Tariffs Catch-All

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nycfan said:
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Tariffs don't necessarily mean ongoing inflation. But a key input to inflation is inflation expectations, and if inflation expectations rise because of tariffs, there could develop an inflationary spiral. That's why the Fed likely will have to keep interest rates high.

It's also true that American companies will be passing on price increases for some time. With a 25% tariff on steel, for instance, American steelmakers can now raise prices by up to 25%. Let's say they are really struggling to compete on price so they only raise 20%, and competition within the industry means an equilibrium of 15%. That's not going to happen at once (unlike with prices of imports). Maybe 7.5% over two years.
 
superrific said:
Do you know this, or are you assuming? Because that's not how country-of-origin rules typically work. We had this issue arise for the EV discounts, which Manchin had insisted would only apply to American-built cars. The regulations defining what is and isn't "American built" were really intricate. So too with the country-of-origin rules in the NAFTA agreement.

I've yet to see the official tariff proclamation. I'd imagine it cross-references other sections of law -- such as the ones described above -- at least for starters, but it's Trump so who knows.
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I haven't seen details of the tariff proclamation and I'm not interested enough to dig any deeper. I basing this on my experience.

You are correct that the NAFTA country of origin rules were complicated based on value of content from various countries. Labor is also content and labor for final assembly is a big number in the cost of the vehicle. I spent many years working for a large global original equipment component supplier, and we would ship parts all over the world in various states of completion to perform final finish operations in whatever country we needed. We would have metal stampings or forgings produced in say, Bulgaria, then ship the parts to Mexico for a surface finish operation. At that point it became Mexican content as far as NAFTA assembly plants were concerned. Or it was "local content" for the VW plant in Puebla.
 
Here are the "details" as specified in the Trump announcement:
  • Importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content.
    • USMCA-compliant automobile parts will remain tariff-free until the Secretary of Commerce, in consultation with U.S. Customs and Border Protection (CBP), establishes a process to apply tariffs to their non-U.S. content.
So there won't be any tariffs on Mexico/Canada at all in the short term (assuming that automobiles count as automobile parts) until the Secretary establishes that process, which might never happen. I think all auto stuff is USMCA compliant, unlike many other products (though I'm not sure).
 
altmin said:
onemileatatime.com

Airline Demand Between Canada & United States Collapses, Down 70%+

Future flight bookings between Canada and the United States are down by over 70% year-over-year in the summer months. WOW.
onemileatatime.com onemileatatime.com

Aviation analytics company OAG has published some data on the decline in flight bookings between the countries, and it’s worse than most people probably imagined. Specifically, the company compared summer season bookings in March 2024 vs. March 2025. In other words, at this point in both years, how many people have booked transborder flights in April through September?

Well, I hope you’re sitting down. For that six month period, the number of tickets booked is down anywhere from 71.4% to 75.7%. Just as an example, April is less than a week away, and here’s how bookings between the two countries are looking:

  • In March 2024, 1,218,570 tickets had been booked for April 2024
  • In March 2025, 295,982 tickets have been booked for April 2025
  • That represents a 75.7% reduction in tickets booked
I knew it was bad, but I didn’t expect it would be that bad, as that level of demand shift is something you almost never see.

Everyone can draw their own conclusions as to what’s causing this. It’s also anyone’s guess if we’re at rock bottom in terms of consumer sentiment, and if we’ll see more close-in bookings than in past years. But either way, April is right around the corner, and those drops are massive.
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How much longer is a flight from Canada to Cancun than Florida?
 
farce© said:
This sounds very Putinesque. "I started this trade war and if the countries we harm resist, we will double down." Sort of like how Putin blames Ukraine for his invasion and it doesn't occur to Trump that the quickest way to peace is for Putin to stop the invasion.

The beatings will continue until morale improves.
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Nothing quick and easy as to ending the Russo-Ukraine War by insisting that Putin stop the invasion.

Putin WON’T stop the invasion.

I know you know that, farce.
 
Calheel said:
That depends where in Canada. Eastern Canada is darn close to Europe.
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It was a rhetorical question of sorts.

