1/27/17, NY Times:
Mr. Trump appeared to embrace a proposal by House Republicans that would impose a 20 percent tax on all imported goods. The White House press secretary, Sean Spicer, told reporters that the proceeds would be used to pay for the border wall…
…
But the House plan would offset that revenue by reducing the 35 percent corporate income tax rate, and would thus generate no new federal revenue over all. It was unclear how that fit with Mr. Spicer’s repeated contention Thursday afternoon that revenue from the tax adjustment would help finance construction of the border wall.
…
Moreover, the tax would not be paid by Mexico. It would be paid by companies selling Mexican goods in the United States. Some might raise prices, imposing the cost on consumers, while others might be forced by competitive pressures to absorb the tax, reducing their profits. Many economists also doubt that the change would end up penalizing imports or encouraging exports. They predict that the value of the dollar would rise, offsetting those effects.
All a recipe for inflation.
The Federal Reserve will then likely raise interest rates in attempt to keep inflation from getting out of control (which they have expressed the intent to do already). Raising interest rates reduces economic growth rates (which have already taken a small dip), and as a result unemployment rates climb.
Ah, the days of stagflation. I remember you well.
A key difference between The Great Inflation of the 1970s and now, however, is that wage growth is much lower than it was. And with the current political climate around the minimum wage, it’s not likely to get any better.
Stagnating wages + increasing unemployment + inflated prices = bad news
Hearseeno 