Powell is not a chicken farmer

12 Mar 2025 2 min read

Daily update

US President Trump imposed and retreated from aggressive taxes on US users of Canadian steel and aluminum, and Canada retreated from a surcharge on exports of electricity to the US. Canadian steel and aluminum are caught by yesterday鈥檚 global 25% tax on US consumers. The EU responded with taxes on its consumers (buyers of bourbon are badly hit), but the EU consumers have substitutes as taxes are only against US products.
US February consumer price inflation will not reflect the direct consequence of trade taxes鈥攊t is too soon. Hints of second-round effects may be in evidence. Some companies may have anticipated tariffs in their normal price-setting process. The media attention on tariffs and inflation (at least among Democrat-leaning media) may give retailers cover for some profit-led inflation.
Absent tariff effects, the forces of supply and demand suggest broadly stable US inflation. Egg prices will聽 no doubt be a social聽 media meme, but neither Federal Reserve Chair Powell nor Trump are chicken farmers, and cannot affect a relative price shock.
ECB President Lagarde is due to speak, and comments in the wake of the EU鈥檚 retaliatory tariffs may be of interest (though the taxes are unlikely to stop rate reductions). The ECB鈥檚 wage tracker is also due.