Is an avocado tax credible?

25 Feb 2025 2 min read

Daily update

US President Trump repeated their intention to aggressively tax US consumers of goods from Canada and Mexico, starting next week. Markets do not entirely believe Trump. Taxing everyday essentials like propane gas and avocado on toast would be very visible, very quickly to US consumers. Polls suggest only 32% of US voters approve of Trump鈥檚 management of inflation.
The Bank of Korea cut interest rates by a quarter point, as markets had expected. This is a reminder that for many countries when it comes to policy setting, the growth deflation aspects of disruption to global trade will outweigh the price inflation impacts.
German final fourth quarter GDP data is due, with more details of the composition being published. It is worth noting that while headline growth has generally been negative, the German consumer聽 showed flashes of optimism through 2024, and consumer spending data has tended to be revised stronger.
There are yet more business and consumer sentiment polls due, but these are still unlikely to say much useful about economic reality. The US Conference Board sentiment survey does not break down the data along partisan lines, but is likely to echo the deep divisions of the Michigan data鈥擠emocrat and independent voter pessimism, and Republican euphoria.