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Not Gonna Happen

This is a syndicated repost courtesy of NorthmanTrader. To view original, click here. Reposted with permission.

Mr. Trump just opened a new tariff front with a 5% tariff threat on Mexico by June 10th with a threat to escalate it to 25% by October 1:

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“Tariffs will be raised to 10 percent on July 1, 2019. Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019.”

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Statement from the President Regarding Emergency Measures to Address the Border Crisis 

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Yea, that’s not gonna happen.

Why? Because economics and politics.

On the economic front it would push the US into a full blown recession ahead of the 2020 election (which some argue may happen anyway), but this action would seal the deal.

For one Mexico is not a small trading partner:

Add the existing pressure (and perhaps expanding pressure) coming from tariffs on China and threatened retaliatory measures and you end up with a price pressure spiral on consumers and businesses nobody will stand for.

And that brings us to politics. It’s all fun and giggles as long as nobody gets hurts but even the Republican donor base is likely to run out of patience way before a 25% tariff gets implemented.

At the end of the day political conviction ends with the pocketbook and a 25% tariff on Mexico would hurt a lot of Republican corporate donor interests.

The administration will get clobbered from within. And that pressure may begin today. Wall Street is not impressed. And neither is corporate America. And neither will American consumers nor the Mexican government which has been negotiating a USMCA deal with the US government.

So while Mr. Trump may be playing bravado to his base this opening of a new tariff war front will find little support anywhere and is not going to reach its threatened conclusion.

In other words: 25% tariffs on Mexico? Yeah, that’s not going to happen.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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