Tariffs absorbed by corporate price cuts?

Below is a fascinating note from Goldman on US tariffs.

The domestic corporate goods price index (CGPI) fell -0.2% mom in May, the first decline since August last year, due to lower gasoline prices. In yoy terms, the index decelerated sharply to +3.2% (April: +4.1%). Domestic prices for machinery-related categories showed a mixed picture of increases and declines. Export prices fell sharply for passenger cars destined to North America.

…A 25% tariff has been imposed on US auto imports from Japan since April, and it is possible that Japanese exporters have started to lower export prices from Japan to mitigate the impact of the tariff on local selling prices.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.