"The latest escalation of the trade war has prompted us to change our baseline view", BofA's Ethan Harris wrote Tuesday, in a rather frank-sounding note called "Trade: it hurts".
Long story short, Harris (and thereby BofA's economics team), has been forced to reassess things in light of the latest escalations in the trade war. "We think things are going to get worse with more pain to the global economy before a deal can be reached with either China or Mexico", he laments.
One problem the bank brings up is the wording of Trump's Mexico proclamation. On Thursday evening, as soon as the details of the White House's "plan" were official, we fretted as follows:
This seems like an extremely ill-advised decision, and it’s made immeasurably worse by Trump explicitly stating that when it comes to what counts as “success” on reducing illegal immigration, it will be the administration’s “sole discretion and judgment”.
Reading further, it sounds like Trump may consider nothing short of the wholesale “elimination” of illegal border crossings as sufficient to lift the tariffs. That isn’t achievable. Mexico simply doesn’t have the capacity to completely stop illegal immigr
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