Undoubtedly, the escalating tariff trade wars will cause U.S. domestic prices to change. It’s time to think about what.
It appears to me that when foreign markets become more difficult and expensive for U.S. products by foreign countries retaliating for U.S. tariffs, it is probable that initially producers will become more “aggressive”, namely prices may decline domestically as producers seeks to unload products that were normally exported.
Conversely, imported products or products made with imported parts will likely see increases in prices.
So what does the U.S. produce that is exported? Some include:
Agricultural products (prime example: soybeans)
Meat (prime examples: chicken, pork)
Dairy (prime example: cheese)
I’m expecting that these products will have domestic price declines within a year if the tariff trade wars are not quickly resolved.
Anything that includes foreign-made components may see shortages and therefore price increases. Other top U.S. exports include:
Automobiles and other vehicles
Aircraft
Machinery of all kinds
I expect most all of these to see price increases because all are reliant on foreign parts.
Just about all imported items will likely see price increases until the dust settles. This includes all electronics, including cell phones, computers, televisions, microwaves, etc.
One interesting area to consider is energy. The U.S. is a major exporter of gasoline and natural gas (LNG). The top customers of U.S. petroleum are: Mexico, Canada, China. The top customers of U.S. natural gas are: Mexico, South Korea, China.
Since Mexico, Canada, and China are on the list of countries which are threatened with U.S. tariffs or already have been levied, U.S. domestic prices of these items may change. While prices could likely increase within those countries, it is harder to guess what U.S. domestic prices will do. While we may see a modest decline for gasoline at the pump, it seems those commodities are subject to more speculation (ie, manipulation) than the average commodity.
In addition, gasoline prices, for example, are well noted for going up faster than they go down.
So at this point, I cannot reliably guess what U.S. domestic energy prices will do.
However, it should be noted that we may see some price declines, the long term effects are more cloudy. It is like predicting the weather. Short term predictions may have some veracity, long term predictions cannot be relied upon.
What do you think? Do you think U.S. domestic prices will be affected by the tariff trade wars? See the Contact page to send your opinion.
The illustration of a cactus is from “Iconographie descriptive des cactées, ou, Essais systématiques et raisonnés sur l’histoire naturelle, la classification et la culture des plantes de cette famille” by French botanist Charles Lemaire, 1841. Missouri Botanical Garden.
The image of a mideopsis orbicularis (water mite) is from a selection of photo-micrographs created by Arthur E Smith and featured in the book “Nature through Microscope & Camera” (1909) by Richard Kerr. Library of Congress.
The drawing of a beast is from “Book of Hours” attributed to an artist of the Ghent-Bruges school and dating from the late 15th century. At the Beinecke Rare Book & Manuscript Library at Yale University.
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