Trump's tariff threat: Impact on the U.S. economy (youtube.com)
The threat to do 25% tarifs on Mex and Can. A third of Mexico's economy is production of things to sell in the US. However, they might have to reduce the control cartels have over the border (fentanil migrants etc).
Maybe a $3000 increase to the price of a $30k vehicle, sold in the US but made in Mexico. WSJ. But the revenue the Fed gets from the tarifs could offset what Americans pay in other ways. Ie tax cut extensions that are coming up as tax cuts are set to expire.
How will it jive with inflation? The less government spends, the less it causes inflation, perhaps.
For the US, exporting less and charging more tariffs for imports might strengthen the US dollar which makes buying foreign goods cheaper. These also make it more attractive to just invest in production in the US rather than in another country.
Mexico has a 16% VAT applied to US imports into Mexico.
For decades America has ‘subsidized foreign production being imported into the US and double-taxed the American goods that are exported.’
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