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Colombia appears to have tightly avoided a trade war with the United States.
Last night, the White House announced that Colombia had agreed to conditions related to the acceptance of newly deported immigrants. As such, Trump canceled his introductory threat by 25 %.
It is clear, though, the customs tariff emerged as one of Trump's first and favorite tools when it comes to the progress of his geopolitical agenda.
Although we have not yet seen any increases on Canadian, Mexican or Chinese definitions, the White House has confirmed This is coming. Economists busy Evaluating what will have to influence local prices, and we believe that the Federal Reserve is thinking about it as well.
We already know that the federal reserve tends to follow the "waiting and see" approach when it comes to responding to the definitions and inflation that entails it. Or at least I did again in 2018.
Trump's introductory threats may be (and to be clear, they are just threats at the present time), they may shake global markets in the direct term. But the actual effect on prices will take longer to see.
The two options for the central bank are:
- Raise interest rates.
- Take the so -called policy approach "See through", where FOMC members ride temporary prices (we hope) the highest prices without raising prices.
We are betting that they go with the second option, but we will be curious to find out how the Federal Reserve Speaker Jerome Powell responds to any tariff questions during the press conference on Wednesday. More about it later this week.
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