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well on Sunday president Trump announced 25% tariffs against products coming from
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Canada and Mexico as well as 10% tariffs coming from product from China president
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has said that it is connected to the level of fentanyl making its way into the us there have also been questions
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around immigration but there are many questions to be asked as to how this will impact all of the parties involved
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including Americans due to the expected retaliatory tariffs by both of our neighbors Jeremy seagull Wharton is
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Professor of Finance joins us to talk it all over Jeremy great to have you on the
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show thanks for your time thank you Dan happy to be here thank you all right so let's start right at the get-go um
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president Trump announces these tariffs what are your thoughts uh not a good idea I think it's not good economically
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and it's not good politically and I'll I'll explain that uh in just a moment uh
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first of all you know as we're talking you know they don't supposed to take
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effect till midnight you know there may be brinksmanship here you know by tomorrow they may be gone a lot of the
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effect obviously depends on how long they're they're going to be on um but uh
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you know uh this is uh this is is going to uh it it's certainly not going to
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tank the US economy it's not going to put us in the recession uh if they last
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let's say two two or three months um um even without retaliation a few tents off of GDP a few ten up on the
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CPI Consumer Price Index but here here's where I I think uh we have to think
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about here and that's a political effect um we're going to get a rise in price in
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in gasoline we already see Futures up uh three or four cents gasoline is the most
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visible price you know everyone's talking about avocados and the up coming Super Bowl and guac and uh people love
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to talk about this the mainstream media let's face it which is who are not Trump's friends are going to get on
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every single story that every penny and all the rest uh and so there's there's
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there's going to be a lot of negative press um because I don't think people
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say you know what I'm I'm I'm paying for more for my guac because of something on
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fentol and Canadian borders uh I don't know if that's going to ring with them
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uh secondly there's going to be certain congre now here's where the critical
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thing this is what's critical in my opinion um the Republicans have a very narrow margin in the house uh they want
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to pass this huge Omnibus Bill they cannot afford to lose anybody you know let's face it one two at most there
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there's a lot of congressmen and women in districts that are going to be very
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affected by this negatively and they're going to get some negative feedback uh speaker Johnson's going to
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hear about this I expect speaker Johnson to go to Trump and said uh you know um let me just tell you you want to pass
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this bill we're having uh some you know we may lose four five six votes and it's
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dead right I mean there's where the rubber hits the road real if you want to
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know the truth where uh where the political pressure I mean first of all it is very sad commentary on our
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government system that Congress who was uh supposed to given the sole rights to impos tariffs in the Constitution gave
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those rights away to the president of the United States by the way the first law
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1962 but by the way with a overwhelmingly Democratic House and Senate passed it signed by Kennedy and
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um to give him the right uh in National Emergency which was what he called there
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have been other bills subsequently that have given him the right in of fair trade practice of else but basically
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Congress I think Congress wants those rights back yeah but they can't get them
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back because even if they even if if if if if they say hey they pass a try to pass a law don't forget uh Trump has
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veto power over that law and they don't have two-thirds to overturn that by any
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means so they gave up a big issue um uh you know that's water under the dam as
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far as that's concerned um so the there's I I think the political impact
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here is what's important particularly in terms of uh passing the Omnibus and tax
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bill that the Republicans want to do because let's face it I mean Trump came
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in with pretty good uh approval ratings an Era of Good Feeling squabbles among the Republicans
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have have been uh at a low let us say uh since the presidency uh why does he want
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to you know uh uh stir the Hornets Nest here uh because uh he won't get his bills passed if he does so you mentioned
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gasoline Futures uh already seeing a tick up yeah uh for consumer in general how quickly and how would they see these
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tariffs start to have an impact well on gasoline right away there are many gas stations that price immediately off
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Futures I mean that that's their formula I mean even before they get it they they
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price off Futures uh so you know we could see a couple pennies two or three pennies four
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pennies within two or three days on gasoline now what super markets do about guac um uh well let's say avocados not
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and and and guac is a derivative there of course I mean that's up to them 80%
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of our avocados come from can uh from Mexico uh so obviously the price of the remaining ones would go up there will be
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a run on them I think if if uh if firms keep the prices you might see sell-offs on on them if they don't raise the
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prices so this has the ability to to have I mean this is not going to change anyone's you know a fundamental
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Financial lifestyle but it's the visible stuff that media that social media love
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and it's GNA just feed into it day after day after day um and not I think at all
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to the benefit of President Trump so let's also throw in the component of the
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Federal Reserve last week not cutting rates uh and and what kind of impact and this has been a back and forth talking
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point especially since the president brought up the idea of tariffs in the first place of what kind of potential
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impact tariffs just maybe larger scale would have on the impact on inflation that we're seeing right now yeah well it
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you know if it is um um longterm if there is retaliation um and then of course Trump
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is even you know saying that he could raise these rates um then you're going
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to have a tick up in the rate of inflation now there is a big debate among Economist and the FED whether a
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tick up of inflation due to tariffs should uh re be a response because it's it's not excess demand it's really an
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external supply side issue where the FED might say well this is going to pass through I'm I'm not going to try to you
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know make things worse by tightening credit uh that would uh so I mean even even I would say let that pass through
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it's a oneshot increase um so uh uh obviously if they tried to raise rates as an excuse that
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would certainly bring the eye of trump on them but don't forget the the next uh
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meeting is not until March 19th so we you know we basically have uh you know you know six seven weeks
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right now before and we'll see how this all settles out uh by then is it your
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belief then that that there's more of a chance that the tariffs that were announced are are a better chance of
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shortterm than they are longterm it seems to make political sense to me that they're
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shortterm um because otherwise I think uh uh you know he will hear the feedback um and he's going to get the
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feedback both from legislators uh uh and and the public um who are not going to like all these stories about uh
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increases in some of their favorite foods it's just it's just the type of
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stuff which the news media loves to eat up how much pun there no yeah exactly how much how much does Canada and Mexico
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retaliate do you think I think that depend depends on the length of time um really I think they're set to retaliate
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I mean I've already heard that you know some you know some Canadian uh liquor
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stores have taken American liquor off of the shelves you know this is us you know
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we bu we make good liquor ourselves so there's going to be a little bit already
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even you know of unofficial retaliation um you know hey just don't buy American Goods even if we don't
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retaliate I mean you know I mean that that that was almost you know maybe maybe that's some of the source of why
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Apple phone sales have been weak in China there was that bu you know by uh non us Goods so there there's going to
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be some of that I don't think I mean right now uh there's going to be a few
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retaliations that are in a fraction of it and I think everyone's sitting down
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to see in the next few days whether you know uh Trump is uh going to settle this
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deal how much do the markets react to this I think it totally depends on how long but let me say as long as these
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tariffs are in effect and are not lowered it's very hard to see the stock market going up Jeremy always great to
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get your thoughts and your Insight thank you very much thank you Dan you got it Jeremy seagull uh Wharton ameritus
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professor of Finance