Not many people live in Canada’s Maritime Provinces (those “close” across the Atlantic to Europe.). Might be a shorter flight over the Arctic to Europe. Like Maine, the Maritime Provinces are poor. The residents aren’t spending big bucks traveling.

Forty percent of Canadians live in Ontario. Something like 80-90% of Canadians live with 50-100 miles of the USA. They have major airports not far from the USA and they can easily fly to Mexico, Central America, and the Caribbean. They will.
 
I know I posted the -70% travel bookings yesterday, but looking at the raw numbers is stark. And this is SPRING/ SUMMER bookings. The snowbirds aren't reflected in this dataset - that's a huge chunk of people. One year from now Florida/ Arizona might have some severe economic issues.

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Data from: Flight Database & Statistics | Aviation Analytics | OAG
 

Senate Democrats to force vote next week on Trump’s fentanyl tariffs on Canada​

The lawmakers are tapping a provision in a 1976 law that allows any senator to force a vote to block emergency powers being abused by the president.


“…
Next week’s Senate vote would only end the national emergency with regard to Canada, a staunch U.S. ally that Trump has repeatedly denigrated by calling it the 51st state. It would put Republicans in the potentially awkward position of voting against Trump over his use of tariffs.

The vote also would take place one day before Trump is set to announce a new set of “reciprocal” tariffs on potentially all trading partners, including Canada, Mexico and China, as well as others in Europe, Asia and elsewhere.

Earlier this month, House Republicans slipped language into a House rule on their stopgap funding bill that would prevent any member of Congress from bringing up a resolution terminating Trump’s declaration of a national emergency over fentanyl and undocumented immigrants entering the U.S.

However, proponents hope Senate approval of the measure crafted by Kaine, Klobuchar and Sen. Mark Warner (D-Va.) would put pressure on House Republicans to act.“
 

Canadians are skipping trips to the U.S. and visitors from other countries could soon follow threatening to deepen the United States’ $50 billion travel deficit.

Experts say they’re pulling back for a variety of reasons, ranging from an unfavorable currency exchange rate to the U.S. political climate given President Donald Trump’s trade policies and his public statements on annexing Canada, as well as high-profile detainments of people who already had visas to be in the U.S., long wait visa times and other policies that have added to tensions with longtime close allies.

Reached for comment Friday, a White House spokesperson said by email that “everybody wants to come to President Trump’s America.”

Canadians “will no longer have to endure the inconveniences of international travel when Canada becomes our 51st state” and that “Europeans are eager to enjoy the Golden Age of America if they so choose to,” the spokesperson said.

In response to President Trump’s tariff plans at the time, former Canadian Prime Minister Justin Trudeau last month urged Canadians to “choose Canada” and suggested “changing your summer vacation plans to stay here in Canada and explore the many national and provincial parks, historical sites and tourist destinations our great country has to offer.”

The cross-border travel trends and Trump administration’s policies are worrying some in the United States’ travel industry, which draws in more than $1 trillion in direct spending a year.

...

The U.S. brought in more than 72 million visitors last year, still below pre-Covid levels, according to a report from Jefferies. Visitors from Canada were the largest group, accounting for 28%, followed by Mexico at 23%, the bank said in a note this month.

Travel and tourism of inbound visitors are counted as U.S. exports, and they accounted for about 8% of U.S. exports of goods and services, according to the Commerce Department.

International visitors from overseas are especially important because they tend to stay longer and spend more money than local tourists, according to the U.S. Travel Association.
 
nycfan said:
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I was just thinking about this.

First, if this is the plan, it means tariffs are in fact not just a negotiating tactic.

But my main point is that it takes quite a level of hubris to think that you could pull that plan off. Not doubt the architect inderstands economics but I have a feeling he overestimates the ability to micromanage such a move.

This plan has the stability of a Soviet nuclear power plant and they put Donald Trump at the switches.

The plan expects no retaliatory tariffs so what does Trump do? He insults and threatens our closest trading partners.

Just mind boggling stupidity.
 
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