Daily update
Daily update
- US September import price inflation is old news, but will still be poured over by economists. Exporters do not pay tariffs in any economy—the legal liability for the tariff is that of the importer. However, exporters may discount their prices to offset tariffs, which would show up as lower pre-tariff import price. If that discounting is not taking place, the burden of the tariff passes further down the supply chain.
- To consider whether tariffs are offset by exporters, it is necessary to compare prices with recent trends. Some goods like consumer electronics tend to deflate over time, so a price reduction there is not necessarily a tariff offset. Comparisons to international trends are also necessary—a falling global price (e.g. for a commodity) does not indicate a tariff offset.
- US September industrial production data is less of a focus. As the US has developed economically, manufacturing has become proportionately less important to the economy—although a nostalgia for manufacturing gives it political relevance. The recent US factory building boom did roll over this year, but is unlikely to make much of a difference to the data.
- Several ECB speakers crowd the agenda (including Lagarde), but the frequency of recent commentary reduces the impact of these remarks.