UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The new tax wave'
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Jul 8, 2025 US consumers face a hefty new 25% tax on products from South Korea and Japan, raising inflation concerns. This tax hike adds to ongoing political and economic uncertainties, with an impact expected on consumer price inflation. The discussion also dives into the complexities of economic indicators like consumer confidence and credit data, revealing how partisan biases can distort perceptions. The implications of these shifts on spending trends and international trade are also explored, shedding light on the broader economic landscape.
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Impact of New US Import Taxes
- The new 25% US tax on goods from Japan and South Korea raises importers' tax burden by 15 percentage points.
- This will likely increase US consumer price inflation by about 0.1 to 0.2 percent directly.
Risks Beyond Direct Tax Impact
- The tax increase alone isn't huge but domestic profit-led inflation could worsen it.
- More aggressive tax hikes or legal battles could escalate concerns without a quick policy reversal.
Economy Data Quality & Consumer Response
- US economic data is politically biased and of poor quality, complicating analysis.
- Consumer response includes some optimism among Republicans and may rely on saving or credit as real incomes decline.