Tuesday, November 26, 2024

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1/ Trump threatened to impose 25% tariffs on all goods from Mexico and Canada, and an additional 10% tariffs on China on his first day in office, likely raising U.S. consumer prices, impacting businesses, and reshaping trade dynamics. The decision may also violate the free trade pact between the U.S., Canada and Mexico, known as the USMCA. The three countries are the largest U.S. trading partners. Chinese products are already subject to average levies of about 15%. In a pair of posts, Trump said the new tariffs were tied directly to stopping the flows of drugs and migrants, and would remain in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump’s tariffs could impact American automotive manufacturing and agriculture, which depend on cross-border trade with Canada, Mexico, and China – countries that collectively account for over one-third of U.S. imports and exports. In 2023, these nations purchased over $1 trillion in U.S. exports and supplied $1.5 trillion in goods and services, supporting tens of millions of American jobs. (New York Times / Washington Post / Reuters / Axios / Associated Press / Wall Street Journal / Politico)

69% of Americans think Trump’s tariffs will lead to higher prices. 44% said they are planning purchases ahead of Trump entering office, and 62% said they feel they’ll have to adjust their 2025 financial plans. (The Guardian)

💭 Why does this matter? Tariffs directly affect the cost of everyday goods, increasing prices for households while disrupting supply chains for businesses. The proposed measures could hinder economic growth by raising inflation, limiting purchasing power, and reducing employment in trade-dependent industries. These effects ripple across the economy, influencing federal monetary policies and international trade relations. Understanding these impacts is critical as they touch every layer of economic life, from local businesses to global markets.

🌐 What are potential long-term consequences of these tariffs? Over time, persistent tariffs could reshape trade patterns, encouraging businesses to relocate manufacturing to countries outside of the tariffed regions or back to the U.S. While this might boost certain domestic industries, the overall economy could suffer from reduced efficiency, higher production costs, and strained international relationships. Prolonged trade disputes may also deter foreign investment in the U.S., hinder global economic cooperation, and increase economic volatility.

2/ Biden proposed a rule to allow Medicare and Medicaid to cover weight-loss drugs like Wegovy and Zepbound, which could extend access to millions of obese Americans. The measure, estimated to cost $35 billion over the next decade, faces opposition from Robert F. Kennedy Jr., Trump’s HHS Secretary nominee, who advocates investing in healthy food and fitness programs instead. Proponents argue the drugs could reduce long-term healthcare costs by addressing obesity-related condi...

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