A 25% tax on US consumers of goods partially made in China is being contemplated (not the original 10%). A 10% tax is easier to evade than a 25% tax, so the rise would bite more. The tax is unlikely to hit US consumers before the mid-term election (there is a lag in implementing). The hit to the US economy of the tax hike may be greater than the hit to any other economy (including China).
The Fed did not mention the tax increases in its policy statement although they must be a consideration. Instead, the signal was as expected – a rate hike is coming at the next meeting.
The Bank of England is next, with the market is confidently expecting a rate increase. Wage growth, the overall strength of the labor market, and recent credit growth argue for a tightening.
There will now be a short service interruption in the morning call, for a couple of weeks. The lawyers are insisting I take a holiday. In vain I have pointed out that economists do not take holidays, and a life without economics is not worth contemplating. Normal service will resume as soon as I am allowed.