Data’s phony trade war

Daily update

US consumer price inflation did not show many trade tax consequences. The slowing of tourism-related prices might reflect how visitors are wary of entering the US, but complications in timing Easter’s effect are also relevant. Appliance price inflation is a concern (the fastest monthly increase since early 2022 may reflect firms anticipating trade taxes).
Several Euro area countries’ consumer price inflation data are due, but this is final April data. Such numbers are almost never revised, and the sense of disinflation in the Euro area means that they are unlikely to change market expectations about European Central Bank policy.
US President Trump announced that Saudi Arabia would invest USD600bn in the US. For context, that is roughly 60% of Saudi Arabia’s gross domestic product. This has the appearance of a “penny dropped” announcement. Like the plan to abandon the penny, there is a fanfare of spin, which does not necessarily change anything in reality. The announcement does not require economic forecasts to change.
Reports of tensions between the UK and China over trade understandings with the US are worthy of attention. The unilateral US action has been an important feature of these trade tensions (meaning the US suffers more than the rest of the world). If tensions rise between other countries, economic risks broaden.