped slow price growth. There are a few ex­cep­tions, such as the pe­riods in 2009 and 2015–2016 when vol­a­tile oil prices sent the prices of nondurables into free-fall.”

This chart shows that the tariffs are starting to bite . . .

See the full column for the details . . .

 


Source: Washington Post

 

Steel prices have gone up after the trade war broke out

Source: Torsten Sløk, Deutsche Bank Securities

 

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