Ahead of the bell on Friday, we’re seeing various different kinds of fluctuations in the global market, with the S&P 500 sitting pretty at what constitutes an all-time high for the index.
$2900 seems to be the magic number – the S&P hit it in the fall of 2018, and again earlier this spring before tanking down to around $2700 and change at the end of last month.
Front and center in business news has been the US/China trade conflict as well as ongoing Federal Reserve central bank deliberations.
Amid a jumble of market activity, investors are looking at some of the newest wrinkles in the tariffs story, including new reports that some of the most big and powerful tech companies are seeking to exempt themselves from the ramifications of the trade debacle.
“Tech companies are trying to get their products off of the list of goods facing tariffs,” says Christine Romans at CNN in the morning’s round-up, adding that companies like Apple and Dell are lobbying the government to stop the madness. “They feel that tariffs won’t solve the underlying problems with Chinese trade that the president wants to stop.
With antitrust probes on the way for these big tech stocks, it stands to reason that some of the giants in the market might be throwing their weight around to try to beat the tariff blues.
What does that mean for the rest of us?
Likely higher prices, and a lot of economic pain.
“The tariffs that have currently been imposed have erased about one-fourth of the tax cuts Americans were supposed to get under the Tax Cuts and Jobs Act over the next five years,” said director of the National Taxpayer Union Foundation’s Free Trade Initiative Bryan Riley in a cogent analysis of current events in a recent interview with Stuart Anderson at Forbes. “It’s not just consumers who are paying more. The tariffs increase the cost of imported inputs used by U.S. manufacturers. So the tariffs hit consumers in the pocketbook, make U.S. companies less competitive and subject exporters to foreign retaliation. It’s a lose-lose-lose for Americans.”
In trying to explain what should be obvious based on simple economics, Riley invoked one of the sacred cows of a party now bent on supporting economic suicide:
President Ronald Reagan once compared trade wars to the pie fights in Hollywood comedies,” he said. “‘Everything and everybody just gets messier and messier. The difference here is that it’s not funny. It’s tragic,’ he said. The big risk is that these “temporary” tariffs become permanent, the trade war continues to escalate and we are unable to unwind the damage that has been done. Certainly with the Trump administration so far, the attitude seems to be that if the tariffs aren’t working like they were supposed to, just slap on more tariffs. At some point that’s got to change, or a lot of innocent people across the country are going to be hurt.”
Arguments that tariffs will not do what Riley suggests are most likely based on partisan fanaticism rather than reality. Take that to the bank.