Tariffs - response...

Baldytyke88

cloud_dog said:

"...I believe low tariffs can be a good way to raise revenue..."

But tarrifs don't raise revenue, they make products more expensive to the consumer, which with my simple understanding raises the possibility of rising inflation.

Tariffs are just a tax, the Government can choose to raise revenue from VAT, NI, tariffs etc, taxes only increase inflation if taxes increase. If a Government gains £10 billion in tariffs, it could lower other taxes by the same amount.

Most countries have tariffs, when we were in the tariff free EU, countries outside the EU did pay tariffs on certain products.

Bostonerimus1

Stocks will fall as inflation goes up. The Fed will probably want to raise rates to combat that, but falling stock markets might encourage Trump to pressure the Fed to lower rates, either way it's dangerous. But it's nothing that hasn’t happened in the past. My US centric stock portfolio will take a hit, but it’s due for some poor returns. In 5 years time this will be all forgotten. So I’m doing what I usually do as a global equity investor - shrug my shoulders and roll my eyes.

Hoenir

Bostonerimus1 said:

 But it's nothing that hasn’t happened in the past. 

Struggling to remember a US President that during his election campaign told his faithfull that taxes were "not going to be a cost to you, it’s a cost to another country".

A whole new paradigm. 

Bostonerimus1

Hoenir said:

Bostonerimus1 said:

 But it's nothing that hasn’t happened in the past. 

Struggling to remember a US President that during his election campaign told his faithfull that taxes were "not going to be a cost to you, it’s a cost to another country".

A whole new paradigm. 

Trump is exceptional in many ways, but protectionist policies are not and telling porkies when it comes to international trade is common. 

Nebulous2

IvanOpinion said:

Seems the markets had not priced in tariffs despite a lot of publicity around them for over a month.

It's a bit like our previous PM's budget. People knew where her promises would lead, but didn't believe she would follow through on them. 

I don't think the markets actually believed he would hit pretty much his closest ally that hard. 

Qyburn

Hoenir said:

Struggling to remember a US President that during his election campaign told his faithfull that taxes were "not going to be a cost to you, it’s a cost to another country".

Did he actually think the tariffs would be paid by Mexico, China, Canada, rather than by US importers and ultimately US consumers?

Grumpy_chap

aroominyork said:

So the first round of tariffs was not a bluff. How does it affect fixed interest investments? It is not going to dampen inflation, so my first thought is to move money from an aggregate bond fund into cash pretty quickly (something like CSH2).

For me, I will do nothing.
I suspect any drop in share values will bounce back quickly as the dust settles.  A bit like the drop in tech stocks when the alternative AI was launched - sharp drop and back to where things started within a week.
If I was going to do something to move money away from stocks because of the impact of US tariffs, the time for me to do that was a week ago.  I did not.  If I move away from stocks now and into cash I will just be locking in the fall.
That's my current opinion.
My opinion may change.
I have no knowledge or experience in matters around finances and stock market movements, so my opinion is worth no more than any other opinion that you may find proffered by anyone you meet in the pub, supermarket, bus stop, golf course or wherever.

InvesterJones

Since I'm rolling over some matured gilts, I've been trying to work out what the likely effect of these announcements is. On one hand we've got BoE very likely reducing rates on Thursday, and a flight from equities, both pushing up gilt prices, but on the other, tariffs are likely to be inflationary in the first year, causing the Fed to keep interest rates higher, pushing down treasuries prices and causing global bonds to follow suit. Two opposing forces!

Shimrod

Grumpy_chap said:

aroominyork said:

So the first round of tariffs was not a bluff. How does it affect fixed interest investments? It is not going to dampen inflation, so my first thought is to move money from an aggregate bond fund into cash pretty quickly (something like CSH2).

For me, I will do nothing.

I would also do nothing - however I am in the process of transferring former workplace pensions into a SIPP which requires a sale into cash before the transfer. As the process is underway, timings for any of this are outside my control - but I just know that the sale will happen at the dip, and by the time the cash is available for reinvestment the markets will have recovered!

Bostonerimus1

Qyburn said:

Hoenir said:

Struggling to remember a US President that during his election campaign told his faithfull that taxes were "not going to be a cost to you, it’s a cost to another country".

Did he actually think the tariffs would be paid by Mexico, China, Canada, rather than by US importers and ultimately US consumers?

I think Trump actually believes that, and no evidence will convince him otherwise. He is totally divorced from reality, along with a majority of the US electorate, and that will eventually lead to bad consequences, but probably not for those at the top.