National security vanities

Daily update

Social media posts from US President Trump overnight indicate a series of new trade tariffs. US buyers of foreign vanity units, soft furnishings, etc., as well as heavy trucks, and pharmaceuticals will be subject to new tariffs. The furniture tariffs, applied on national security grounds, are likely to have a muted impact. These are not high frequency purchases (lowering price awareness). Prices have already risen following earlier tariffs. Democrats appear to have redecorated early this year, presumably anticipating tariffs.
The 100% pharmaceutical tariff applies only to branded drugs, and constructing a factory may lead to an exemption. Many pharmaceutical companies have facilities in the US, so it may be relatively easy to superficially expand those facilities to avoid tariffs being applied.
Yesterday’s revised US GDP showed stronger consumer spending. This is a reminder that US middle income and higher income consumers have the resources to at least maintain spending power. However, the upward revisions on consumption were narrowly based. August consumption data is due today.
Japan’s September Tokyo consumer price inflation was lower than expected (on the international core definition, it is almost at 1% y/y). This complicates the already uncertain outlook for Bank of Japan policy. Eurozone inflation expectations are due, as is the US PCE deflator.