See this article posted today at @financialtimes.com for further info: www.ft.com/content/e2ae...

Surprised to see suggestion that lower core PCE inflation in 2019 due to tariffs + uncertainty.

What is the best evidence backing this interpretation of the core PCE dynamics?

e.g., CHIPS act has acted to reduce dependence on imported semiconductors by introducing subsidies/grants.

Not necessarily advocating the use of either of these policies, but if we take the goal as given, its worth thinking about what would be the best way to achieve it.

2. WTO rules? Tariffs apparently are easier to justify under national security grounds, while subsidies may more clearly violate WTO rules & trigger countervailing duties.

3. Tariffs are faster, easier to implement, and with quicker impact.

What am I missing?

Again, if we agreed on the goal, sounds like subsidies would be more focused/less distortive relative to tariffs?

But I guess I can see a few reasons why tariffs could be more palatable:

1. Tariffs raise revenue, while subsidies involve taxpayer transfers.

If we agreed on the goal, is this the only way to achieve it?

Why not subsidies?

Subsidies would encourage domestic production of these strategic sectors, but without raising the input costs of domestic manufacturers and other sectors that rely on steel and aluminum.

Tariffs raise cost of steel & aluminum from rest of world, expenditure switching to domestic producers - less reliance on foreign metals!

Problem: Tariffs raise cost of aluminum & steel used by manufacturers, making their goods less competitive and more expensive domestically

Thanks, that's really interesting and helpful

How are other Latam countries doing in refocusing between China and US? Looks like another missed opportunity for both US and Latam!