by Lance Roberts
Real Investment Advice
For Part 1 on “Tariff Risk” read: Tariff Impact Not As Bearish As Predicted.
In “Trumpflation” we discussed why the tariff risk was not inflation. To wit:
“Today, globalization and technology give consumers vast choices in the products they buy. While instituting a tariff on a set of products from China may indeed raise the prices of those specific products, consumers have easy choices for substitution. A recent survey by Civic Science showed an excellent example of why tariffs won’t increase prices (always a function of supply and demand).”
[…] Of course, if demand drops for products with tariffs, prices will fall, reducing inflationary pressures. Furthermore, the tariff risk is not a one-sided event. If Trump tariffs Chinese, European, or Canadian products, those countries tend to enact counter-balancing tariffs on U.S. products. Such slows demand for goods and services between all parties, again a deflationary process.